This article about what to do if, due to non payment of levies, the owners corporation does not have enough funds to pay the outgoings has been provided by Debbie Barker, StrataLoans.
Question: What options do we have if, due to non payment of levies, the owners corporation does not have enough funds for the year to pay for all of the outgoings?
Answer: There are a number of areas that could be looked at to assist.
Financial Options to Survive COVID-19
The current economic environment that we see ourselves in due to the COVID-19 outbreak and consequential closure of some industries is unprecedented times. With many people suddenly unemployed or temporarily stood-down, some are facing financial hardships which may be reflected in the payment of levies and other fees. Some Bodies Corporate would be feeling the flow on effect of this is with increased arrears and difficulty keeping on top of essential outgoings. There are a number of areas that could be looked at to assist:
If a corporation does not think they will have enough funds to cover their outgoings then there may be ways they can reduce their costs, so in discussion with the committee and/or manager, look at what is being spent and see where reductions can be made.
Another option that has been made available by some banks is to break term deposits early without charge to assist in managing current necessary expenditure. Discuss your options with your bank for
ways they could assist with everyday maintenance costs.
Special Levies and Funding
During this time, Body Corporates may be feeling this strain with balancing these hardships and maintaining an acceptable level of arrears. A strata loan may be a viable option instead of existing or planned Special levies. This would reduce the overall ongoing outlay for all owners while still allowing essential works to be carried out.
Interest Only Loans
Whether funding is an existing arrangement or something that you may see as a viable option in moving forward, talk to your preferred strata loan company about options available. During this time many financial institutions are offering interest only repayments, waiving of fees and other
options to assist during this time.
Consolidation of Existing Projects
An additional option to consider for those buildings which are experiencing lower occupancy due to reduction in holiday lettings could be to consolidate your projects that have been on hold or staggered around the higher occupancy periods. By having projects done at the same time would save time and money, making the most of the downtime and the empty spaces.
During the current situation it is important to talk to someone about the options that are available before the issue becomes a problem. There can always be a solution and in these uncertain times this may be an option that has not been a consideration before but may well be the answer to getting through.
Have a question about using a strata loan to pay for painting or something to add to the article? Leave a comment below.
This post appears in Strata News #349.
- NAT: Q&A Reducing Strata Levies During the Coronavirus Crisis
- NSW: Should We Still Continue With Debt Collection During the COVID-19 Crisis?
- Strata Finance: The guide for Owners Corporations