A recent Johannesburg High Court ruling has put body corporate levy recovery practices under a sharper spotlight.
In Centenario Body Corporate v Thandeka Mlotya, the body corporate sought summary judgment based on an acknowledgement of debt for approximately R18,000. What concerned the court was not simply whether levies were payable, but the recovery process surrounding them. Legal costs associated with the matter had grown to several times the amount being claimed.
The decision is important for trustees, managing agents and community scheme professionals because it highlights a wider governance issue: recovering sectional title levy arrears must be managed transparently, fairly and with appropriate oversight.
The case also raises questions about acknowledgements of debt, attorney-driven collection processes and the degree to which recovery costs can be added to an owner’s account.
Here is what property professionals need to know.
What the Court Actually Ruled in Centenario Body Corporate v Mlotya
The case involved a homeowner in the Centenario sectional title scheme and a claim based on an acknowledgement of debt (AOD) for R17,981.86.
The homeowner contended that payments had been made under the arrangement but disputed how those payments had subsequently been allocated. Questions were also raised about charges appearing on the account, including attorney fees and certain water charges.
Rather than granting summary judgment, the High Court gave the homeowner leave to defend the matter so these issues could be properly examined.
Of particular concern to the court was the relationship between the relatively modest debt and the costs generated in pursuing it. The judgment noted that the attorneys’ costs exceeded the claim by at least five times.
Johlene Wasserman, Director of Community Schemes and Compliance at VDM Incorporated, has highlighted the case as an important warning for sectional title schemes. Her commentary points to increasing judicial scrutiny not only of whether arrears exist, but also of whether the methods used to recover them are proportionate and properly governed.
That distinction is important. The ruling does not remove an owner’s obligation to pay levies lawfully raised. Instead, it shows that the recovery process itself can also be examined.
Why Disproportionate Legal Costs Are Now a Governance Red Flag
Levies are fundamental to the financial health of sectional title schemes. Bodies corporate rely on contributions to maintain common property, pay service providers, fund reserves and meet ongoing obligations.
Effective body corporate debt collection is therefore essential.
However, Centenario demonstrates why recovery cannot be approached as an unlimited cost exercise.
The court expressed concern about taking a claim of less than R20,000 through the High Court where the associated costs had become significantly larger than the underlying amount.
For trustees, the lesson is that the relevant question is no longer simply: “Is this levy legally owed?”
It may also be necessary to ask: “Is the method and cost of recovering it reasonable and defensible?”
When costs spiral, a relatively manageable case of sectional title levy arrears can potentially place a homeowner under severe financial pressure. In extreme circumstances, the judgment noted the possibility that a cost spiral could contribute to the attachment of a home or insolvency.
That makes proportionality a governance concern, not merely a legal-cost issue.
Acknowledgements of Debt Are Not a Blank Cheque
An acknowledgement of debt in South Africa is commonly used to formalise an agreement between a creditor and debtor.
In a body corporate environment, an owner in arrears may sign an AOD acknowledging an outstanding balance and agreeing to repay it according to specific terms.
AODs can be useful recovery tools. But Centenario illustrates why they should not be treated as automatic validation of every amount appearing on an account.
The homeowner challenged underlying charges despite having signed an AOD, and the court considered those objections sufficient to require further examination.
For trustees and managing agents, that means every component included in an AOD should be clearly identifiable and justifiable.
This is particularly important where balances include:
- Outstanding levies
- Interest
- Water or utility charges
- Debt collection fees
- Attorney fees
- Other administrative charges
Using standard-form AODs without carefully checking the debt’s composition can create unnecessary exposure.
What This Means for Trustees’ Oversight Duties
One of the most significant aspects of the Centenario judgment was the court’s concern about the apparent level of attorney control over the collection process.
The court questioned whether the body corporate’s management responsibility had effectively been handed over to its attorneys after an account was placed for collection.
This should encourage trustees to view body corporate levy recovery as a governance function, not something that disappears from their responsibility once attorneys become involved.
Trustees should retain visibility over:
- When accounts are handed over
- What amounts are being pursued
- What costs are accumulating
- Whether litigation has been properly authorised
- How payments are allocated
- Whether further legal action remains economically sensible
Professional legal assistance remains important, but trustees should maintain appropriate oversight and decision-making throughout the process.
Practical Steps for Fair, Defensible Levy Recovery
Bodies corporate and managing agents can use the ruling as an opportunity to review their existing collection processes.
Document Every Cost
Statements should clearly distinguish levies, interest, utilities, legal costs and other charges.
Where recovery costs are added, there should be a clear basis explaining why they were incurred and how they were calculated.
Establish Proportionality Thresholds
Trustees should consider developing clear escalation procedures for arrears.
For example, at what balance does attorney involvement become appropriate? When is litigation economically justified? Could another dispute-resolution process achieve the same result more efficiently?
A structured body corporate debt collection policy can help ensure similar cases are handled consistently.
Consider the Community Schemes Ombud Service
The Community Schemes Ombud Service (CSOS) provides a dispute-resolution mechanism specifically for community schemes.
Depending on the circumstances, CSOS may provide an alternative to immediately pursuing conventional court litigation for certain levy-related disputes.
Body corporate’s should assess the appropriate recovery route with professional advisers before escalating a matter.
Review Body Corporate Rules and Resolutions
Debt recovery should align with the Sectional Titles Schemes Management Act, applicable prescribed management rules, valid trustee resolutions and the scheme’s own body corporate rules.
Clear governance documentation makes it easier to demonstrate how and why decisions were made.
How ExplorIT Supports Compliant, Transparent Levy Management
Cases such as Centenario show why effective levy management depends on more than sending statements and following up outstanding balances.
Trustees and managing agents need reliable records that show an account’s history and the decisions made throughout the recovery process.
ExplorIT’s property management and community scheme solutions help practitioners centralise important information and create clearer administrative audit trails.
With the right systems in place, managing agents can more easily:
- Track levy accounts and payment histories
- Maintain accurate owner records
- Record communications and follow-ups
- Store relevant documentation
- Monitor outstanding balances
- Maintain transparent financial records
- Create consistent recovery workflows
- Access historical information when disputes arise
This supports a more accountable approach to community scheme administration while helping trustees maintain better oversight.
The broader message from Centenario is clear: good levy recovery is not only about collecting what is owed. It is about being able to demonstrate that the process followed was organised, transparent and defensible.
For managing agents and bodies corporate operating under the Sectional Titles Schemes Management Act and associated regulations, strong administration has become an increasingly important component of good governance.
Want greater visibility and control across your community schemes? Book a demo with ExplorIT to see how our property management systems can simplify levy administration, record-keeping, and scheme management.