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This article, written by Mr Ernst Serfontein of EW Serfontein & Associates Inc. and originally written and published on De Rebus - The Law Society of South Africa, explores how South African law treats unpaid levies owed to Homeowners’ Associations (HOAs) and Bodies Corporate as a form of debt subject to the three-year prescription period set out in the Prescription Act 68 of 1969. It explains that each levy becomes due monthly and will prescribe individually if no legal action is taken or acknowledgement of debt is made within that timeframe. The article highlights key court rulings confirming that associations that delay collection risk losing their right to recover old arrears, while also outlining how issuing summons or obtaining written acknowledgements can interrupt the prescription process. The overall message is clear - trustees and managing agents must act promptly and maintain proper levy collection procedures to protect the homeowners association’s stability while preventing claims from expiring.
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Original Article Source – derebus.org.za
The purpose of this article is to examine the applicable case law to determine whether claims for levies payable to a homeowners’ association (HOA) in terms of its memorandum of incorporation (moi) or payable to a body corporate in terms of the Sectional Titles Schemes Management Act 8 of 2011 (the STSM Act) prescribe after three years as per s 11(d) of the Prescription Act 68 of 1969 (the Act). I will also consider whether or not there are other factors unique to levy claims, which prevent or delay prescription.
In a number of decided cases the effect of the so-called embargo provision normally contained in a title deed of a property governed by a HOA, on the prescription of levies was considered. An embargo provision in the title deed effectively prohibits transfer of the erf without a clearance certificate issued by the HOA, inter alia, confirming that all dues by the owner to the HOA have been paid.
The issue which had to be determined by the courts was whether or not the embargo is a real right or a mere personal right. If it is a real right, the question arises whether or not a claim for levies by the HOA prescribes at the expiry of the normal prescription period of three years in terms of s 11(d) of the Act.
In Lukhele v Fernbrook Estate and Others (GP) (unreported case no 61719/13, 17-2-2015) (Legodi J) (Fernbrook) the parties were ad idem that in accordance with the Supreme Court of Appeal (SCA) decision in Willow Waters Homeowners Association (Pty) Ltd v Koka NO and Others 2015 (5) SA 304 (SCA) the embargo contained in the title deed of the property concerned is indeed a real right, which the HOA has against a member or owner, which is enforceable against subsequent owners.
In this matter it was held that the applicant, who had acquired the property at an auction and was obliged to pay the outstanding levies, is also entitled to raise prescription just as the registered owner could do so. Consequently, the court ordered that the amount to be paid by the purchaser to the HOA in respect of levies, may not include levies older than three years.
It can be inferred from this judgment that a claim for levies prescribes after the expiry of the normal prescription period of three years in terms of s 11(d) of the Act, notwithstanding the embargo, and irrespective of whether or not it is the owner or his successor in title or the purchaser who is responsible for the payment of the levies pursuant to the embargo provision.
In the case of Changing Tides 17 (Pty) Ltd NO v Portion of Erf 366 Wapadrand CC and Others (GP) (unreported case no 24135/2010, 15-12-2016) (Molefe J) (Changing Tides 17) the court again confirmed that as per Willow Waters, a restrictive title condition or embargo is a real right and not a personal right. The court held that the restrictive title deed condition or embargo from which the debt stems, has the same effect as a servitude which only prescribes after 30 years. In addition, ‘it is a continuing wrong’ which also prevents prescription.
However, the debt for levies claimed which arose from the restrictive title deed is susceptible to prescription. Accordingly, the debt owed to the HOA is a debt subject to the normal prescription period of three-years.
In the matter of Bradley Scott Real Estate CC v Serengeti Exclusive Estate Home Owners Association NPC and Others (GJ) (unreported case no 13150/2016, 9-2-2017) (Diedericks AJ) (Bradley Scott), the applicant was the purchaser of a property in an estate that was subject to an HOA where the owner had been liquidated.
The applicant had sought an order that the HOA issue a levy certificate in terms of the embargo provision on payment by the applicant of an amount, which excludes levies older than three years.
The applicant contended that the HOA’s calculations include levies and penalties that became payable more than three years earlier to which levies and/or penalties the HOA is not entitled in the light of s 11(d) of the Act.
The court held that the HOA has a real right by virtue of the embargo provision which protects the creditor’s claim against the whole world. The court was not persuaded that the applicant’s approach in calculating the amount of levies due to the HOA (by excluding debts older than three years) was correct and consequently dismissed the application with costs.
Unfortunately, the judge stopped short of saying that levy debt does not prescribe after three years. However, by saying that the applicant’s approach in calculating the outstanding levies was not correct the court by implication held that levies older than three years had not prescribed.
In Osho Property Ventures (Pty) Limited v Body Corporate Construction Park and Others (GP) (unreported case no 46109/2021, 13-3-2025) (Kubushi, J) (Osho) the applicant had purchased a sectional title unit from the liquidator of the company, which owned the unit. The applicant, who in terms of the conditions of sale was responsible for the payment of the outstanding levies, had applied for an order that a levy clearance certificate be issued by the body corporate in terms of s 15B(3) of the Sectional Titles Act 95 of 1986 (STA) (which is an embargo provision) against payment to the body corporate of an amount which does not include debts older than three years.
The issue in this matter was whether or not the body corporate’s claim for levies had prescribed by virtue of the embargo provision.
The court held that, as concluded in Willow Waters, there are two separate rights, one, a personal right in regard to the claim for arrear levies, the second, a real right in respect of the embargo. The personal right for the claim of levies must be separated from the real right embargo entitling the body corporate to refuse the issuing of a so-called levy certificate as set out in s 15B(3)(a)(i)(aa) of the STA. This section affords protection to the body corporate in that it provides security for debt recovery.
The court considered the judgment in Bradley Scott and held that it was clear that the court in that matter was in agreement with the body corporate that ‘all amounts due’ (for more than three years) do not prescribe, and that the defence of prescription cannot be used to curtail the real right that has been created in terms of s 15B(3)(a)(i)(aa) of the STA.
The court noted, however, that in Bradley Scott the applicant was a prospective purchaser. This was in contrast to the cases where the applicant was the registered owner as in Body Corporate Santa Fe Sectional Title Scheme NO 61/1994 v Bassonia Four Zero Seven CC 2018 (3) SA 451 (GJ) and Ashu and Another v Body Corporate, London Place and Others 2025 (1) SA 147 (WCC) (London Place) (case particulars infra).
In both these cases the applicant, as the registered owner of the property, had relied on prescription and the court made a finding that the historic arrear levies older than three years had become prescribed. In casu the court noted that the applicants in both these cases were registered owners, and not a prospective purchaser as in Bradley Scott.
According to the court, it is clear from the authorities quoted that a prospective purchaser cannot avail itself of a defence of prescription that relates to a debt and accrues to the registered owner only.
In Body Corporate of 22 West Road South v Ergold Property Number 8 CC 2014 JDR 2258 (GJ) (West Road), levies were due by an ordinary member (not a trustee) to a body corporate of a sectional title scheme and the question was whether or not prescription was delayed for one year after the day on which the owner ceased to be a member.
In this regard s 13(1)(e) provides that if the creditor is a juristic person and the debtor is a member of the governing body of such person, prescription shall not be completed until the lapse of one year from the date on which the debtor ceases to be such a member.
The court held that s 13(1)(e) of the Act was intended to obviate the problems that arise from the potential conflict of interests where a debtor sits on the governing body or board of a juristic person and delays or prevents the juristic person from taking action to collect that which is lawfully due to it.
Having considered the provisions in the STA dealing with the nature of a body corporate, its powers and functions and that of the trustees, the court came to the conclusion that the governing body of a body corporate are the trustees who are empowered to administer the affairs of the body corporate.
It was accordingly held that the defendant, as a member of the body corporate (and not a trustee) is not a member of the governing body as envisaged in s 13(1)(e) and as such completion of prescription was not delayed.
In London Place the issue was the same as in West Road. The court considered the relevant authorities and also came to the conclusion that the governing body of a body corporate for purposes of s 13(1)(e) of the Act must be the trustees, if regard is had to the legislative scheme of the STMA. In terms of s 7(1) of the STSMA it is clear that the powers and functions of the body corporate must be performed and exercised by the trustees.
The judge accordingly agreed with the court’s finding in West Road that the governing body of a body corporate are the trustees who are empowered to administer the affairs of the body corporate and since the defendant was not a trustee, he was not a member of the governing body. The running of prescription was, therefore, not delayed.
As regard the legal position (at least in Gauteng) Osho relied on Bradley Scott and held that only the registered owner and not a prospective purchaser may rely on prescription. This means that the HOA’s claim against the owner prescribes after three years and only the owner may raise this defence.
However, the same defence is not available to a prospective purchaser if for example the property is purchased at an execution sale and such purchaser is obliged to pay the outstanding levies for purposes of transfer of the property. The body corporate can thus recover all the levies due to it from a prospective purchaser even the debts older than three years.
In my opinion there is no legal justification for the distinction between the position of the owner and that of the purchaser. If the owner is entitled to raise prescription there is no reason why the purchaser should not be.
In terms of the embargo all dues by the owner to the body corporate or HOA should be paid and the amount due by the owner does not include levies older than three years which have prescribed. In my view there is, therefore, no reason why a purchaser should not also be entitled to avail himself of prescription.
Both West Road and London Place held that a member of a body corporate who is not a trustee is not a member of the governing body of a sectional title scheme. As such, prescription is not delayed in terms of s 13(1)(e) of the Act and the body corporate’s claim, therefore, prescribes after three years. However, by inference it can be assumed that prescription of a body corporate’s claim against a member who is also a trustee, will be delayed in accordance with that subsection.
I have not come across any decision concerning the position of members and directors of an HOA. However, if the same principle as in West Road and London Place is applied, only claims against directors and not the members are delayed in terms of s 13(1)(e). However, an ordinary member who is not a director would under normal circumstances not qualify as a member of the governing body of the HOA and thus prescription will not be delayed in such case.
What if a member is entitled to appoint or nominate a director to the board in terms of the MOI of the HOA? In the initial stages of the development process, the developer is normally still the owner of most erven since these erven have not been sold yet. As owner of the majority of the erven, the developer would want to retain control of the board of directors and will, therefore, ensure that the MOI affords him the right to appoint or nominate the majority of directors.
In my opinion, the developer in this situation, although it is obviously not itself a director, would be able to influence the outcome of a decision by the board to institute action against it via the directors appointed or nominated by it. In my opinion prescription in this instance would, therefore, be delayed in terms of s 13(1)(e). However, we will have to wait for the courts to make a pronouncement in this regard.
Ernst Serfontein BA BProc (Unisa) is a legal practitioner at EW Serfontein and Associates Incorporated in Pretoria.
This article was first published in De Rebus in 2025 (Oct) DR 22.
Original article posted on derebus.org.za.
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This article is not intended to constitute any form of financial or legal advice.
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You might also be interested in reading the following article by Mr Ernst Serfontein, Groundbreaking Judgement Ruling: Crystal Ball Properties 65 (Pty) Ltd. vs Landsmeer Homeowners Association NPC.
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