Sectional Title Risks: Do these levy checks first
- Low levies often signal future special levies and hidden costs
- Financial transparency and governance determine scheme stability
- Due diligence upfront prevents costly disputes and legal exposure
Why levy checks matter more than price
Buying into a sectional title scheme is not just a property purchase, it’s a financial partnership.
You are stepping into a shared system of costs, governance, and legal obligations. And if you don’t interrogate that system properly before buying, the risks can escalate quickly.
The biggest mistake buyers make? They focus on the unit and ignore the scheme.
Understand what you’re actually buying
In a full title (freehold) property, you own everything, land, structure, and responsibility.
In a sectional title scheme, you own your unit, but you also inherit:
- Shared financial obligations
- Collective decision-making
- Exposure to how well (or poorly) the scheme is managed
That’s where things go wrong.
The critical levy checks every buyer must do
1. Interrogate the Levy, don’t just accept it
A low levy is not a bargain, it’s often a warning sign. Demand a full breakdown:
- Maintenance provision
- Insurance cover
- Security and operational costs
- Reserve fund contributions
If the reserve fund is underfunded, special levies are inevitable.
2. Track the history of special levies
This is one of the clearest indicators of scheme health. Ask:
- How often have special levies been raised?
- What triggered them?
Frequent special levies usually point to poor planning or weak financial management.
3. Assess governance and decision making
The body corporate runs the scheme, but not always effectively.
Review:
- Trustee competence
- Meeting minutes
- Rule enforcement
Poor governance leads to disputes, delays, and financial inefficiencies.
4. Demand transparency in spending
You need to know how money is managed. Check:
- Are multiple quotes obtained for major work?
- How are contractors selected?
- Are owners informed of large expenses?
Lack of transparency is where mismanagement begins.
5. Review financial records in detail
Don’t skip this step. You are entitled to:
- Audited financial statements
- Budgets
- Reserve fund status
- Arrear levy levels
This tells you whether the scheme is stable or heading toward financial stress.
6. Understand dispute resolution before you need it
Disputes are common, the question is how they’re handled. Find out
- Internal resolution processes
- Escalation routes
The Community Schemes Ombud Service (CSOS) can intervene, but prevention is always better than cure.
7. Be an active owner or pay the price
Passive ownership is risky. If you:
- Ignore meetings
- Skip communications
- Don’t question decisions
You lose control, but still carry the financial consequences.
Expert insight: Where buyers go wrong
“Most buyers don’t run into problems because the rules are unclear — they run into problems because they don’t ask the right questions upfront,” says Zerlinda van der Merwe of TVDM Consultants.
“Levy structures, reserve funds and governance processes are often overlooked, yet they are exactly where financial risk sits. If you don’t interrogate these properly before buying, you can inherit problems you didn’t create, but are fully liable for.”
The Reality: Financial pressure is the biggest risk
According to Clientèle Legal, up to 70% of body corporate disputes are linked to financial pressure such as arrears, affordability challenges, and disputes over levies.
That’s not a minor issue, it’s systemic risk.
Bottom Line
A sectional title purchase can be a smart investment or an expensive mistake. The difference comes down to one thing: Due diligence.
Ask the hard questions. Interrogate the numbers. Understand the system before you buy. Because once you’re in, you’re in.
