Levies - Who pays, the Landlord or the Tenant?
This question often pops up in our daily dealings with tenants. In South Africa, the responsibility for paying levies in a rental property depends on the terms outlined in the lease agreement between the landlord and the tenant and this may vary on a case-to-case basis. Let's investigate a few different scenarios:
You might have heard about the term "triple net lease" which essentially means that all costs are recovered from the tenant. This includes levies. In the majority of the cases levies is a cost associated with sectional title properties. It is seldom that a landlord would require a triple net lease for a sectional title unit, but this may also depend on the size of the opportunity. We often find that rates and levies are paid by the landlord in a sectional title scheme, and tenants would be liable for any rates or levies increases during the lease term.
Other levies may include City improvement district levies, or homeowner association levies, often recovered from tenants, but again, dependent on how the lease is structured.
Landlords and tenants can negotiate who bears the responsibility for paying levies. This flexibility allows for various arrangements depending on the property and the parties involved.
It's essential for both landlords and tenants to clearly outline these details in the lease agreement to avoid misunderstandings or disputes regarding levy payments.