Author: Auren Freitas dos Santos
Director of The Advisory
26 March 2021
Lease agreements specify how utilities should be dealt with between tenants and landlords to avoid any sticky situations. However, a Property24 reader is questioning special water levies and fixed electricity fees being passed on by their landlord.
“My Landlord has been issued a special water levy, to recoup historical undercharges on the water, due to leaks on the estate property that cannot be found. I have only been a tenant for 5 months. My lease states I am not liable for levies. My landlord says it is water usage and has added the cost to my account. Is this allowed?
In addition to this special levy, the reader wants to know if the landlord is within their right to charge an ‘electricity fixed fee’?
“When questioned, I was told it was an amount all units pay in the estate for the street lighting, and so is an electricity charge for my account. My lease says I am liable for electricity consumed on the premises, premises is defined as my unit number. No mention of a fixed fee for street lighting, am I liable for this amount?”
Auren Freitas dos Santos – Founder and Director of The Community Schemes Advisory, a leading boutique firm specialising exclusively in community schemes law, has the following advice from a sectional title perspective:
“My advice to the reader would be for him to ask his landlord to investigate the validity of the so-called “special water levy” and the “electricity fixed fee” to ensure that these amounts are in fact due and payable.
“With regard to the “special water levy” it is important to note that the following –
- a body corporate may only levy members with a special contribution, if additional income is required to meet a necessary expense that cannot reasonably be delayed until provided for in the budget for the next financial year; and
- a special contribution only becomes due on the passing of a written trustee resolution.
“With these principles in mind, I suggest that the landlord asks the trustees of the body corporate to explain why the recoupment of the historical undercharges on the water was so urgent that it could not be reasonably delayed until provided for in the next budget (in other words, including in the normal monthly levies of the next financial year) and to request a copy of the signed trustee resolution approving the so-called “special water levy”.
With regard to the “electricity fixed fee” it is important to note the following –
- in terms of section 3(1) of the Sectional Titles Schemes Management Act, a body corporate is only entitled to levy the members with four types of contributions, generally referred to as admin levies, reserve levies, exclusive use area levies and special levies; and
- that these levy contributions are payable by the owners in proportion to the participation quotas of their section.
“In light of the above, I don’t believe that the body corporate has the power to levy the owners with a so-called “electricity fixed fee” because this contribution does not fall within the ambit of section 3(1), and unless your lease agreement states otherwise, there is no legal obligation upon tenants to pay any of the four types of contributions levied by a body corporate.
“So instead of creating animosity between you and your landlord, I would rather recommend challenging the body corporate’s right to recover the so-called ‘special water levy’ and ‘electricity fixed fee’”, says Freitas dos Santos.
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