Flat Chat Strata Forum Strata Committees Current Page

  • Creator
    Topic
  • #8374

    I live in a small strata scheme managed by BCS
    While on a trip overseas I forgot to pay my strata levies.
    I had never before missed a payment
    On returning home I paid the levy and forfeited my discount for paying the l
    evy on time
    BCS charged $ 80 for legal fees relating to letters sent regarding the late=
    payment.
    I refused to pay these costs and the debt has now accumulated to $258
    The chairman of the owners corporation requested that the fees be waived but=
    was rolled by
    Members of the committee.He has resigned as a matter of principle
    Any advice regarding a fair and reasonable outcome for this matter would be g=
    reatly appreciated
    Regards and Thanks=

Viewing 8 replies - 1 through 8 (of 8 total)
  • Author
    Replies
  • #17381
    kiwipaul
    Flatchatter

      How late were you with the payment because the legislation only allows penalties if you are more than 30 days late.

      (2) A contribution, if not paid at the end of one month after it becomes due and payable, bears until paid simple interest at an annual rate of 10 per cent or, if the regulations provide for another rate, that other rate.

      But once you are over this period

      (1) An owners corporation may recover as a debt a contribution not paid at the end of one month after it becomes due and payable, together with any interest payable and the expenses of the owners corporation incurred in recovering those amounts.

      So if you paid within the 30 days you are ok, but if it was more than 30 days it’s debatable.

      #17384
      FlatChatFan
      Flatchatter

        @Whale said:
        oops – I just posted after Kiwipaul, who may well have answered little voice’s post, so I’ll delay commenting lest I duplicate that answer.

         

        Whale, I wish you had gone ahead and made your comment.  Jimmy must still be pondering over Kiwi Paul’s comment.

         

        Seems to me that if a person forgets to notify the Managing Agent they will be away and make other arrangements, or even pay levies in advance if they are away for a while, they still owe any interest or penalties on top of the levies.

        #17382
        Whale
        Flatchatter

          Most items have been covered in the preceding posts but to elaborate, in NSW any Fees & Charges raised by your Plan’s Strata Managing Agent are shown in the Agency Agreement that your Owners Corporation has with that Agent, and the method of their application for debt recovery is usually provided in a Motion submitted by the Strata Manager for consideration at each Annual General Meeting of the O/C.

          You should make it your business to know what your Plan’s debt recovery procedures are, and that’s why your O/C (of which you’re a member) needs to agree to the amount/s of those Fees via its Agency Agreement, and via a Resolution taken at a General Meeting of the O/C with regard to how those procedures will implemented for those Proprietors whose payments are in arrears and at what intervals (e.g. 30 & 60 days after the due date) they’ll be applied.

          As the Secretary & Treasurer of a self-managed Plan I must admit that I don’t have a lot of sympathy for Proprietors who don’t pay their Levies on time, but in answer to your specific questions, the interest that an O/C can charge is restricted in that it can only be applied to Levy payments, and only then to amounts in arrears at one calendar month from the month in which the payment was due, and at 10% interest (simple).

          So your Plan’s Strata Manager cannot charge you interest on the collection fee component of your debt, that debt for fees alone does not make you un-financial in terms of you voting at General Meetings, but your Strata Manager may, under the O/C’s Resolution that I’ve referred to, engage the services of a debt collection agency on behalf of the O/C whose fees will be added to your debt if/when collected.

          With respect to your Executive Committee waving those Fees, they’re not the O/C’s Fees to waive they’re the Strata Manager’s Fees incurred in doing the O/C’s business, and so far as the interest on any unpaid Levies is concerned, that can only be waived by a Special Resolution taken at a General Meeting, not by the E/C Chair or by a vote of its Members.

          If the matter proceeds to the Local (small claims) Court, there’s a well established precedent that it will only award debt collection fees against a Proprietor if the Strata Manager can justify that the amount of the Fees was an incurred expense (i.e. in collecting the debt), but I’d suggest to you that a large Agency such as the one that you’ve referred to could probably make that justification.

          After all that, in my opinion a reasonable way forward for you would be to ask your Strata Manager to check that the calculations of interest has been applied only to your Levy payment arrears beyond that one month period (if it doesn’t already) and at the prescribed rate (10%), to then pay the full amount owing, and to either make a note in some reliable way about when your Levy payments are due (same date) each quarter or ask your Strata Manager to send all future Invoices to you by e-mail. 

          #17385
          Jimmy-T
          Keymaster

            [While i was writing this post, Whales’s post (immediately below) came in – we are basically saying the same thing but I would start with his post as it lays out what can and can’t be charged very clearly and I don’t think I disagree with any of it.]

            OK, the relevant sections of the Act for NSW (below) compels the Owners Corp to charge interest on unpaid levies but is less clear on the costs of debt collection which it says the Owners corp “may” recover.  The Owners Corp (not the Executive Committee) is allowed to waive the interest and other charges by a special resolution vote (requiring 75 percent support). The sympathetic Chairman was actually over-stepping the mark by trying to get the EC to waive the additional charges – that can only be done by the Owners Corp by a special resolution at a general meeting.

            Little Voice can’t be charged interest or for debt collection unless the payment was more than a month overdue so we have to assume that was the case.  But it only has to be one day over for these penalty charges to kick in. If you then refuse to pay the interest or the cost of debt collection, you get yourself into this accumulating interest and debt recovery fee cycle.

            The charges seem excessive but once the Owners Corp and the strata manager have crossed the line where interest is mandated by strata law and debt collections are allowed by your own by-laws and contractual arrangements with strata managers, you are in a cycle of penalty interest payments and debt collection fees all of which are, on the face of it, valid if unfair.

            The only way to break the cycle is to pay the accumulated debt.  You can then wait until the next General Meeting and present a motion asking the other owners to pass a special resolution to waive the costs which could be credited to your account.  If you are still ‘unfinancial’ by the time of the next general meeting you can’t even propose that motion.

            If there has been some impropriety – e.g. the strata manager has jumped the gun in chargiing you for the debt collection sooner than they were legally allowed, you can raise this with Fair Trading.  Otherwise the best thing to do is pay up and throw yourself on the mercy of the Owners Corp at your next General Meeting (and do some heavy duty lobbying before then).

            We had a chairman in out building who stopped paying levies when he and his cronies were kicked off the Executive Committee.  He took great pleasure in running up a $20,000 hole in our finances – but the smile disappeared when it turned into a $40,000 debt for unpaid levies, penalty interest, debt recovery and court costs.

            My advice, pay the bill and argue the toss later.

            Here’s what the strata Act says:

             

            79   Interest and discounts on contributions

            (1)  Any contribution levied by an owners corporation becomes due and payable to the owners corporation in accordance with the decision of the owners corporation to make the levy.

            (2)  A contribution, if not paid at the end of one month after it becomes due and payable, bears until paid simple interest at an annual rate of 10 per cent or, if the regulations provide for another rate, that other rate.

            (3)  However, an owners corporation may by special resolution determine (either generally or in a particular case) that a contribution is to bear no interest.

            (4)  An owners corporation may, by special resolution, determine (either generally or in a particular case) that a person may pay 10 per cent less of a contribution levied if the person pays the contribution before the date on which it becomes due and payable.

            80   How does an owners corporation recover unpaid contributions and interest?

            (1)  An owners corporation may recover as a debt a contribution not paid at the end of one month after it becomes due and payable, together with any interest payable and the expenses of the owners corporation incurred in recovering those amounts.

            (2)  Interest paid or recovered forms part of the fund to which the relevant contribution belongs.

            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.
            #17388
            scotlandx
            Strataguru

              The only thing I would query is the addition of nearly $200 to the original debt collection fee.  It is difficult to say as we don’t know how overdue the levies were etc., but it seems excessive.

              There are a number of strata management companies who have a side business doing debt collection, and they make a lot of money.  From what I have seen, I think some of their practices are dubious, but that is just my opinion.  They need to be very careful when they label something as a legal fee, because legal fees have special characteristics.

              Re fees generally – the courts have recently been considering the imposition of fees by banks for a range of things, and the central issue is – were those fees reasonably incurred, i.e. can the fee be justified?  For example, charging a $30 overdraft fee may not be reasonable if it doesn’t reflect the costs to the bank.  So that is the only aspect where I differ from Whale, as it is possible that the additional amount may not be justified.

              If you wanted to make an issue of it, you could challenge it in a local tribunal/court, the question is, is it worth it?

              #17390
              Casper
              Flatchatter

                i’ve had a legal fee imposed on me for a debt recovery charge when i paid my levies late. however i’ve refused to pay it on the following grounds:

                1. i paid the outstanding levies within a few days of receiving the notice from the strata manager, i think they were unreasonably hasty in passing it to a debt collector (if they ever actually did, see below)

                2. i never had any correpsondence or communication of any kind from the debt collector – so my contention is that the debt collector did nothing, should have rendered them a bill, the strata manager shouldn’t have paid it if he did and their incompetence is not my issue

                the strata manager has refused to remove the charge from my account, i’m interested in people’s comments

                #17397
                Whale
                Flatchatter

                  Casper – you’ll find that the Fee you’ve received is not to do with any services provided by debt collector, but is the Strata Manager’s fee for the preparation of the Notice that you received. So you’re right, the debt collector hasn’t done anything; yet.

                  If you don’t pay the current Fee, depending upon the Debt Collection Procedures adopted by your Owners Corporation, the Strata Manager may issue a further Notice for another Fee and that’s when they could refer the collection of both those to a Debt Collection Agency — and when they’ll correspond with you and at the same time add their Fee to your Debt.

                  If you maintain your position, whilst it’s unlikely that your O/C would take the matter to the Local (small claims) Court the debt would certainly be recorded against your Lot, and the consequence of that is that the debt would be paid by way of an adjustment at Settlement (in favour of a purchaser) IF you ever sold your property.

                  It would probably be a wise move to swallow your pride and just pay the Fee for the first Notice before the Fees for second and third ones arrive!

                  #17420
                  Casper
                  Flatchatter

                    Thanks Strataguru, it is a third party charge, they’ve identified in the levy notice the legal firm they say they’re passing on costs from. & they’ve also confirmed in writing they won’t pass the unpaid charge on to a debt collector!

                  Viewing 8 replies - 1 through 8 (of 8 total)
                  • You must be logged in to reply to this topic.

                  Flat Chat Strata Forum Strata Committees Current Page