- This topic has 9 replies, 7 voices, and was last updated 7 years, 2 months ago by .
-
Topic
-
The Strata Committee identified a unit which had some leaks which was affecting the common property. The plumber identified the leaks coming from the unit and quoted the costs for repairs. This was provided to the owner which they agreed to pay for. The work order were issued and the work has been done. However the owner has not paid the Owners Corporation for these repairs for several months.
How does the OC recoup these charges from the owner? What should the Strata Committee have done in this type of situation so we know what’s best practice?
Thanks in advance for the responses.
-
Replies
-
The agreement was in writing, I presume? If you have a managing agent, they will have a usual approach to debt recovery. Our levy notices have the following on them:
“Levy Arrears Process from Due Date
After levy due date, First Letter $0.00
+14 days after, Second letter $55.00
+14 days after, Final letter $110.00
+7 days after, Notice to Debt Collection Agency $250.00 + legal fees”
The same could apply to another valid debt.
I’m not sure of my ground here, so please bear with me, but I have a feeling there is a difference between debts that can be attached to levies and other debts.
The former could be attached to the levies if they were, for instance, part of a ruling from NCAT but the others feel like they may be a separate issue which would require a local small claims court action. Hopefully someone can clarify.
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.
JT may have a point and an alternative route would be to seek an order from the Tribunal that the debt be paid. Your managing agent, if you have one, should be able to advise.
I would imagine they are not able to vote on agm/egm matters if they are not up to date financially, so that may also get a mention if so.
I would firstly say the cost of sending the letters Sir Humphrey mentions is a little steep. These costs need to be reasonable.
In NSW the agent can charge these costs to the OC but the agent can not without a judgment just slap them on an owners register.
It is not until after NCAT or a court rules these are a debt as part of a claim that they become a recoverable debt and then they can then be slapped on the levy register of the owners in question.
Fair Trading said they were going to educate agents on this issue but that was just a disposable line because agents still slap amounts on peoples levy register when they have no authority to do so.
Rather than load this comment with case law I will simply provide an extract from a response from Fair TradingFair Trading in 2016 (bold added)
“I have reviewed your comments about my previous letter to you regarding section 80 of the Strata Schemes Management Act 1996 (the Act). Section 80 (1) permits an owners corporation to recover as a debt, a contribution that has not been paid, together with applicable interest and the expenses of the owners corporation in recovering those amounts.
Section 78 of the Act permits the owners corporation, or the strata managing agent acting in its stead, to levy those contributions on individual lot owners. The amount of this contribution, together with any interest applicable would be placed on the lot owner’s account. However, as you have suggested, the Act does not permit the inclusion of the cost of recovery of the contributions being placed against a lot owner’s account. It is necessary for the owners corporation to seek a judgment to recover those expenses.
In the circumstances, Fair Trading will take steps to remind strata managing agents of their responsibilities in relation to section 90 of the Act, and of Fair Trading’s views. Mr Geeves of Fair Trading will also be writing to you to provide further information on your complaint.”
Yours sincerely
Rod Stowe
Commissioner
Note that the first reminder is the second letter and that comes after AGM minutes that have the due dates and amounts for levies decided and that first reminder is free. The second reminder is not that expensive and it comes after they have been told three times for free how much and when to pay.
Whether the cost can be charged to the owner, two things might be relevant due to yet another state difference. 1) In the ACT there is a section of the Act about OC costs that can be recovered from owners. 2) This schedule of charges for such letters was included in the management agreement.
I am with JT on this issue. I am not certain about this but …. recovery of a debt from a levy contribution may be treated differently by NCAT than a debt from a personal liability from an individual Lot owner’s burst pipe. A quick phone call to NCAT should sort this out.
Perhaps the Owner has had advice about their responsibility and is now unsure of whether they are totally responsible for the payment of the invoice and are waiting to have this confirmed by Mediation or the OC requesting an NCAT order.
The cost does not form part of the levies, it is a separate debt. Therefore the OC should pursue it as a separate matter.
The OP says that the owner agreed to the works but it’s not clear whether it was in writing. Even if it wasn’t, if an owner has agreed to it verbally there shouldn’t be a problem. Note that an OC may have to undertake works or repairs that are the responsibility of a lot, the OC has the right to pass on the cost of those works/repairs to the owner.
So if I were the OC in this situation I would send a letter of demand to the owner, and state that if it is not paid then the OC will commence debt recovery proceedings.
The cost does not form part of the levies, it is a separate debt. Therefore the OC should pursue it as a separate matter.
The OP says that the owner agreed to the works but it’s not clear whether it was in writing. Even if it wasn’t, if an owner has agreed to it verbally there shouldn’t be a problem. Note that an OC may have to undertake works or repairs that are the responsibility of a lot, the OC has the right to pass on the cost of those works/repairs to the owner.
So if I were the OC in this situation I would send a letter of demand to the owner, and state that if it is not paid then the OC will commence debt recovery proceedings.