HOA Levy Prescription

Understanding HOA Levy Prescription in South Africa

Home-owners’ associations (HOAs) keep their communities afloat through mandatory levies, but what happens when those levies go unpaid for years? Enter HOA Levy Prescription—the rule that an HOA’s right to sue for arrear levies lapses after a set period unless certain events stop (“interrupt”) the clock. This article unpacks how the three-year prescription on levies runs, ways it can be interrupted, the role of the Community Schemes Ombud Service (CSOS), practical collection routes, and the defences owners can raise.

What Exactly Is HOA Levy Prescription?

Prescription is a statutory time-bar. Section 10 of the Prescription Act 68 of 1969 extinguishes a debt after the relevant period lapses, while s 11(d) sets that period at three years for most contractual debts—including HOA levies. Once prescription runs, the HOA cannot enforce payment in court unless prescription was validly interrupted or delayed. Recent commentary confirms that the same principles applied to sectional-title levies also govern HOA levies because both arise from contract and statute.

Key takeaway: the HOA must sue within three years of each levy’s due date unless the debtor acknowledges liability, is sued, or falls into one of the statutory extension scenarios.

Commencement of the Three-Year Period on Levies

The prescription clock starts when the levy is “due and payable.” For HOAs, that is usually the first day of the month (or other date) stipulated in the constitution or conduct rules. Each month’s levy triggers a new cause of action and its own three-year countdown—so a January 2022 levy prescribes in January 2025, February 2022 in February 2025, and so on. There is no “running balance” approach: the HOA must track every instalment separately.

To comply with SEO, note how homeowners association levy arrears quickly snowball if management overlooks these rolling deadlines—especially where levies increase annually.

Events That Interrupt HOA Levy Prescription

Section 14 of the Prescription Act offers three interruption methods:

1. Service of legal process – issuing summons or CSOS application interrupts prescription until final judgment.

2. Debtor’s acknowledgement of liability – written or even unequivocal oral acknowledgements reset the clock (“acknowledgement interrupting prescription”).

3. Debtor’s payment – partial payments may imply acknowledgment.

After interruption, a fresh three-year period begins on the day following the acknowledging act or conclusion of the litigation. HOA managers should therefore diarise every collecting overdue HOA fees step, keeping proof of letters, emails and payment receipts.

Acknowledgements that Interrupt Prescription of Levies

The acknowledgement interrupting prescription rule has spawned extensive case law. Courts look for an unambiguous admission of indebtedness. Examples that have succeeded:

• An owner signing a payment plan.

• Emailing the HOA: “I will settle my homeowners association levy arrears next month.”

• Making a part-payment accompanied by a reference to outstanding levies.

Silence, vague apologies, or disputes over quantum are insufficient. HOAs should insist on written acknowledgements and avoid informal “chat-on-WhatsApp” promises that may later be denied.

CSOS Levy Dispute Resolution

The Community Schemes Ombud Service Act 9 of 2011 created CSOS as a low-cost alternative to court. Filing a levy-collection application with CSOS is “legal process” that interrupts prescription under s 14 of the Prescription Act, provided the HOA has first exhausted its own internal dispute-resolution procedure.

Because CSOS orders carry the same weight as magistrates’ court judgments, they can be enforced by warrant of execution. However, CSOS awards costs only sparingly, so HOAs chasing large homeowners association levy arrears may still prefer court where they can recover attorney-and-client costs.

Collecting Overdue HOA Fees: Litigation vs CSOS

Collecting overdue HOA fees involves strategic choice:

For “three year debt prescription SA” compliance, remember that whichever route the HOA chooses, process must be issued within three years or prescription may extinguish the claim entirely.

Owner Defences

Debtors commonly raise:

1. Complete prescription – proving the levy became due over three years ago with no interruption.

2. Non-membership – challenging the HOA’s establishment or the owner’s obligation.

3. Rule invalidity – arguing the levy was not properly authorised under the HOA constitution.

4. Set-off – claiming the HOA owes the owner refunds for services or credits.

Courts strictly apply prescription, so HOAs must monitor ledger entries and act promptly. Conversely, owners should check whether the HOA missed the deadline before negotiating settlement.

Preventing Future HOA Levy Prescription Problems

• Automated billing – issue invoices immediately and show the due date clearly.

• Electronic reminders – send monthly statements; each reminder can double as an implied acknowledgement request.

• Quick escalation – refer arrears older than 90 days to attorneys or CSOS.

• Governance training – trustees must understand “three year debt prescription SA” rules; ignorance can cost millions in lost levies.

By embedding prescription awareness into management processes, HOAs guard their financial sustainability.

FAQ – HOA Levy Prescription (10 Common Questions)

1. Does every unpaid levy prescribe after three years?
   Yes, unless prescription is interrupted or postponed under the Prescription Act.

2. Can the prescription period be longer than three years?
   If the debtor is a director/trustee of the HOA or the debt is under arbitration, prescription extends by one extra year.

3. What counts as an “acknowledgement interrupting prescription”?
   Any clear admission of liability—written, oral, or by conduct such as part-payment.

4. Does emailing the HOA about payment plans interrupt prescription?
   Yes, provided the email clearly recognises the debt and is dated before prescription runs.

5. Is a CSOS application enough to interrupt prescription?
   Filing the application does; mere internal complaints do not.

6. Must the HOA sue for the entire arrears in one action?
   They may include any still-alive levies but cannot revive amounts whose prescription has completed.

7. Can an HOA charge interest after prescription?
   No. Interest is accessory to the principal debt and falls away if the levy prescribes.

8. What if the HOA kept sending monthly statements—does that interrupt prescription?
   Not by itself; it is the debtor’s acknowledgement, not the creditor’s reminder, that interrupts.

9. Can the HOA blacklist defaulters with credit bureaus?
   Yes, but doing so after prescription may constitute unlawful credit reporting.

10. How do bodies corporate differ?
    Body corporate levies also prescribe in three years; the same analysis applies under section 3 of the Sectional Titles Schemes Management Act.

References

Useful Links

1. Community Schemes Ombud Service (CSOS) – Official Site – Access application forms, practice directives and guidance notes for levy disputes.

2. Full Text of the Prescription Act 68 of 1969 – Check statutory wording that governs all prescription issues.

3. SOS Community Schemes Knowledge Base – Article on Levy Prescription – A practical guide for trustees and owners.

If you would like to know what to do if you have been blasklisted click here.

If you would like to know more about what debt collectors are not permitted to do click here.

If your query relate business rescue or lquidation as opposed to how debt collection works click here.

Or if you would like to know more about bankruptcy law click here.

If you would like to know more about how estate planning effects collections follow the links below:

If your query relates to ante-nuptial contracts click here.

If your query relates to post-nuptial contracts click here.

If you would like to know more about your rights under the national credit act click here.

If you would like to know more about how to dispute a municipal account click here.

If you would like to know more about the use of Section 414 enquiries in the course of enforcement of debts click here.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for errors, omissions, loss, or damage arising from reliance upon any information herein. Don’t hesitate to contact Meyer and Partners Attorneys Incorporated if you require further information or specific and detailed advice. Errors and omissions excepted (E&EOE).

Meyer and Partners Attorneys have offices in Centurion and can assist with all of your Family Law, Civil Law, Contractual, and labour-related matters.