The CSOS Levy: What Are You Paying For?

The Essential CSOS Levy Guide

A community scheme refers to a scheme or arrangement where there is shared use of and responsibility for parts of land and buildings and includes a sectional title scheme, a home owners association, a housing scheme for retirees, a housing co-operative and a share block scheme. If you are an owner in a community scheme, you may have wondered what your monthly CSOS levy contribution is and what it is used for? 

What Is the CSOS?

The Community Scheme Ombud Service, or the CSOS, is a public entity created by the Community Schemes Ombud Service Act No. 9 of 2011. The CSOS came into operation on 7 October 2016 and falls under the portfolio of the Minister of Human Settlements.

What Is the Role of the CSOS?

Disputes over a host of issues may arise between persons who have a material interest in the scheme, such as the scheme itself, represented by the scheme executives, an owner and an occupier. These persons may be in disagreement over how finances should be utilised, what behaviours are acceptable and which are not, or how or who should manage and oversee matters of the scheme. 

Fortunately, conflicts and disputes no longer need to be addressed by way of arbitration or the Courts and dispute resolution is the primary role of the CSOS. However, the role of the CSOS is not limited to dispute and conflict resolution.

As per Section 4 of the CSOS Act, the CSOS fulfils several functions and sub-functions:

• Regulating, monitoring and controlling the quality of all sectional title governance documentation;
• Taking custody of, preserving and providing public access electronically or by other means to sectional title scheme governance documentation;
• Promoting good governance of community schemes; and
• Providing education, information, documentation and other services to raise the awareness of owners, occupiers, executive committees and other persons.

What Is the CSOS Levy?

The CSOS levy is a levy collected by a community scheme from the owners in the scheme and paid to the CSOS in terms of Section 29(1)(b) of the Community Schemes Ombud Service Act No. 9 of 2011, which came into effect on 7 October 2016. 

The amount of the CSOS levy that each owner in a community scheme has to pay and its manner of calculation is set out in the Regulations to the CSOS Act published by the Minister of Human Settlements on 7 October 2016.  

Each scheme is obligated to collect the prescribed CSOS levy from every owner in the community scheme and to pay such an amount over to the CSOS on a quarterly basis.

The amount of the monthly CSOS levy payable by the owner depends on the amount of the monthly levy charged by the community scheme to that owner and the Regulations display a chart, setting this out in an easy to follow format. 

The actual formula for the monthly CSOS levy is the lessor of R40.00 or 2% of the amount by which the levy charged by the scheme to the owner exceeds R500.00.  

Therefore no CSOS levy is payable by an owner to the CSOS if the levy charged by the community scheme to the owner is less than R500.00.

Furthermore, the maximum monthly amount payable by a unit to the CSOS is R40.00 per month.

When Are CSOS Levies Due? 

The owners in a community scheme are billed on a monthly basis by the community scheme for the CSOS levy. The CSOS levy for all the owners is then paid by the community scheme to the CSOS on a quarterly basis. Community schemes must use their CSOS registration number as a payment reference for all payments made to the CSOS. 

The Community Scheme must pay the CSOS quarterly in terms of CSOS Regulation 11(1) and in terms of the Practise Directive of the Chief Ombud dated 14 June 2018: 

• Quarter 1, ending 31 March (payment by 7 April);
• Quarter 2, ending 30 June (payment by 7 July);
• Quarter 3, ending 30 September (payment by 7 October);
• Quarter 4, ending 31 December (payment by 7 January).

As per the CSOS Practise Directive No. 3 of 2017, certain unit owners automatically qualify for exemption from the CSOS levy payment:

• Unit owners residing in schemes for retired persons who are in mid-care/assisted living; 
• Unit owners residing in schemes for retired persons who are in frail care;
• Unit owners who receive SASSA grants;
• Unit owners with a net monthly income below R5500.00.

What Are the Consequences of Non-payment of CSOS Levies?

There are several repercussions for the non-payment of a CSOS levy. As per Section 34 (1) (b) of the CSOS Act, non-payment of CSOS levies is a criminal offence. 

There are also financial penalties. Interest is charged at a rate of 2% per month for CSOS levy payments that are not made within the due date.

Alan Levy Attorneys: Community Scheme Attorneys in Johannesburg

Alan Levy Attorneys offer specialist legal services and assistance for legal matters pertaining to homeowners associations, sectional title schemes, community schemes, and share blocks. Further, when buying or selling a property it is wise to choose an attorney that will be able to ensure a quick and seamless transfer and registration. Alan Levy Attorneys operate within the scope of the law by keeping up to date with the most current community schemes legislation. Contact Us for exceptional service, knowledge and turnaround times for dispute resolution, scheme compliance, and other community scheme related matters.  

This article does not constitute legal advice of any sort. This article should be seen as an educational summary of the applicable legislation and procedures pertaining to CSOS legislation and regulations, and CSOS levies, in South Africa. Should you require legal