When a sectional title unit is sold, a crucial part of the transfer process is obtaining a levy clearance certificate from the body corporate. This certificate confirms that all outstanding levies and charges due to the body corporate have been settled by the seller, and it is a legal prerequisite for the transfer of ownership to be registered. Without it, the Deeds Office will not finalise the transaction.

However, questions frequently arise when a seller has paid all amounts owed to the body corporate, but the trustees still refuse to issue the clearance certificate — often citing a breach of conduct rules or a failure to comply with certain building or scheme requirements. This has become a grey area where some trustees overreach, using the levy clearance process as leverage to enforce unrelated compliance.

But recent court decisions are bringing much-needed clarity to this issue.

Tapuch v The Trustees

In a landmark judgment handed down by the Gauteng Division of the High Court, the court made it clear that bodies corporate may not withhold a levy clearance certificate as a means of enforcing compliance with scheme rules or municipal laws — where all financial obligations to the body corporate have already been met.

The case in question — Tapuch v The Trustees for the Time Being of S H Body Corporate 3 and Others — involved a unit owner who had settled all outstanding amounts due to the body corporate. Despite this, the trustees refused to issue the clearance certificate because the owner had not submitted approved building plans for additions made to the property.

The court was asked to determine whether the body corporate was entitled to withhold the certificate under these circumstances. The answer was a firm no.

The court reaffirmed that the purpose of section 15B(3) of the Sectional Titles Act is to safeguard the financial sustainability of the body corporate — not to create a backdoor enforcement mechanism for other rules or laws. The court emphasised:

“A body corporate cannot, if it is convinced that a specific rule or law was contravened, sit back and wait for the day that the recalcitrant unit owner wants to sell the unit, and then use the levy clearance certificate as a mechanism to compel compliance.”

In other words, trustees are expected to enforce compliance at the time the alleged contravention occurs — not months or years later by blocking the transfer of ownership. If all moneys due have been paid, the levy clearance certificate must be issued.

This judgment affirms a key principle: levy clearance certificates exist to confirm financial compliance — not general rule enforcement.

What Section 15B(3) Actually Permits

Section 15B(3) of the Sectional Titles Act is often misinterpreted or selectively applied by trustees and managing agents. But its purpose is clear: it empowers a body corporate to confirm that all financial obligations — levies, special contributions, interest, or penalties — have been settled by the current owner before a sectional title unit is transferred.

This provision acts as a financial safeguard for the sectional title scheme. It ensures that no unit changes hands with outstanding debt that might compromise the body corporate’s ability to fund ongoing maintenance, administration, or essential services. It is not a catch-all clause that allows trustees to hold up a sale in order to resolve unrelated disputes, enforce compliance with scheme rules, or demand retrospective paperwork.

The judgment in Tapuch makes this distinction unambiguous. The only lawful basis for withholding a levy clearance certificate is non-payment of money legally due to the body corporate. Once that financial threshold is met, trustees have a legal obligation to issue the certificate. They may not stretch the intention of the law to achieve unrelated objectives — even if they believe a rule has been broken or a by-law ignored.

This means that if a seller has, for instance, erected a structure without body corporate approval or failed to remove an unauthorised fixture, the trustees must pursue those issues separately. They may initiate enforcement action, issue a formal demand, or apply for a compliance order — but they cannot weaponise the clearance process to compel obedience.

What Bodies Corporate Can (and Should) Do in Rule Contravention Cases

While the Tapuch judgment limits the misuse of levy clearance certificates, it does not strip trustees of the authority to enforce compliance with sectional title rules. What it does make clear, however, is that enforcement must follow the correct channels — and must not be delayed until the unit is sold.

If a unit owner has breached conduct or management rules — whether by making structural alterations without consent, creating a nuisance, or breaching municipal building regulations — the body corporate has every right to act. But that action must be timely, structured, and legally grounded.

Trustees may:

• Issue written notices to the owner regarding the contravention, citing the specific rule that has been breached.
• Initiate dispute resolution procedures under the prescribed dispute resolution mechanisms in the Sectional Titles Schemes Management Act or the Community Schemes Ombud Service (CSOS).
• Apply to CSOS or court for a compliance order if the contravention is not remedied voluntarily.
• Impose penalties, where such measures are lawfully provided for in the conduct rules and have been approved by special resolution.

The mistake many bodies corporate make is sitting on a rule violation — sometimes for years — without initiating any formal proceedings, only to then attempt to resolve the issue by refusing a clearance certificate when the unit is eventually sold. This approach has now been explicitly rejected by the courts.

The underlying principle is one of procedural fairness and legal consistency. Trustees have the authority to enforce rules, but they must do so transparently and within a reasonable timeframe. The right to take action exists — but the leverage cannot come from blocking a sale where all amounts due have already been paid.

Trustees who are concerned about a potential loss of control should see the Tapuch judgment not as a restriction, but as a call to use the proper tools at their disposal — earlier, more decisively, and in accordance with the law.

VDM Attorneys – Sectional Title Legal Support

Sectional title living comes with shared responsibilities — not only for unit owners but for trustees who are tasked with managing compliance, finances, and governance in accordance with the law. When issues arise, especially around the administration of levy clearance certificates or enforcement of scheme rules, the decisions trustees make can have legal and financial consequences for everyone involved.

Working with an attorney who understands the statutory framework governing sectional title schemes helps ensure that actions taken by the body corporate are both lawful and defensible. It also offers clarity when disputes occur — whether relating to unpaid levies, rule contraventions, or the proper use of legal mechanisms such as clearance certificates or compliance orders.

Contact us to find out more.