Who Pays the Piper? Rethinking Levy Clearance Certificate Fees in Sectional Title Schemes

By Auren Freitas dos Santos

In the daily functioning of sectional title schemes, some practices become so entrenched that few pause to question their legal foundations. One such practice is the charging of a fee for the issuance of a levy clearance certificate when an owner sells a unit.

Commonly, this fee is determined in terms of a management agreement between the trustees and the managing agent. This fee often goes unexamined by the owners themselves. It appears as a line item at the time of transfer—non-negotiable, unexplained, and assumed to be legitimate. But in truth, it exists in a grey area.

So here lies a compelling question: on what legal basis can a seller—who is not a party to the management agreement—be held liable to pay this fee?

Let’s unpack this.

The Legal Framework: A Matter of Function, Not Fee

Section 15B(3)(a)(i)(aa) of the Sectional Titles Act, provides that no transfer of a unit may be registered unless the registrar is presented with a conveyancer’s certificate confirming that all moneys due to the body corporate by the transferor (seller) have been paid, or that provision has been made to the satisfaction of the body corporate.

To enable this, a clearance certificate is required. Prescribed Management Rule (PMR) 10(1)(a), read with section 15B of the Act, authorises either the trustees or a delegated managing agent to issue such a certificate. Importantly, this is a statutory function—issuing confirmation of a fact (that all amounts due to the body corporate have been settled).

But nowhere in this legal framework is there an express or implied right for the trustees or their agent to levy an additional fee on the seller for performing this statutory function—let alone one arising from a private agreement to which the seller is not a party.

The Management Agreement: A Private Arrangement

Managing agents often include a clearance fee in their contract with the body corporate, and trustees, acting on behalf of the scheme, may authorise it. But this is a private agreement between the trustees and the agent. The unit owners—who bear the fee when selling—are not parties to it.

The managing agent may argue that the fee is a cost of performing the clearance function on behalf of the trustees, and since the function benefits the owner (by enabling the transfer), the cost should lie with the owner. But even if the benefit flows to the owner, that alone does not create liability. The owner never requested the service directly and they were never consulted on the price.

This raises a critical concern. If an owner has not agreed to the fee—either through express consent or a rule amendment—on what legal or contractual basis can they be compelled to pay it? 

In any other contractual context, a party cannot be held liable for a charge arising from an agreement they are party to. Why should it be different here?

Is the Fee “Money Due to the Body Corporate”?

Some managing agents and trustees might argue that the clearance fee forms part of “all moneys due to the body corporate.” But this seems like a stretch. The fee is not prescribed in any statute, nor is it a contribution levied in terms of a budget approved by the owners at a general meeting. It’s not a levy or a special contribution. It is, at best, a charge for an administrative function—contractually agreed between two parties, one of whom is not the seller.

So can this fee truly be said to be “due” to the body corporate by the owner in terms of law or have we allowed a private arrangement to morph into a de facto tax on the transfer of units?

Delegation Is Not Power to Impose Liability

The trustees may delegate the function of issuing the certificate to the managing agent, but delegation does not include the power to create obligations for third parties. If the trustees wish to recover the cost of the clearance certificate from a seller, it arguably requires an agreed mechanism—such as express consent or a conduct rule properly passed by special resolution and filed with the Ombud.

Until such time, sellers are arguably being coerced into paying a fee without a valid legal basis—because the alternative is the collapse of a property sale.

A Path Forward: Transparency and Legality

This isn’t to say that a reasonable fee for the issuance of a clearance certificate is unjustifiable. Managing agents perform an important service, and administrative costs are real. But legitimacy matters. The current practice exposes managing agents and trustees to potential challenges—especially if a seller is legally savvy and refuses to pay a fee they never agreed to.

These are not abstract legal questions—they have real-world consequences. They affect ordinary people, often in the midst of one of the most financially and emotionally demanding transactions of their lives: selling their home.  That’s why practical and legally sound solutions are urgently needed.

So what’s the way forward? Transparency and lawful authority.  If trustees wish to recover a clearance certificate fee from sellers, they should consider the following:

• Propose a conduct rule that explicitly authorises the fee, adopted by special resolution and approved by the CSOS. This creates a binding and transparent framework.
• Clearly communicate with owners about the purpose and legal basis of the fee, well before a sale is underway.
• Consider including the cost of issuing clearance certificates in the flat monthly management fee charged by the managing agent. In this way, the cost is absorbed as part of the scheme’s general administration and covered through the levies already paid by all owners. This approach spreads the cost fairly and avoids placing a disproportionate burden on owners who happen to be selling.

Unless or until legislative reform brings clarity, the current practice will continue to exist in a grey area. Which raises my final question: just because something is common practice, does that make it lawful?

What do you think? Should owners be liable for fees they’ve never agreed to? Or do trustees have the implied authority to recover such costs on behalf of the body corporate?

Join the conversation.  Share your thoughts with us on our social media pages—we’d love to hear your perspective and experiences.

Specialist Community Scheme Attorney (LLB, LLM), Auren Freitas dos Santos, is a Director of The Advisory, a boutique consultancy specialising exclusively in community schemes law. Reach out to him via email at info@theadvisory.co.za to request an obligation-free quotation if you have questions about levy clearance certificates.