Body Corporate or Strata unit

Check Your Personal Liability – Unpaid Levies

1st July 2019

If you are a committee member of the body corporate, we recommend that you check that the insurance cover for your building covers adequate office-holder liability insurance (also known as office bearers’ insurance).

If A Lot Owner Owes Body Corporate Levies

If levies are not paid on time, the whole body corporate suffers. There will not be enough money to cover the costs of maintaining the complex.

It is important that bad debts are attended to promptly.

Regulations in the Standard module and the Accommodation module requires bodies corporate to recover levies that have been outstanding for more than two years. (Similar provisions are in the other Regulation modules)That section also allows bodies corporate to attend to outstanding levies much sooner Early action against late levy payers is recommended to committees.

The debt is payable by both the previous owners and the new owner should a property be sold. The conveyancing process should ensure that there are no body corporate levies outstanding – that is the purpose of the “settlement” process.

Any debt recovery expenses are included in the total debt outstanding so it is wise for lot owners who are disputing the amount claimed to pay the total and then discuss the claim after the payment with the committee otherwise debts will mount up.

It is common for bodies corporate to offer discounts for prompt payment of levies (building the total cost of the discounts into the total amount of levies to be collected in the next year – this decision taken at the annual general meeting) so there is a strong penalty for people who do not pay on time.

There is a tried and tested legal process to be followed when debts are not paid. The first steps can be undertaken by the body corporate through their committee and working with a body corporate manager (if your complex has one)

The first part of the process is to ask again for the money by sending out an arrears notice, say 30 days after the date the levies were due. We suggest politeness, particularly in the first arrears notice, is vital for community harmony. The lot owner may not have received the first notice (Australia Post is not infallible), they may have been away overseas or in hospital or they may just be disorganised.

A second arrears notice (say a 60 day notice) may be necessary and, once again, the lot owners could be overseas for an extended period and then we suggest that the treasurer (or body corporate manager) be requested to make phone contact to follow up on the lot owner whose debt is outstanding.

If that process does not produce the money for the outstanding levies, the service of a debt recovery company is probably needed.

Source of this information: Successlaw www.successlaw.com.au Phone (07)3034 8900.

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