This article discusses waiving strata levy interest by general meeting resolution and why informal approval is not allowed.
Question: I’ve asked if my late fee charges can be waived and the strata manager states the request must be considered by the owners corporation via a meeting, which I may have to pay for. Is this correct?
Due to some unfortunate circumstances over the last 2 years, I have been late in paying levies and whilst they are always paid despite being late, have accrued both late fees and interest which I did not notice. This has resulted in an arrears amount of $182 to date. This amount is made up of purely fees and not levies.
I asked the Strata Manager if, under the circumstances, this could be waived. The Strata Manager advised that an AGM has to be called to ask the Owners Corporation and if an EGM is called instead, it will be at my cost ($396 + disbursements). I find this excessive.
For a request of this nature, why does it necessitate any type of GM? Can it not just be decided amongst the Owners Corporation informally, as it’s a circumstantial one-off request?
Answer: There is no informal decision making capabilities by the Owners Corporation only at a General Meeting
With decision making in Strata there are only three ways that decisions can be made which are:
- by the Owners Corporation at a General meeting,
- the decision of the Strata Committee at a meeting and
- under delegated authority by an appointed strata manager.
The amount of interest is dictated by Section 85 of the Strata Schemes Management Act 2015, included below for ease of reference. This section also specifies that it is the Owners Corporation that has the ability to waive that interest. There is no informal decision making capabilities by the Owners Corporation only at a General Meeting so the strata manager is correct in that regards.
There is of course an option for you of requesting a motion on the Annual General Meeting if you have one coming up.
I would suggest though that the $182 is not just interest but also fees payable by you for late notices being issues which is common in the strata profession. These fees will be prescribed by the strata managers Agreement/Contract.
Some strata managers are willing to waive these fees, if for example the individual has not previously been late in payment, but there is nothing dictated in the Act in regards to these fees.
85 Interest, discounts on contributions and payment plans
- A contribution, if not paid when it becomes due and payable, bears until paid simple interest at an annual rate of 10% or, if the regulations provide for another rate, that other rate.
- Interest is not payable if the contribution is paid not later than one month after it becomes due and payable.
- However, an owners corporation may by resolution determine (either generally or in a particular case) that a contribution is to bear no interest.
- An owners corporation may, by resolution at a general meeting, determine (either generally or in a particular case) that a person may pay 10% less of a contribution levied if the person pays the contribution before the date on which it becomes due and payable.
- An owners corporation may, by resolution at a general meeting, agree to enter into payment plans, either generally or in particular cases, for the payment of overdue contributions. A payment plan is to be limited to a period of 12 months but a further plan may be agreed to by the owners corporation by resolution.
- The regulations may prescribe requirements for payment plans.
- The existence of a payment plan does not limit any right of the owners corporation to take action to recover the amount of unpaid contributions.
- The Tribunal or a court may, on application by an owner, order that no interest is chargeable on a specified contribution if the Tribunal or the court is satisfied that the owners corporation should reasonably have made a determination not to charge interest for the late contribution.
This post appears in the September 2021 edition of The NSW Strata Magazine.
Robert Fothergill Strata Life E: Robert@thestratalife.com.au P: 02 9456 9917