This article about effective debt recovery through payment plans in Victoria has been provided by Rochelle Castro, RC & Co Lawyers.
Owners Corporations are currently facing dire times as a result of the COVID 19 pandemic.
An Owners Corporations has a legal obligation to repair and maintain the common property, but at the same time act with due care and diligence and managing its operations whilst it holds the common property in trust for all the lot owners.
Due to COVID 19 there is a significant increase in lot owners asking for their OC to defer levy payments. Unfortunately, if levying of fees are deferred, the asset of the lot owners, being the common property and the services attached to that, will suffer.
To resolve the issue, an OC should have a practical and commercial approach to manage its finances and at the same time, preserve a healthy and reasonable cash flow so that it could comply with its legal obligations.
How do you do that?
By negotiating a payment plan with the lot owner, with condition that interest will be payable (if decided by the OC) and that the debt is paid before the next quarter – all in a written agreement, the OC will be able to assist owners with their financial constraints. Further, the owner is able to view the OC as an entity who not only manages their asset – the common property but is also willing to work with them during these difficult times.
The OC should also obtain legal advice on the terms and conditions of the payment plan agreement to make sure both parties – the OC and the owner understand how the instalment payments should be managed.
Please remember that you should get expert legal advice that is tailored for your particular matter.
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This post appears in Strata News #351.
Have a question about debt recovery or payment plans in Victoria or something to add to the article? Leave a comment below.
- VIC: Q&A Setting Up a Maintenance Plan and Deciding on a Budget
- VIC: How Can An Owners Corporation Survive a Cash Flow Crisis? [Step-By-Step]
- NAT: Q&A Non Payment of Levies: Financial Options to Survive COVID-19
Looking for strata information concerning your state? For state-specific strata information, take a look here.