Sectional Title Risks: Do these levy checks first

By Neale Petersen

April 29, 2026

Property Management

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.

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“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.”

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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.