We have been asked a few questions from WA Lot Owners about overdue strata levies. These have been answered by Jordan Dinga, Abode Strata and our Strata Martyr.
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.
This post appears in Strata News #253
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.
This post appears in Strata News #160.
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Looking for a Strata Lawyer or Accountant in your area? Search within our Strata Services Directory in the category Legal Services WA and Financial Services WA for the best list of contacts available.
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