Fortified Capital Plus
There are a vast number of Community Schemes in South Africa that struggle to operate functionally as a result of non-paying unit owners. The non-payment of levies results in a shortfall in the operational budget which basically means that paying unit owners either end up subsidising non-paying unit owners’ levy amounts or the Community Scheme goes without essential services to the common property. This often results in unit owners’ property assets not being maintained and a general decay within the entire Community Scheme, causing a drop in the value of properties.
The Fortified Capital Plus lending solution is utilised to fund Community Schemes with arrear levy debtor problems, where a portion of unit owners have not paid their levies, and / or in respect of Arrear Levy Debts subrogated in terms of Levy Guarantee Insurance Policies.
FORTIFIED CAPITAL PLUS LENDING SOLUTION FEATURES:
Minimum amount
R 50 000.00
Interest rate
Prime plus 3.85% per annum, compounded monthly.
Interest is capped at 20.0% per annum, compounded monthly, due to legislative and industry restrictions imposed on interest chargeable to levy debtors.
Interest repayment
Interest is capitalised and repaid “as and when” the Community Scheme collects its arrear levies.
Repayment
Loans are generally repaid “as and when” the Community Scheme collects its arrear levies.
Underlying legislation and security
The Sectional Titles Schemes Management Act 8 of 2011, the Sectional Titles Act 95 of 1986, and the Community Schemes Ombud Service Act 9 of 2011, including important case law.
Liquidity
Loans to Community Schemes are illiquid.
The secondary market for this asset class is well established and sales can be facilitated by BC Funding Solutions, to willing buyers.