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Hi all,
I’ve recently started to take a more active role in my strata, and am currently the “Secretary” on the EC. However, all day to day “management” is handled by the Strata Management company.
Recently, we received copies of the quarterly financial records (balance sheet, etc) which showed the list of lots and how much they owed or were in credit for strata levies. One lot has over $10k outstanding.
After some discussion (and investigative work) it would appear:
1) The lot owner has never paid any strata fees (it’s a reasonably new building)
2) The lot owner is a lives overseas
3) There is no resident in the lot (no tenant, etc) as reported by neighbours, and other “checks” to see that there has been no access for at least the last 2 weeks.
The strata management has commenced some legal actions, but it seems they are at a bit of a loss on how to proceed if they can’t “find” the owner.
My thoughts were:
a) Leave it alone, collect the outstanding debts + interest when the property is eventually soldb) If it is ever rented, then contact the agent and start the process from there
c) Eventually, try to force the sale of the property to recover the costs
Hopefully you can provide some advice on the best way to proceed? I’m not really sure how else we should proceed here?
Thanks for any ideas!
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Hmm. Tricky. Tempting as it may be to look forward to a tidy bonus of interest when the unit eventually is sold, I would be inclined to try to track down the owner. I would worry that plan A might come unstuck somehow if there was no paper trail showing how the managing agent was directed by EC resolution to commence debt recovery action.
In the ACT and possibly elsewhere, the Act requires notice to be given to the OC if a unit is to unoccupied for more than a month. There might be insurance consequences if a unit is unoccupied but notice was not given. Contact details for the owner should be listed on the unit/lot roll. In the first instance, I would be asking the managing agent to work a little harder to determine if levy notices sent to that address are just being ignored or are the contact details wrong? Can the owner be easily tracked down?
I have no idea how you would do plan C. Whatever you do, you would need to have shown that you exhausted all avenues to find the owner and recover the levies. From the ACT Act, so I suspect it could be similar elsewhere, it is possible to recover as a debt from an owner reasonable costs associated with levy recovery. After the managing agent has done what they can, I suspect that could include a professional debt recovery service or action at the state Tribunal. Perhaps you can get an order that would seize other assets in Australia?
+1 to tracking the person down as well as obtaining professional debt recovery advice.
I’d also look at the strata legislation for your state & make sure the OC is fulfilling its obligations to all owners. In NSW:
“The owners corporation must prepare and keep a strata roll. The roll must be kept by mechanical, electronic or other means. There must be recorded for each lot:
* the owner’s name
* or the owner’s agent and the agent’s Australian address for service of notices.”
&
“After the levies are set, the Treasurer must write to the owners and tell them the amount to pay and the date to pay. This notice only has to be given once.”
&
“An unpaid levy gains interest at the rate of 10% simple interest a year if not paid within one month after it is due. The owners corporation cannot increase or decrease the interest but it can make a special resolution to charge no interest. Unpaid levies, including interest, can be recovered by the owners corporation as a debt in court.”
We did have problems with outstanding debts, our OC now has a process in place where we have a graduated response to overdue levies which ends in debt recovery with all costs directed to the debtor. Since we’ve brought in that process we’ve had very few problems with outstanding levies.
& well done, webman for stepping up to the plate for your OC.
The only legal case study I could find was from Victoria where the Supreme Court ruled that notifying someone overseas that they were behind in their levies was not the same as a legal claim (or something like that). Suffice it to say that while you can claim the reasonable costs of debt recovery in unpaid levies, it could be a gamble if you send someone to Shanghai when they can’t do anything when they get there.
There is a clear disconnect between having to register the name of an agent who may pass on communications and making that communications stick in a legal sense. There are certainly plenty of “agents” who are filling shoeboxes with letters and demands from strata managers because they have no idea where to send them.
This property has not been forgotten – it has been “parked”. The owner clearly wanted to get money out of their country and invest it somewhere that it’s not going to lose value. They don’t particularly want people living in it or maybe they just don’t want the hassle of managing rentals. They may even plan for kids who are still at primary school to one day occupy it when they come here to study at university.
In the meantime the other owners are subsidising the investment and many will have moved on before the owner turns up and is slammed with a bill for unpaid levies and compound interest.
There needs to be a mechanism in the law for abandonded units – let’s say those that haven’t paid levies for two years and where the owners can’t (or won’t) be contacted – whereby the Owners Corp can get a court order allowing them to take control of the unit, rent it out and give it back to the owner when they eventually show up (provided their debt has been cleared).
Maybe we should just give them to airbnb to run – because they are such nice, community conscious people. There are areas of London where they have been talking about punitive taxes for people who deliberately leave their investment units empty. It would be better for everyone if “parked” units were put back on the rental market until they were claimed.
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.
I wonder if these “ghost” owners are paying their council rates? I believe councils can “confiscate” properties for recovery of such rates.
And would the council be a source of information as to the owner if they are being paid?
@Boronia said:
I wonder if these “ghost” owners are paying their council rates? I believe councils can “confiscate” properties for recovery of such rates.And would the council be a source of information as to the owner if they are being paid?
Perhaps there is a way for the OC to piggyback on the councils debt recovery process? Even if it is to just find who is the person doing it in the council and getting an informal briefing. Perhaps it can be formalised? The OC after all is a legal ‘person’ with an interest in the property.
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