QLD: Q&A Levy Debt Strategies for Dealing with Late Paying Owners

This article is about QLD levy debt strategies for overseas lot owners.

Table of Contents:

• QUESTION: At a recent committee meeting, the committee voted to implement a discount for early payment of levy contributions. Is this a committee decision, or should this go to a general meeting?
• QUESTION: What are the laws or regulations for reminder letters and letters of demand when pursuing late levies? One of our owners is using the system to their advantage.
• QUESTION: What options are available to pursue outstanding body corporate levies, given the lot owner resides in China and is significantly behind on payments?

Question: At a recent committee meeting, the committee voted to implement a discount for early payment of levy contributions. Is this a committee decision, or should this go to a general meeting?

Answer: The committee doesn’t have the authority to override the decision of the owners.

The inclusion of a discount is usually written into the motions to raise the admin and sinking fund levies. As owners approve these at a general meeting, the committee doesn’t have the authority to override the decision of the owners. Any changes to the current process would require approval at an Extraordinary General Meeting (EGM) or presentation at the next Annual General Meeting (AGM).

However, the committee does have the right to present motions to owners and to determine the wording of motions at future meetings. Therefore, if the outcome of the committee meeting were that the levy motions would be presented at the next AGM with the inclusion of a discount, that would be a fair decision. If owners agreed, they could then vote to approve the proposal.

For what it is worth, and from a manager’s perspective, I don’t think discounts are a positive for body corporates. My rationale is that levies are monies paid to yourself, and you can’t give yourself a discount. In other words, the body corporate can’t give the owners a true discount because the body corporate is the owners.

At most schemes where there is a discount, this is achieved by artificially raising the levies by an amount equal to the discount. To allow for a ten per cent discount, you must increase the budgeted amounts by ten per cent. If you don’t, there will be a shortfall in income. From an accounting perspective, this is unnecessary and sometimes leads to a confusing distortion of the accounts.

The counterargument to this is that people view discounts as an incentive to encourage owners to pay on time. However, most schemes also have penalties in place for non-payment to help regulate this issue. Empirically, I haven’t observed any differences in on-time payment rates at schemes with discounts versus those without. I know the accounts are cleaner, and there are fewer debates about whether payments are made on time at the buildings without discounts.

William Marquand
Tower Body Corporate
E: [email protected]
P: 07 5609 4924

This post appears in the July 2025 edition of The QLD Strata Magazine.

Question: What are the laws or regulations for reminder letters and letters of demand when pursuing late levies? One of our owners is using the system to their advantage.

What are the laws or regulations for reminder letters and letters of demand when pursuing late levies? We issued three late payment notices, with interest accruing, and the fourth notice references debt collection.

One owner only pays on the letter of demand. We want to reduce time until payment. The next fees are due by the time four notices have been sent. On and on it goes. This owner does not pay the accruing interest. The late payment is applied to the oldest debt, resulting in a better-looking ledger for management and making the debt look current. In other words, they are using the system to their advantage.

Answer: The terms of the management agreement between the body corporate and its strata manager can often detail the arrears recovery process the body corporate has chosen to adopt.

In response to the query raised, the short answer is No.

• Regulation 162 of the Body Corporate and Community Management (Standard Module) Regulation 2020 (“the Regulations”) details how contributions must be levied on an owner;
• Regulation 163 of the Regulations details the manner in which notice of a contribution payable must be given to a lot owner, namely, inter alia, at least 30 days before payment of the contribution is required; and
• Regulation 166 relates to the recovery of unpaid contributions, namely that if a contribution is not paid by the due date, the body corporate may recover it as a debt. This regulation also details how payments or part payments are to be apportioned.

Consideration should also be given to the terms of the management agreement between the body corporate and its strata manager, as it can often detail the arrears recovery process the body corporate has chosen to adopt for the strata manager to carry out on its behalf. Alternatively, the arrears recovery process may be determined by a body corporate at its annual general meeting, so a review of the minutes of the last AGM should also be conducted. The process may involve a three stage arrears process consisting of reminder notices, each with more severe wording, which is often followed by a legal letter of demand. Whilst not a statutory requirement, this form of arrears process is generally adopted for the purposes of being reasonable.

Naturally, the process can be shortened if the arrears recovery process, determined either at the AGM or set out in the management agreement, is amended.

Petra Lohmann
Bugden Allen
E: [email protected]
P: 08 9254 6304

This post appears in the October 2024 edition of The QLD Strata Magazine.

Question: What options are available to pursue outstanding body corporate levies, given the lot owner resides in China and is significantly behind on payments?

We have a lot owner, believed to reside in China, who is significantly behind on their levies by over $100,000. Despite our efforts to serve court-ordered documents for payment, we’ve been unsuccessful in China as no one acknowledges ownership.

We’ve attempted to contact all known email addresses without success. The apartment is rented as part of our holiday pool, and the agent’s address we have on file has responded that they no longer act for the owner and to not contact them. How can we pursue the outstanding body corporate levies, as we’re in urgent need of resolution?

Answer: If a defendant (in this case, the lot owner) is attempting to avoid service, or you are unable to personally serve them, the Court can permit them to be served in another way.

If a defendant (in this case, the lot owner) is attempting to avoid service, or you are unable to personally serve them, the Court can permit them to be served in another way. This is called substituted service.

To be successful in a substituted service application, the plaintiff (body corporate) must show:

1. It is impracticable to serve the documents in the usual way; and
2. Using the substituted method, the document must come to the knowledge of the defendant

For service to be “impracticable”, you must prove to the Court that personal service is not practicable and that, having made genuine and reasonable attempts to do so, the party has been unable to get the documents served, as required by the UCPR.

An application for substituted service must also provide evidence that the documents (and therefore the proceeding) will likely come to the knowledge and/or attention of the defendant.

Mahoneys regularly assists bodies corporate in obtaining substituted service orders in levy recovery matters.

Todd Garsden
Mahoneys
E: [email protected]
P: 07 3007 3753

This post appears in the April 2024 edition of The QLD Strata Magazine.

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Read next:

• QLD: Q&A Unpaid Strata Levies and Overdue Fees at Settlement
  
• QLD: Q&A Levy Increases – As Lot Owners, Can We Refuse?

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