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Topic
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Hi.. We have a strata special levy for the external renovation of our block of 20 units. Our levy is $116,000 and was due on December 31, 2019. We haven’t been able to make a payment yet and have just been hit with $4000 interest for the month of January on the overdue levies.
This calculates to 41% pa interest. What is the maximum interest that can be charged for over due levies such as these?
We have since paid $60,000 and will be making the full payment by end of March. I am thinking that I will only pay what was owed (i.e. $116,000) and disregard any interest charges. What can strata do in that situation?
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Replies
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You need to look at Section 85 and Section 86 of the strata Act. They allow for penalty interest of 10 per cent per annum on unpaid levies, plus the reasonable costs of recovery.
That means if you simply don’t pay the penalty interest, they can hire debt collectors to retrieve the unpaid amounts at your, probably considerable, expense. And the unpaid amounts will start accruing interest too.
As for the $4000, that may be the 10 percent interest broken down into three quarterly payments, but you would have to ask your strata manager how they reached this figure.
The owners corproation has considerable leeway in how they charge penalty interest, and how it is paid, so your best bet is is to talk to the committee and the strata manager as soon as possible.
If you simply don’t pay, you will not only accrue more interest, you will also lose your voting rights as an owner.
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You need to look at Section 85 and Section 86 of the strata Act. They allow for penalty interest of 10 per cent per annum on unpaid levies, plus the reasonable costs of recovery.
That means if you simply don’t pay the penalty interest, they can hire debt collectors to retrieve the unpaid amounts at your, probably considerable, expense. And the unpaid amounts will start accruing interest too.
As for the $4000, that may be the 10 percent interest broken down into three quarterly payments, but you would have to ask your strata manager how they reached this figure.
The owners corporation has considerable leeway in how they charge penalty interest, and how it is paid, so your best bet is is to talk to the committee and the strata manager as soon as possible.
If you simply don’t pay, you will not only accrue more interest, you will also lose your voting rights as an owner.
If you want to be alerted when anyone replies to your posts or responds to this topic, please register and login, then you will be able to subscribe to the topic. The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers. NB: Longer threads may spill over to additional pages - look for the numbers on the bottom right, under the last post.
Looks like the SM calculated the interest on 12 months instead of the actual number of days interest was acrued.
Ten per cent p.a. interest on $116,000 is $11,600. Penalty interest of 10 per cent is a statutory amount eatablished in strata law.
If you want to be alerted when anyone replies to your posts or responds to this topic, please register and login, then you will be able to subscribe to the topic. The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers. NB: Longer threads may spill over to additional pages - look for the numbers on the bottom right, under the last post.