› Flat Chat Strata Forum › Levies and Unit Entitlements › Can’t pay, won’t pay › Current Page
Hi Jimmy,
I came across this article in the Sydney Morning Herald. May I please clarify a few points:
Community Association, Neighbour Association and Strata Schemes
There may be some developments in which a number of small strata schemes together form a large community scheme and that community scheme is managed by a Community Association. The Community Association comes into existence upon the registration of a community plan.
Likewise, a neighbourhood scheme is managed by a Neighbourhood Association, which comes into existence upon the registration of a neighbourhood plan.
However, a Community Association would not be the “overarching” body in charge of a neighbourhood scheme. Perhaps the correspondent might have meant that s/he lives in a strata scheme, within a larger community or neighbourhood scheme.
2. Obligation to strike levies
So far as the article relates to a strata scheme, under Division 2 of the Strata Schemes Management Act 1996, an Owners Corporation must :
a. estimate how much money it will need to credit to its administrative fund and to its sinking fund; and
b. determine the amounts to be levied as a contribution to its administrative fund and its sinking fund; and
c. levy on each owner, such a contribution.
The amounts levied then goes toward the costs of maintaining the common property, for which the Owners Corporation has an obligation under section 61 and 62 of the Act.
If an owner fails to pay the levies as and when they become due and payable, that contribution automatically bears interest at the rate of 10% per annum under section 79(2) of the Act, unless the Owners Corporation by special resolution determine that that contribution is to bear no interest.
Similar provisions may be found in the Community Management Statement or the Neighbourhood Management Statement and in the Community Land Management Act 1989, with the exception that, under section 20 of this Act, a Community Association or a Neighbourhood Association may levy a contribution on the owners.
3. Penalties for Non-Payment of Levies
It is questionable if an Owners Corporation or an Association can exclude a person from using certain areas of common property or common facilities as a result of his or her failure to pay the levies, as implied, by way of a by-law.
The governing legislation does not say that an Owners Corporation or an Association can penalise a defaulting owner by excluding that owner from using certain areas of the common property or from using common facilities.
There is a doctrine in Corporations Law preventing the majority shareholders of a company from exercising their power in an unjust or oppressive manner so as to constitute a “fraud on a minority”. An Owners Corporation or Association should be careful when dealing with lot owners and their rights, so as to not go beyond the powers given to it under the respective governing legislation.
Kind regards,
Lelien
Watson and Watson Solicitors