Can trustees reduce levies?

The full effects of the COVID-19 outbreak on the economy is yet to be determined.

Expenses, such as levies, recoveries and contributions (hereinafter referred to as contributions) in community schemes, have come under the spotlight, as requests are being received for cash flow relief, in the form of reduced levies and or levy ‘holidays’.

But can the managing agent or trustees reduce or even reverse contributions.

Well, the answer ito the managing agent is simple - NO, unless the managing agent is appointed in the capacity of an executive managing agent, as the managing agent has no jurisdiction or powers ito determining contributions. The managing agent’s roles is to collect the contributions, as determined by the trustees, following the adopted annual budget.

As for the trustees, its a little more complex. Yes, the trustees do determine the contributions, but they do so based on an annual budget, approved and adopted at a general meeting. Deviating from this should be carefully considered, and changes, if any, communicated to the members, timeously, in terms of either the Constitution, Memorandum & Articles of Association, or Section 5 of the Sectional Titles Schemes Management Act (whichever is applicable).

However, contributions are the lifeblood of the scheme. The trustees would be well advised to carefully review the financial status of the scheme, before making such changes, taking into account reserves, cash flow and upcoming projects or expenses.