Services may not be suspended

Trustees representing a sectional title complex may not suspend the services of a recalcitrant owner or tenant who has fallen behind in payments for electricity, water or levies.

Michael Bauer, general manager of sectional title management company IHFM warns that the body corporate trustees and the managing agent needs to take swift and decisive action against owners or tenants who do not pay their bills.

“Suspending or disconnecting services would be a highly effective way of putting pressure on a non-paying member but such actions are not sanctioned by law,” says Bauer.

He points out that in 2000 a body corporate disconnected the electrical supply to residents in a sectional title complex who had disputed the calculations it used to set a special levy to improve the common properties.

The members refused to pay this levy and the electricity service was suspended in an effort to force them to do so.

The affected owners made an urgent application to the High Court, which ordered the immediate reconnection of services and stipulated that the body corporate and the managing agents had to pay the costs of this urgent application.

He says that services may not be suspended and as a result the best way of confronting a recalcitrant non-payer is for face-to-face negotiations or, failing this, appointing an efficient attorney or debt collection agency to collect the arrears.

Bauer says this may lead to selling the owner’s (or tenant’s) movable property and even applying for the individual’s sequestration to recover the debts.

He says that many individuals who live in sectional title complexes are reluctant to take on the role of acting as a trustee fearing that if things go wrong then they could be held legally liable.

“This is, by and large, an unwarranted fear because the Sectional Title Act provides a general indemnity for trustees in the event that they make a genuine mistake,” he says.

“However, the Act does allow prosecution for any criminal acts such as fraud or for gross negligence,” says Bauer.

He points out that managing agents are not indemnified by the Act and if they make a costly mistake – and the Fidelity Fund does not cover them – then they could be held liable. 

• Joburg Water failed to complete water and sanitation projects in unnamed informal settlements because it failed to appoint a contractor on time. The report also revealed that Joburg Water's liquidity ratio - value of assets divided by liabilities - has weakened to 1.1:1 - well below the 1.5:1 normal for municipalities;

• City Power had 25 serious power outages this year against a target of 24. It erected 1322 street lights to 12 areas in the quarter but poor maintenance of street lighting "nullified good work being done in this area"; and

• Cash-strapped Pikitup has reduced its cleaning work in 119 informal settlements, including those in Diepsloot, Alexandra, and at hostels in Soweto, from a daily service to three times a week.

• It was revealed last week that the city plans to instal pre-paid water and electricity meters in every home.

TITLE: Section 118 of the Municipal Systems Act

Digest Extract: If you are ready to stop giving your tenant open cheques for electricity and water and to give them the control to manage their budget for their utility use - Our prepayment system is designed for BODY CORPORATES, RENTAL PROPETIES such as; HOUSES, COTTAGES, SHOPS, OFFICES ..... NATION WIDE...

Section 118 of the Municipal Systems Act

Did you know, section 118 of the Municipal Act makes landlords ultimately responsible for debts to municipality, even when the account is not in the landlords’ name.

With this in mind and knowing that electricity prices have just increased by 24.8%. Are you unnecessarily exposing yourself to risk by giving your tenant an open cheque for electricity use.

In real-terms, every electricity and water increase means an increase in the risk of arrears for landlords, body corporates and managing agents.

Take a look at the latest electricity increases announced by Eskom and approved by the South African National Regulator (NERSA):

•          2010/11: 24.8%. This makes the average Eskom electricity price for post paid meters 41.31c/kWh

•          2011/12: 25.1%. This makes the average Eskom electricity price for post paid meters 51.68c/kWh

•          2012/13: 25.9%. This makes the average Eskom electricity price for post paid meters 65.06c/kWh

These percentages are also the percentage by which your risk has increased in each of your rental properties. In real number terms this risk has just increased by 106.8%. The increases to be applied in the next 3 years will total to 75.8% from 2010 to 2013. If we add the increase of 31% last year (2009), it will mean that increases in electricity will have been a a staggering 106.8% in a 4-year period. That is a 106.8% increase in your exposure to risk.

Landlords with stand alone homes have more to worry about than just the risk above. As to Section 118 of the Municipal Act, even if tenants open their own account at the municipality, the landlord will ultimately be liable for any arrears. Because of Section 118 some municipalities have disallowed any tenant to open an account with them based on a lease agreement. This means that the risk bounces back in any case to the landlord. If you are interested to know more about Section 118, we can send you information, just send us an email to: This email address is being protected from spam bots, you need Javascript enabled to view it , the subject must be: SECTION 118.

How to stop writing an open check for electricity to tenants and give tenants control over electricity usage:

Tenants would love to reduce their electricity use and have control over their budget, while you as a landlord would love to have guaranteed payments. It is a win-win situation.

Tenants can now track and control their use to their budget, while you can rest assured you are paid in time, all of the time. It is a win-win situation again.

Thousands of landlords, were early adopters of technology with a vision, and have been using prepayment collections for almost 10-years now to collect electricity, water, levies and arrears on a prepayment system.

Now, just as they have been doing, you too can now use prepayment technology to get rid of every risk of losing money on electricity and water. You too can relive yourself of the stress, hassle, risk, collection and accounting associated with collecting for utilities.

For many years technologically advanced landlords were the first ones to enjoy peace of mind. Now with electricity increases so high, it has become a necessity for every landlord to start using prepayment solutions to get rid of the risk, hassle, accounting, and enjoy the pleasure of getting guaranteed payments every month.

Our prepayment system is designed for BODY CORPORATES, RENTAL PROPETIES such as; HOUSES, COTTAGES, SHOPS, OFFICES ..... NATION WIDE.

If you are ready to stop giving your tenant open cheques for electricity and water and to give them the control to manage their budget for their utility use, while you simply just receive the funds on consumption; get started now by calling us to get the most effective prepayment solution today:

Our numbers you can call today:

•          National  087 550 0870

•          Johannesburg  010 500 1110

•          Pretoria  012 004 0002

•          Bloemfontein  051 004 0002

•          Durban   031 100 1110

•          Cape Town  021 300 1110

Or visit our website to learn more: www.PrePaidMeters.co.za  .

We are helping thousands of Body Corporates, Landlords, Letting Agents and Managing Agents to effectively manage their water and electricity - allow us to help you.

VERY IMPORTANT NOTE: The prepayment system for landlords and managing agents is called sub-metering. Sub-meters will not replace your municipal meter if you are on a STAND ALONE PROPERTY, regular home. For a standalone house connected to the municipality you must call your local council/municipality to get a prepaid meter. ONLY they can help you. We can only provide sub-meters that will be installed after your municpality meter.

Intelligent Utility Management Reduces Risk & Gives Power to the Consumer

www.PrepaidMeters.co.za Team

Tel: 087 5500 870

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