Interception and justice: Is it lawful to reroute utility payments to recover arrear levies
28 May 2026 | Nicole Tavares and Candice Damons
The following scenario was recently brought to our attention: Owner A is in arrears with their monthly levy contributions. Owner A’s scheme makes use of a prepaid meter system for the purchasing of electricity units. The question now becomes: can the body corporate use a percentage of the funds, loaded for the purpose of purchasing electricity, to recover these arrear monthly levy contributions.
Levy contributions and arrear levy contributions
One of the body corporate’s functions is to establish and maintain separate administration and reserve funds. Section 3(1)(c) of the Sectional Titles Schemes Management Act 8 of 2011 (STSMA) states that the owners of the body corporate must make contributions to such funds. This is more commonly referred to as “levies”. Section 3(1)(i) states that the body corporate must recover any amounts due to it by the owners.
The above creates a legal obligation on owners to pay levies, and the failure to do so will result in arrears accruing. Prescribed Management Rule (“PMR”) 25 of Annexure 1 to the Regulations of the STSMA sets out how arrear levies are dealt with, more practically by setting out that:
owners are responsible to pay levies by a specific due date;
interest may be charged on amounts in arrears, and
trustees can take steps to recover any unpaid amounts.
On this basis, it could be assumed that the trustees could simply link the purchasing of electricity via the metered system to the payment of the amounts outstanding. This assumption would be incorrect, well, not unless directed via a court order.
Arrear levies and prepaid meters
Bodies corporate are permitted to install separate prepayment meters, as is the case in the above scenario. As the purchasing of electricity and levies are legally distinct debts, all funds collected must be correctly allocated. Meaning that, when an amount is loaded onto the meter, the body corporate is in no way automatically permitted to deduct arrears, interest or legal fees from any unrelated payments.
A further point to consider is that often the service agreement between the meter and/or "utility wallet” is between the owner and the utility supplier, who is in all likelihood not a registered debt collector and therefore would not be in the position to collect outstanding debt.
It is important to note that regardless of whether the body corporate is a party to the agreement with the metered utility service provider, the body corporate would still not be authorised to leverage electricity purchases against arrear levies.
Lawful recovery of arrear levies
The STSMA and the PMRs require arrear levies to be recovered through a legal process via the Community Schemes Ombud Service (“CSOS”) or the relevant court.
A body corporate cannot lawfully recover arrear levies:
from electricity purchases,
by cutting or limiting utilities, and/or
partake in any form of self-help enforcement.
A body corporate cannot simply stop loading electricity tokens as a way of pressuring an owner to pay up.
We leave you with the following thought: Just because you can, doesn’t mean you should.
Contact us today on 061 536 3138 or at info@tvdmconsultants.com if you require more information on the above.
About the Author:
Nicole Tavares is a Co-Founder and Director of TVDM Consultants.