This article discusses what happens when an owner refuses to pay strata fees, outlining voting processes, payment options, and enforcement steps a strata company can use to fund necessary maintenance.
Question: We are likely to have at least one owner who absolutely refuses to pay any further increases in fees. This will make it difficult to carry out any maintenance under the 10 Year Plan. What should we do?
Answer: Alternative methods of collecting funds may be required
The opportunity to vote at a general meeting for changes to the amounts being levied is done by Ordinary Resolution, so a majority vote is required.
If all the increases are reasonable and can be demonstrated as being necessary, then the amount of money raised for the 10 year plan would be justified by the time schedule listed for the replacement or servicing of major common property items.
If the amounts raised or proposed to be raised in the budget are extortionately high then there could be grounds to make an application to the Tribunal (SAT) to review the fees and charges.
Alternative methods of collecting funds may be required so that half the ownership isn’t bankrupted in the process.
- It might be that adjusting the scheduling of maintenance or setting different priorities for the accumulation of funds is an option?
- A strata loan may be required to enable urgent maintenance and pick up the short fall in accumulated funds.
- The Strata Company does have within its authority the ability to come up with payment plans for individual owners.
- A straight refusal to pay any increases may also lead to few options as to how it all plays out:
- Debt recovery is also an option that the strata company has available to it.
- This can at its worst, end up with the sale of the property.
In summary
An older building that hasn’t been maintained properly may result in higher costs to fix the problem.
Funds allocated to a Reserve Fund for a 10-year plan are a good indicator or an active group of strata owners who are aware of the need to have the buildings maintained.
A fixed income may result in some owners not being able to pay the necessary increases, resulting in a need to sell and move elsewhere which is more affordable.
This post appears in the November 2021 edition of The WA Strata Magazine.
Shane White Strata Title Consult E: shane.white@stratatitleconsult.com.au