Question: If an owner can’t pay a levy fee, is the outstanding amount added to the levy the following year for all owners? Are owners expected to pick up the shortfall? Can an owner be forced to sell if they don’t pay their levies?
Answer: Debt recovery proceedings do not require the sale of the unit.
A unit owner is required under the Unit Titles (Management) Act 2011 to pay levy contributions in full by the due date stated in the notice. If a levy remains unpaid after the due date, it is subject to interest at an annual rate of 10%, or other such amount (not more than 20%) agreed by the owners corporation by special resolution.
S95 (1) if the Act states that “ïf an amount owing to an Owners Corporation is not paid on or before the date it is payable, the Corporation may recover the amount as a debt from the unit owner, together with interest under S94”.
Any late payment fee or interest is the responsibility of the individual unit, not all owners. Any unpaid contribution is not added to the corporations budget the next year. However, depending on how well the owners corporation is funded, it may be necessary to supplement the budget with an additional amount to fund the shortfall until the debt is repaid.
Following reasonable attempts by the strata manager to collect outstanding fees, the executive committee can agree to refer the matter for debt collection, either through a debt collection agency or legal firm. If the debt is not paid by the time the Magistrate’s Court issues a judgment, assets (other than the unit itself) may be seized, or if seizure of assets can’t occur, then funds may be garnished from a bank account until paid in full. In rare cases, unpaid debts may result in bankruptcy for debts in excess of $10,000. Debt recovery proceedings do not require the sale of the unit. The unit is typically only seized by the mortgage.
This post appears in Strata News #757.
Nina Cannell Signature Strata E: nina@signaturestrata.com.au P: 02 6185 0347