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Adeze’s situation is pretty awful, it does sound like he/she should have initiated communication at a much earlier stage, but to be fair the actions of the strata manager/OC seem pretty extreme.
There is a fine balance in managing this type of issue – the OC needs to keep its finances in good order, and owners should pay their way. However, there are times when an owner may find themselves in financial difficulty. You need to draw a distinction between those who for a range of reasons are not able to meet their obligations for a time, and those who take a cavalier view towards paying the levies, and/or put them as a low priority.
In the latter category you have people who just don’t care, and can mount up substantial arrears. Particularly annoying are those who choose to go on overseas trips or renovate their apartments, and then cry poor. Then there are the absentee landlords. They are the ones who should be dealt with via a proper debt collection process.
I believe that if someone is in genuine financial hardship, and is proactive about managing the debt, there is little to be gained from penalising them and hitting them with ever-mounting fees and charges, it only makes the situation worse.
On the other side of the coin I have seen a number of cases where the strata manager has told the EC/OC they will take care of it, and they then proceed to gouge the hapless owner for any fees and charges they can think of. On the face of it, I would say that Adeze has been subjected to this, and I have a pretty fair idea who the strata manager is. There are a number of large operators who run a very lucrative sideline in strata debt collection, and in my view their practices are very dubious. The “legal fees” they charge for what are very straightforward matters, usually generated via pro forma, are exorbitant and cannot be justified.
We had an owner who some time ago owed $6000 in back levies. I found out that the EC had taken it upon themselves to progress legal action that at the time I found out had already cost $9000. That raised alarm bells because the person they were pursuing is a lawyer, and he could have easily challenged those costs as being excessive relative to the debt.
Bennifer – I agree with you that everyone should pay their way, but strata managers play the game for all its worth, they see this as a great way to make money, because they know that under the strata legislation the hapless owner will be liable for the costs, provided they are characterised as legal costs, therefore the EC/OC won’t question the costs. And in Adeze’s case, he/she has made genuine attempts to deal with the debt, there has been no suggestion that Adeze feels they shouldn’t pay.
The interest rate that currently applies to unpaid levies is 10%, this is well above any rate you would get if you invested money anywhere, so I think it is high enough.
Adeze – I suggest you contact the Law Society in NSW and also seek advice from either Legal Aid or a community legal centre. I would be seeking a very detailed breakdown of the costs incurred, including whether all of the charges can properly be characterised as legal fees.