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: petra@bagl.com.au P: 08 9254 6304