We have been asked a few questions from WA Lot Owners about overdue strata levies including interest charged on overdue fees.
Table of Contents:
- QUESTION: Is the amount of 15% simple interest is still payable on overdue strata levies with the new Strata Titles Act, 1 May 2020?
- QUESTION: How do you “handle” owners who are not financial but are attending the AGM. We find they sometimes cause a disruption at meetings.
- QUESTION: Can I still vote if I don’t pay a special levy? Would I be unfinancial if I have an overdue special levy?
- QUESTION: Can a proxy of an unfinancial lot owner be counted as a quorum for an AGM? What section of the act shows this?
- QUESTION: Can the Strata Manager Change the locks to your premises for non-payment of outstanding strata levies?
- QUESTION: We have outstanding fees due to non payment of Strata levies. We are selling our apartment and planning on paying the full amount owing at settlement. Is this permissible?
- QUESTION: A lot owner has overdue strata levies. Are they entitled to attend the AGM? If so, can they vote?
- QUESTION: A lot owner’s personal financial problems have lead to overdue strata levies. Everyone in the building knows of the problem. Is this a privacy issue?
- QUESTION: In our self managed scheme, one owner owes money for the painting of the eaves. To recover outstanding fees, can we sue him for the money owed plus all costs to do so?
- QUESTION: Do you have any information on charging interest on overdue strata levies? We have one owner who is 10 quarters behind and the property is now in administration.
Question: Is the amount of 15% simple interest is still payable on overdue strata levies with the new Strata Titles Act, 1 May 2020?
Answer: As of 1 May 2020 the interest rate changed to 11%.
Jordan Dinga
Abode Strata
E: [email protected]
P: 08 9368 2221
This post appears in Strata News #464.
Question: How do you “handle” owners who are not financial but are attending the AGM. We find they sometimes cause a disruption at meetings.
Answer: The chair would have the right to insist that any member disrupting the meeting, financial or non-financial, refrains from their behaviour. If the behaviour persists, ask the person to leave the meeting.
Under the Strata Titles Act 1985 and as amended in 2018 there is no probation on any unfinancial owner attending an AGM. If they do attend:
- they do not form part of the quorum of the meeting,
- they cannot nominate for the strata council of owners,
- they cannot vote on any Ordinary Resolution, nor any Special Resolutions.
However, they can vote on a Resolution without Dissent and an Unanimous Resolution.
Yes, they can participate in the discussion but on voting as mentioned above, cannot have a valid vote and that would be on most strata decisions as the majority would fall under the jurisdiction of an Ordinary Resolution.
Now if any member financial or non-financial are disrupting the meeting the chair would have the right to insist that the person refrains from their behaviour or if the behaviour persists ask for the person to leave the meeting.
An AGM is no different from any other organisational meeting and proper meeting protocols need to be adhered to.
Brian Rulyancich
StrataTAC
E: [email protected]
P: 0428 970 067
This post appears in the March 2021 edition of The WA Strata Magazine.
Question: Can I still vote if I don’t pay a special levy? Would I be unfinancial if I have an overdue special levy?
A special levy to raise $170000 was voted in at the last meeting of our strata. We did not attend this meeting as the only notice of this was via email and filtered straight to my husband’s junk mail and so forwent our right to vote.
We now have a $22k bill for repairs we do not agree with. My question is – will we be unable to vote on other matters if we don’t pay this special levy?
I have not been able to find information which makes the distinction between regular strata fees and a special levy. I understand that if regular strata fees are not paid, we are not entitled to vote but my question is in regards to a special revenue raise?
Answer: Includes all levies standard or special as passed at an AGM or EGM.
Jordan Dinga
Abode Strata
E: [email protected]
P: 08 9368 2221
This post appears in Strata News #456.
Question: Can a proxy of an unfinancial lot owner be counted as a quorum for an AGM? What section of the act shows this?
Answer: The simple answer is no, an unfinancial owner cannot be counted as a quorum for an AGM.
The simple answer is no, an unfinancial owner cannot be counted as a quorum for an AGM.
Under section 130 a quorum is made of those “who are entitled to cast the votes”.
Under section 120 an owner is not “entitled to cast the votes” if unfinancial.
130.Quorum at general meetings
- At a general meeting of a strata company for a strata titles scheme other than a 2‑lot scheme, a quorum is constituted if there are present persons who are entitled to cast the votes attached to 50% of the lots in the scheme.
120. Voting
- However, the owner of a lot is not entitled to cast the vote attached to the lot if —
- there is an outstanding amount recoverable under this Act owed to the strata company by the owner of the lot.
Jordan Dinga
Abode Strata
E: [email protected]
P: 08 9368 2221
This post appears in Strata News #397.
Question: Can the Strata Manager Change the locks to your premises for non-payment of outstanding strata levies?
Answer: Short answer is no.
Short answer is no.
The strata manager and the council of owners do not have the authority to change locks due to non-payment of fees.
Brian Rulyancich
StrataTAC
E: [email protected]
P: 0428 970 067
This post appears in Strata News #350.
Question: We have outstanding fees due to non payment of Strata levies. We are selling our apartment and planning on paying the full amount owing at settlement. Is this permissible?
We are lot owners and we are trying to sell our apartment.
We have outstanding fees due to non payment of Strata levies. We advised the Strata Manager we would pay the full amount owing at settlement. Is this permissible?
Answer: The matter would need to be referred to the council of owners for a decision.
That arrangement can be done, however, the strata manager would not have the authority to agree to the proposed arrangement and would need to refer the matter to the council of owners for a decision.
The role of the strata manager would be to advise the council as the strata manager would be privy to all the facts and would provide all relevant information to the council for due consideration.
The council of owners would have the right to impose conditions if they saw fit and also impose interest under Clause 100(4)(b) of the Strata Titles Amendment Act 2018. The role of the council of owners and the strata manager is to work on a balance so as to protect the interest of the strata company, which is paramount and their role but at the same time assist the lot owner during a difficult time.
Brian Rulyancich
StrataTAC
E: [email protected]
P: 0428 970 067
This post appears in Strata News #350.
Question: A lot owner has overdue strata levies. Are they entitled to attend the AGM? If so, can they vote?
I live in a small strata where we self manage. We are due to have our AGM shortly and one member has not paid their quarterly levy despite repeated reminders.
Is this member entitled to attend the AGM and if so are they entitled to vote on any measures?
Answer: We look to the Strata Titles Act of WA: Schedule 1 – By-laws
Under the Strata Titles Act of WA:
- On a show of hands each proprietor has one vote.
- On a poll the proprietors have the same number of votes as the unit entitlements of their respective lots.
- Except in cases where by or under the Act a unanimous resolution or a resolution without dissent is required, no proprietor is entitled to vote at any general meeting unless all contributions payable in respect of his lot have been duly paid and any other moneys recoverable under the Act by the strata company from him at the date of the notice given to proprietors of the meeting have been duly paid before the commencement of the meeting.
Jordan Dinga
Abode Strata
E: [email protected]
P: 08 9368 2221
This post appears in Strata News #326.
Question: A lot owner’s personal financial problems have lead to overdue strata levies. Everyone in the building knows of the problem. Is this a privacy issue?
Our Strata scheme of 16 owners has one owner who has personal financial problem which have lead to overdue strata levies.
The Strata Manager has passed the problem to the Council of Owners. Consequently, all the lot owners and residents are aware of the personal financial problems via COO meeting minutes and by word of mouth.
I thought the Council of Owners didn’t get involved with Strata Fee collection and that it was the Strata Manager’s area of responsibility. The Family who is behind in payments are now aware that all their neighbours know of their personal issues. It has been highly upsetting for all involved.
Should this information not have been kept private? Can you please advise if this is how it should be?
Answer: It is standard practice that the lot owners position is included within the AGM Agenda Financials.
Having shared ownership in strata titled property is very similar in shared ownership of a business. Do you think you would have the right to know that your business partner is not meeting the contributions all parties agreed upon in order to protect your investment? The cash flow of your property relies on payments by all lot owners. What if all of a sudden you don’t have enough funds to pay the insurance renewal?
At any time, with notice, an owner is allowed to inspect the strata company records – which would bring to light the financial position of all owners.
It is also standard practice that the lot owners position is included within the AGM Agenda Financials. The Strata Manager bringing it to the Strata Councils attention is very standard so that the council can decide how they want to deal with it. Note that the Strata Manager makes no decisions. It isn’t their position to do so. We provide best practice options and assist under instructions.
I can appreciate that everyone has difficulties paying bills from time to time. I am the first to have sympathy for some owners when we deal with cost recovery. But it shouldn’t ever be to the detriment of other owners and there are systems in place for that purpose.
So ultimately to answer your question it sounds like everything is as it should be.
Jordan Dinga
Abode Strata
E: [email protected]
P: 08 9368 2221
This post appears in Strata News #253.
Question: In our self managed scheme, one owner owes money for the painting of the eaves. To recover outstanding fees, can we sue him for the money owed plus all costs to do so?
We have some eves that run the circumference of the building and they require painting. Money were required to be put in the Sinking fund to pay for the work. One owner has not put any money forward and is not replying to any requests relating to this subject and has previously cried “poor” on any issue.
What are our options? To recover outstanding fees, can we sue him for the money owed plus all costs to do so? He attended one meeting where we discussed the painting issue and raised no objections, but now is just stonewalling us.
We are located in Western Australia and at the moment self manage our Residential site.
Answer: Unless a specific Cost Recovery By-Law has been passed and lodged then NO, costs may not be recovered.
Are the eaves common property according to the strata plan?
Was the meeting valid?
If one or more of the below was omitted the meeting may be invalid.
Postal Delivery time: unless there is a by-law which sees electronic correspondence the agent must be posted to all owners at least 18/20 days prior to the meeting.
AGM agenda motion: was the motion within the AGM agenda and was it specific? ie what was to occur, was a quote included, the total amount to be sent and how were funds raised ie $5,000 expenditure to repair eaves payable by one instalment of $500 per unit entitlement on or before (insert date).
AGM: was there a quorum, was this motion passed by a majority?
Levies due and payable? Section 36 of the Act explains the strata company’s duty and responsibility relating to levies and collection.
Cost Recovery? Unless a specific Cost Recovery By-Law has been passed and lodged with Landgate or the Court of Jurisdiction ordering the owner to reimburse the Strata Company for Costs incurred as a result of Debt Recovery on that lot owner; then NO, costs may not be recovered. Debt Recovery Costs may not be used by the Strata Company unless they are noted within the adopted budget for the property.
Top Tips
Strata Manager – To avoid risk, liability, unnecessary conflict and drama we suggest employing the services of a professional strata manager.
Debt Recovery By Law – a necessary by law in today’s marketplace.
AGM agenda – It’s true that Prior Preparation Prevents Poor Performance. Yes, you may set a suitable date for an AGM however the preparation for your AGM starts after the last one. Only once you have all proper content for a clear and concise AGM, should you finalise and then set the AGM date, noting that the postal delivery time is met.
Elizabeth Florence
Abode Strata
E: [email protected]
P: 08 9368 2221
This post appears in Strata News #297.
Question: Do you have any information on charging interest on overdue strata levies? We have one owner who is 10 quarters behind and the property is now in administration.
Do you have any information on charging interest on overdue strata levies? We have one owner who is 10 quarters behind and the property is now in administration.
The council members originally started charging 15% interest simply by adding 15% to each quarter that was overdue. But now we think this was incorrect and that there is a formula to use. We are located in WA.
Answer: An unpaid levy attracts 15% a year if not paid within 14 days after it’s due. This annual amount is calculated as a daily rate to coincide with the number of days overdue.
10 Quarters is a long time between drinks. Possibly this owner does not believe they have to pay levies?
Your annual budget not receiving those funds would have put a strain on cash flow to a point where the strata company has not been able to function as per the wish of the Strata Company agreed at a general meeting.
Section 36 (4) (b) refers to interest being charged on late levies. Firstly my advice would be to pursue this debt through a Strata Lawyer.
An unpaid levy attracts interest at the rate of 15% simple interest a year if not paid within 14 days after it’s due. This annual amount is calculated as a daily rate to coincide with the number of days overdue.
When an amount comes due another 14 days applies before late payment interest starts to be calculated. A calculation whereas 365 days of the year are incorporated simple interest is an annual amount and the amount of days overdue indicates the amount of simple interest charged. This is not compounded interest in which the principal amount (Levy) being charged increases daily and is then charged interest on that increased amount.
Simple interest means the amount of interest that can be accumulated daily against the outstanding amount and depending on the number of days overdue is calculated and added on to the principal amount (Levy) for payment.
Each quarterly levy would be different, as the first quarterly levy is now 2.5 years overdue. Overdue levies should not get to this stage and should be pursued sooner. I am not an account or lawyer, I am a Strata Manager.
An accountant to work this out for you and a Lawyer to send a letter of demand would be prudent. To get some idea of what those amounts may be I would recommend a “simple interest calculator” off the internet.
All matters discussed above can be deemed of a legal nature and as such, not being a lawyer or accountant all advice given is deemed my general opinion only and I take no responsibility for any omissions or mistakes. Clarification is at your discretion as I would seek clarification myself it the matter was under my management.
Strata Martyr
This post appears in Strata News #160.
Please note this advice was provided prior to the proclamation of the new strata title amendments and will be updated in due course.
Have a question about overdue strata levies or something to add to the article? Leave a comment below.
Read next:
- WA: Q&A Plumbing Problems in My Unit. Who pays for Investigating the Cause?
- WA: Q&A What Do Strata Levies Cover? Why Am I Paying Strata Levies?
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As the eaves are part of the outside of the building it should be covered by building insurance,
What is the process when I’m the only lot owner left in a lot of 3, and the owner of the other two does not respond to emails or phone calls?
The owner of the other 2 lots is the strata contact person but he has not paid the strata insurance for this year and does not answer his mobile or email. He does not occupy either property (they both sit empty atm) and I do not have his current address (although I saw him around recently after months of not seeing him at all).
I recently received a letter asking me to provide the insurance brokers with a new contact name, address and mobile number, and I feel like if I do answer this letter I will be held responsible for paying the full fee. If the fee is unpaid the insurance will be cancelled.
What should I do and what are the consequences of having the strata insurance cancelled?
What is the process when a proprietor/lot owner is not paying their strata levies? One owner hasn’t paid for 3 quarters. We are a self-run strata with 6 lots. What STA section is it governed by? Does the Strata Manager have to consult with the committee before charging interest? How do we advise the owner interest is due? Thank you
Hi Amy
I believe the above article addresses these issues.
All the best resolving the matter.
Thank you, please can someone advise if the 15% simple interest is still payable with the new strata titles act, 1 May 2020?
Hi Amy,
I have responded to your question in the above article.
My unit used to send notice of levy by post before due date but some reason I can’t get it ,so I called them when I get it ,then paid : due date 1/1/2019 ( from 1/1 / 2019 to 30/3/2019)my paid 9/1/2019.
I am very shocking I get interest and lawyer fee: $ 10.250 . My question is my paid 9 date late I am have to paid interest and they lawyer fee ???
I am very grateful to hearing from you soon .
Kind Regards : Thi
I am in the same boat. I wish there was more advice for owners of strata properties who are being pursued aggressively like this by their Strata Management/Council of Owners as it’s bringing people undone financially. It’s going to be to a point where there is no way that I will be able to pay these fees back but they won’t back down and give me a clean slate.
We have received the following comment from Marietta Metzger, magixstrata:
Regarding the following Q&A: Question: A lot owner has overdue strata levies. Are they entitled to attend the AGM? If so, can they vote? I personally do not agree that an individual lot owners position should be included within the AGM agenda financials.
While the financials show any levies in arrears as of just an amount, it should not be disclosed with an AGM agenda which owner has not paid up their levies and is in arrears.
This is only for the Council of Owners to know as it is in their duty to ensure that all levies are paid up and if not, what measures are necessary to take.
Hi Felicity
It sounds like this scheme is a new construction? If this is the case, it would be well worthwhile ensuring that an engineer or builder checks everything within the coming year so that any claim for building defects can be made within the statutory allowed period (which I think is 6 years). If not done, and defects are found later, owners will be responsible for any remedial work.
Good luck.
HI Felicity,
1. Definitely not legal unless it has been specified within an AGM or EGM.
2. Again definitely not allowed unless it has been specified within an AGM or EGM.
3. The Strata Company and the Body Corporate are the same thing, being all lot owners. If you mean the Strata Manager when you first say Strata Company then no they cannot act as the Body Corporate/Strata Company.
Our Strata company has brought forward the due date for our levies, we were advised two weeks ago. Today we receive an email saying they had seriously underestimated the amount for the levies and are significantly increasing the total for the levy by over $20,000 (between 16 apartments), with the first installment due in 3 weeks.
1. Is it legal for them to bring the due date of levies forward?
2. Can they then fine owners who budgeted for the full 6 months to pay, and now not only have to pay 2 months early, but to come up with more money on top, not to mention that they only get told of the increase 3 weeks prior?
3. Is the Strata company also allowed to act as the Body Corporate for a building that was, until the start of this year, owned by a single party, but now has 16 new owners?
Some things to ponder and consider when it comes to penalties……
The power to waive or not charge interests accrued on levies lies with the Strata Company, not the strata manager. Strata Title Act WA (1985) section 36 4(b).
There is also a tax implication if Strata Companies recovering monies from penalties. Other than the interest payable on late levies, other penalties may be seen as a non-mutual receipt, and the principle of mutuality does not apply to these types of penalty amounts.
Hi Janine. Don’t be surprised if the decision made by the owners of Units 1 & 2 in your strata complex to engage the services of a strata manager involves a builder/developer who may be hoping that your now being expected to meet the cost of these regular strata levies and fees will cause you to eventually want — or simply have no option but — to sell and move away. If you’re able to, try to find out why the owner of Unit 2 suddenly up and sold and moved away only 2 weeks after employing the strata manager given this previous owner, who was keenly in cahoots with the owner of Unit 1 to employ a strata manager, must have had a rough idea of what the strata levies and fees would amount to. If this previous owner says anything like “…it was the new high costs of strata levies and fees that made me want to sell and move away.”, it could show promise that something $neaky is at play. It wouldn’t hurt for you to contact the “Office of the Public Advocate” to see if those employed there are able to assist you in any way, and even if they can’t directly, it’s odds-on they will be able to put you in touch with not only someone who can, but perhaps also an authoritative body who might be already well ahead of the game waiting for any vulture$ (who may have an eye on your Unit’s lot) to pounce. One really can’t be too careful in matters such as this. Best of luck to you.
Hi everybody,
I live in a set of 3 x Villas in WA. I bought my Villa in 2011. I knew absolutely nothing about “Strata” and don’t even remember “Strata” being explained to me when I bought my property. I live in number 3. The wife of the owners of #1- was doing the Strata Managing for free when I bought my property right up until 2018. There is only 3 x Villas which do not warrant the services of a paid Strata Manager. The Wife decided she no longer wanted to be the Strata Manager and between her and her best friend who lived in #2, went ahead and organised for us to pay a Strata Manager. I was dead against the idea but #1 and #2 had the majority over me so a Strata Manager was hired without my consent. Two weeks after this, the lady in #2 sold her Villa and moved away leaving me stuck with a paid Strata Manager. I am home 24/7 and am a qualified Administrator. I offered to take over Managing our 3 x Villas for FREE but the wife in number #1 wanted to go all official and ignored my offer. I know Strata Management can be quite involved but like I said, there is only 3 x of us in the complex. I even offered to do an online quickie course in Strata Management, its not Rocket Science.To cut a very long unhappy story short, I am now very ill with Diabetes, Major Depression and failing Kidneys. I have worked from the age of 18 to 56 when unfortunately, due to my serious illnesses, was deemed unfit to work any further and I haven’t. I am now on a permanent “Disability Support Pension” and have to live on $450 a week to cover everything you could possibly think of including a Mortgage. I cannot meet at least 50% of my financial obligations. Last week I got a bill from the Strata Manager for $1032.16 which is $732.16 for Insurance + $300 for Fees due without fail in 9 x days.
I cannot pay this bill, its as simple as that. I am currently writing an email to the “Strata Community Association” asking if there is any form of exemption, discount, repayment plans or even waiving the bill due to illness and poverty in their Rules, Regulations or Policies. I am 60 x years old, I cannot lose my home, its all Ive got. If I lose my home, I will be become homeless. If I become Homeless, I will die within the first week. I am honestly not bragging – why would I but I suffer from 14 x different serious illnesses, conditions and disorders.
How and who can I approach about my dire and desperate situation.
I am a 10th Generation Australian with 2 x Grandfathers serving in the War 11. I cannot possibly be punished for being ill. I am so frightened this Strata Manager has the power to take away my home, Im having at least 6 x debilitating Panic Attacks a day due to the stress of this $1032.16 bill.
I do not nor will I ever have the money to pay this bill – end of story.
Please help me!.
Kindest thanks,
Janine.
As discussed aboved, there are different components that make up an overdue amlount that needs to be paid up to wipe the slate clean.
The various components can include:-
(1) the levy itself
(2) the simple interst on the overdue levy
(3) amouht that is charged by debt collection activities
(4) adminstrative amount that is charged to the Strata Company (by the Strata Managing Agent) that is on charged to the lot.
Being late for levies can render a person being unable to vote at meetings. Current STA (1985) Standard Schedule 1 14(6) says “no proprietor is entitled to vote at any general meeting unless all contributions payable in respect of his lot have been duly paid and any other moneys recoverable under the Act”……
Does this contribution include
(1) money owed to the Strata Company as a result of by-law breach?
(2) money owed to the Strata Company as a result of enforcing a by-law? For example, Strata Company has a debt recovery costs on-charging by-law, and the lot has incurred charges due to debt recovery activity.
(2) money owed to the Strata Company as a result of an agreement under STA section 37(1)(g)?
Lastly, does a council member need to be financial to vote in a Council of Owners meeting?
Thank you for your insights.
I have recently been hit with over due levies for two quarters.
Levies are $405 a quarter with $82 for sending a notice and $15 interest.
My overdues amount is around $250 which I am trying to break down.
Basically my unit was vacant for a few months and being managed by a real estate agent. I put in $1500 after a few months to cover various expenses.
Its only after I reviewed my bank statement that I found the extra cost and subsequently found out there was an ongoing email war between the real estate and the strata manager which I was unaware.of.
Is there any where I can go to get some resolution on this
Hi Alan
We have received the following reply back from Strata Martyr:
Section 36 (4)(b) is the section of the Strata Titles Act you refer to.
The prescribed rate of interest on late payment of levies is 15% simple interest.
The other charges you describe relate to administration. The simple rate can be calculated daily from the time it is overdue.
You should contact the Strata Management company and ask for a breakdown of the account if they haven’t given it to you already. Ask them how they worked out your late payment Interest.
In a separate correspondence to “The Council of Owners” ask them if they will consider waiving the interest as you have been the victim of poor service from your property manager who has poorly managed and it was never your intention to avoid payment.
The real charges here are the debt collection administration ask the Council of Owners to stop pursuing the overdue debt till ratification at the next general meeting can be gained. At the general meeting, there would be an agenda item indicating that your lot was seeking to have late payment interest waved. I doubt if the Management Company will waive their $82 fee as they have already done the work.
You should:
* pay your levy bar the late payment fees;
* Ask your Council of Owners to instruct the Strata Manager’s debt collection to cease on your lot for overdue interest.
* Request that your late payment interest fees be waived at the AGM.
* Alternately pay everything and pursue the above as reimbursement to avoid additional cost from the Strata Manager’s debt collection procedures.
A Strata Company has the ability to introduce its own late payment policy at a general meeting if owners agree.
Strata Martyr
This article is misleading. The Act does not provide for an interest free period as indicated.
Due dates are determined at the AGM and minutes are distributed to all owners.
Logically, unless the owners passed a resolution waiving interest or allowing an interest free period, interest accrues from the day after the due date.
Incongruously, during a SAT directions hearing, when I referred to the failure of our strata company/manager to charge interest from the day after the due date, the Member asked if the strata company “decided” to charge interest.
Can strata companies not charge interest unless they passed resolutions to do so?
Can strata companies recover lost income from strata managers who unilaterally decided to grant interest free periods?
We have bylaws that state that money owed for submetered utilities and parking licences can be “recovered as if they were contributions levied pursuant to section 36 (1).
The strata manager’s lawyer advised that a lit-s financial status and eligibility to vote would be dependent on the payment, prior to the commencement of a general meeting, of amounts owed for such debts on the day that notices of meetings are distributed commences
Accordingly should interest not be incurred when these debts are not paid by the “due date”. This raises several issues:
1. Can the strata company assert that the due date for utilities and parking licences us other than the AGM minuted due dates for levy payments?
2. Can interest be charged when such debts are not paid?
How frustrating for you Alan
It can be confusing.
Do remember that ALL OWNERS form the STRATA COMPANY – that includes you.
The “Strata Manager”, or probably strata management company, may have duties delegated to it but is only authorised to make charges and deductions as agreed in the contract. The management agreement should be available for you to look at if you wish to check the fees they are charging the strata company (all owners as a single entity).
Generally, to on-charge administration fees to individual owners required a motion at each AGM or a by-law to be registered on the strata plan.
However, interest is charged from the due date, which on your quarterly levy is ~$15 therefore your owner account will show (for example)
$405.00 DR due date Q1
405.00 DR due date Q2
15.19 DR interest 15% (for x days – roughly 3 months) between due dates Q1&Q2
If you have paid the first levy then the interest stops but you may owe interest on the unpaid period for two lots of levies which may not appear until due date Q3
There are assumptions that the strata company (or it’s delegate) should deal with property managers but even though in practice this happens and often not well, the legal responsibility remains with the individual owner.
The easiest way to resolve this is to
> Pay the overdue levies Q1&Q2 plus the outstanding interest as soon as possible;
> contact the strata management company representative know you have now received strata advice (rather than property manager advice), are better informed about your rights and responsibilities and apologise for the misunderstanding (that should make them better disposed to listen to you).
> request quarterly levy notices are emailed direct to you (and you take responsibility for payment by forwarding to the property manager (if rented), or pay direct (if vacant).
Note: that although it is customary for levy notices to be issued quarterly, under the Strata Titles Act 1985 there is no requirement for this to occur – notification of due dates in the minutes of an AGM is sufficient!
> ask that in this instance the admin charges be waived and that the council of owners be contacted to obtain this.
If (and only if) the representative refuses or is very difficult, request IN WRITING, details of the by-law or motion approving on-charging of fees, that was approved by the majority of owners at a properly convened annual general meeting.
Finally, be a little more active with your investment. Property is valuable and is worth the average 30 minutes a month to ensure you know what is going on. Read through the agenda and appoint a proxy for meetings if you can’t take an hour each year to attend. When minutes of that meeting arrive do read them. If there’s anything you don’t understand – ask for clarification.
I love strata and see the value of making our investments (whether as owner or investor) work hard for us. However, oversight is really best done by an interested party – usually the owner.
All the best!
We have received this comment via email from Jeff Smith, Exclusive Strata Management:
Your article raises a very topical issue that we have been discussing in our office.
The Act actually states that interest applies from the due date not 14 days after the due date.
We had previously allowed 14 days prior to applying interest, however, as this would appear to contradict the Act we have recently reverted to applying interest if the debt is not paid by the due date.
In WA, The Strata Titles Act 1985 section 36(4) states in relation to levy contributions that:
(4) Any contribution levied under this section —
(a) becomes due and payable to the strata company in
accordance with the terms of the decision to make the
levy; and
(b) if not paid when it becomes due and payable, bears
interest on the amount unpaid at the rate of simple
interest prescribed, unless the company determines
(either generally or in a particular case) that an unpaid
contribution shall bear no interest or interest at a lesser
rate; and
(c) including interest accrued under paragraph (b), may be
recovered as a debt by the strata company in a court of
competent jurisdiction and the strata company may
agree to a compromise of such a debt.
The prescribed amount is specified in the Strata Titles General Regulations 1996 section 26 which states:
“The prescribed rate of interest under section 36(4)(b) is 15%.”
In practical terms, when and if the property is sold, the agent should be made aware that there are outstanding amounts owed to the strata company. The Section 43 certificate should clearly indicate the amount outstanding against the property (including the interest). These sums, along with any other outstanding amounts against the property must be paid on or before settlement.
Simply put, simple interest is a daily calculation based on the original amount of the debt. With simple interest we do not compound (ie add) the prior interest charges to the original debt.
For the simple interest calculation, it will be best to calculate the interest accrued on each debt separately and then add all of the accrued interest together. Accrued interest is just the interest we calculate as being owing.
I have created a simple spreadsheet which will help you calculate these values. I am happy to provide such to you directly or through the operators of this web page.
I do not live in WA and thus I can not attest to whether the 15% interest your council has decided to charge is valid. Also given that the owner is now in administration, you will need to lodge a formal claim of debt with the administrators and there may be rules around how much interest they will be able to pay (eg they may only be liable for interest after the date of their appointment). Best speak to a lawyer regarding all of this.
Additional information supplied by David White, uploaded by LookUpStrata Admin:
Body Corporate – Late Penalties – Simple Interest Spreadsheet
Hi David
Thanks for your response.
It would be great to include a link to your spreadsheet in the article as a resource. Do you mind sending it through to me at [email protected] and I will upload it as a PDF at the bottom of your comment?
Thanks
Nikki