Question: One lot owner in our 4 lot scheme hasn’t paid levies in over 30 years. We are looking to improve common property but I don’t think it’s fair to make any improvements that benefit this lot owner.
I own a townhouse in a block of 4 units. One owner (a lawyer) hasn’t lived here for 30 years nor paid levies for 30 yrs. Over 20 years ago, we took her to court over unpaid levies with no success as she plays the system representing herself at no cost with appeals etc and it has cost us a fortune.
We are looking to spend money to upgrade the common property. Part of this includes improvements to the carport that belongs to the owner who does not contribute to levies. I’m against any improvements that will benefit this lot.
How can we recover the 30 years of levies? If the outstanding levies cannot be recovered at this time, can we make improvements to common property, excluding any that benefit the unfinancial owner?
Answer: The Strata Company has a general duty to ‘control and manage the common property for the benefit of all of the owners of lots’.
In accordance with the Act, a Strata Company must, as a minimum, establish an Administrative fund sufficient to maintain the common property, and, in order to raise these funds, levy lot owners.
100. Administrative and reserve funds and contributions
- A strata company must —
- establish a fund (an administrative fund) for administrative expenses that is sufficient in the opinion of the strata company for the control and management of the common property, for the payment of any premiums of insurance and the discharge of any other obligation of the strata company; and
- determine the amounts to be raised for payment into the administrative fund; and
- raise amounts so determined by levying contributions on owners of lots —
- in proportion to the unit entitlements of their respective lots; or
- if the scheme by-laws provide for a different basis for levying contributions, in accordance with that basis;
- recover from the owner of a lot, by action in a court of competent jurisdiction if necessary, any sum of money expended by the company for repairs or work done by it or at its direction in complying with a notice issued, or order made, under a written law in respect of the lot.
and
It would be remiss of me to comment, without knowing the determination of the case presented to the Court. I would presume that the presiding Judge would have made orders that both the Strata Company and the lot owner were to abide by, in relation to outstanding contributions owed to the Strata Company and that the decision would have taken into account the Debt Recovery Procedure adopted by the Strata Company.
Provided the levies were raised correctly at General Meetings, then in theory the Strata Company should be able to recover the levies in either of two ways. They can take the matter to Court, where the Judge will make a determination based on a number of factors. Or, when the lot is sold, the outstanding debt passes on to the new lot owner (unless an arrangement has been made otherwise at the time of settlement). Should the Strata Company still have a considerable amount of contributions owed, it would be prudent for them to engage legal advice to recover the monies, which could possibly result in the ‘seizure and sale’ of the lot in order to recover the outstanding contributions.
That being said, the Strata Company does have a general duty to ‘control and manage the common property for the benefit of all of the owners of lots’. We would need to consider whether the Common Property Car Port used by the owner is subject to any Exclusive Use bylaws, or whether it needs to be ‘improved’ or simply maintained and repaired. The Strata Company still has a responsibility to ‘keep in good and serviceable repair, properly maintain, and, if necessary, renew and replace the common property’, but the Strata Company is not obliged to make improvements to the common property.
This post appears in Strata News #546.
ESM Strata
E: info@esmstrata.com.au
P: 08 9362 1166
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