#64217
TonyC
Flatchatter

    If I can add to the excellent discussion, forcing the sale of the property through any means (Bankruptcy being the simplest for an individual, Liquidation for a company) is an effective way to recover an outstanding Strata levy / Strata debt because it is conveyancing practice that all property outgoings which are outstanding are cleared on settlement.

    In NSW the requirement is found in clause 14.1 of the standard Contract for Sale which states:

    Normally, the vendor is entitled to the rents and profits and will be liable for all rates, water, sewerage and drainage service and usage charges, land tax, levies and other periodic outgoings up to and including the adjustment date after which the purchaser will be entitled and liable.”

    Notes: Even though it says Normally, it is rare that this clause does not apply.  The adjustment date is on completion / settlement, unless early possession is given (if so, it is the possession date).

    Comparable provisions exist in the Contracts for Sale in the other States and in the Territories.

    It is the practice of Trustees in Bankruptcy and Liquidators to pay sale expenses such as agent’s commission, conveyancing fees and outstanding outgoings (such as strata levies) on settlement, and treat them as sale expenses. The same practice is adopted by Mortgagees who sell the property under power of sale.

    So, the procedure is that the property is sold at auction, let’s say for $820,000. That is the Contract price. If there are for example $20,000 in unpaid outgoings, then on settlement, the purchaser still pays $820,000 for the property but $20,000 will be applied to pay the unpaid outgoings directly.

    The bottom line is that the outstanding strata levies / strata debt will be paid when the property is sold. And the best way to force a sale is to have a Trustee in Bankruptcy appointed if the owner is an individual, and a Liquidator appointed if the owner is a company.  If the property is mortgaged, the mortgagee will take over when a Trustee in Bankruptcy or a Liquidator is appointed.