WA: When does interest apply to unpaid strata levies in WA?

Question: For recovery of unpaid levy contributions in WA, we understand that 11% interest is charged on or after the due date. Due to this, how many days should interest be applied?

Answer: Most Strata Companies do not charge interest for the first 30 days and give this as a “grace” period, however if not paid within that timeframe then the interest is charged as of the day the levy became due.

The interest charges on levies are set out in Section 100 (4), (5) & (6) below of the Act and Regulation 78.

Section 100 (4)(a) also states that the levy becomes due and payable in accordance with the terms of the decision, meaning that the minutes of the General Meeting, where the levies were struck, would note that the levy is due and payable on (date). The Strata Company can then charge interest, at the regulated rate of 11%, as of that date. For example: Quarterly Levy due 1st January 2022 for the period to 31st March 2022 – the interest is due and payable as of 1st January 2022.

Most Strata Companies do not charge interest for the first 30 days and give this as a “grace” period, however if not paid within that timeframe then the interest is charged as of the day the levy became due ie: 1st January 2022 in the above example.

Interest is applied until the outstanding amount is paid.

Administrative and reserve funds and contributions

Section 100 states:

4. Any contribution levied under this section —
   
   1. becomes due and payable to the strata company in accordance with the terms of the decision to make the levy; and
   2. if not paid when it becomes due and payable, bears interest on the amount unpaid at the rate of simple interest specified in the regulations, unless the company determines (either generally or in a particular case) that an unpaid contribution bears no interest or interest at a lesser rate; and
   3. 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.
5. Interest paid or recovered under subsection (4) or (6) forms part of the fund to which the contribution belongs.
6. The owner of a lot is liable in respect of any contribution levied under this section and any interest on the contribution, jointly and severally with any person who was liable to pay that contribution and interest when that owner became the owner of that lot, to pay so much of that contribution and interest as was unpaid when the owner became the owner of that lot.

Regulation 78. Rate of interest on unpaid contributions

For the purposes of section 100(4)(b), the rate of simple interest specified is 11% per annum.

This post appears in Strata News #565.

Shelley Fitzgerald
Emerson Raine
E: shelley@emersonraine.com.au
P: 9330 3959