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We have an Owner who persists in paying the strata levy 6 weeks to 2 months after the due date. According to the NSW Strata Act 1996, a levy which is more than one month overdue has a penalty of 10% p.a simple interest payable until paid.
Thus, if the payment is 2 months overdue, a penalty of 1/12 of 10% of the levy is payable as a penalty. If the levy is, say $500, the penalty is $4.17. Is this correct? If so, its hardly a deterrent from late payment
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I wish my levies were $500 a year.
The law also allows you to discount levies paid on or before the due date, so the late payer would get a double whammy.
Say you budget needs X amount a year, you set the budget at X plus 5% for contingencies but discount 5 percent for prompt payment. Of course, you add 10 percent for late payment.
It soon adds up and gives you a buffer so that you aren’t always chasing money from people who can’t organise their finances.
And don’t forget the other disincentive for late payers is that they can’t vote at general meetings.
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.
That’s right – the rate applied to overdue levies is 10% per annum, calculated on the levies owing.
The actual amount of penalty that accrues is irrelevant – look at it another way, 10% pa interest is pretty high, bearing in mind current interest rates.
We have had people who are erratic but reliable payers, in that they have consistently paid, albeit late. As long as payment is made does it really matter? The way we view it is any interest that might accrue on the debt is a bonus, whatever the amount is.
A late payment may be an issue is where a large special levy is struck, and the OC needs the funds to progress works, but note then the interest on late payments is a deterrent.
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