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09/03/2013 at 5:05 pm #8734
Hi…we have moved to strata living…lots to love about it. After being here 3 months we have learnt that 2 owners are not paying their levies. One pays a whole full year in arrears….SM says not to worry, money eventually comes in. This owner lives oversea. Unit is rented out.
The second one, more worrying has not paid for 3years…SM has told owners it is too hard to case and would cost too much in legal fees to do so. Amount owing with normal and special levies is approx $20,000. This doesn’t help the financials…
We were not made aware of these arrears when strata search was done…shouldn’t it have shown up somewhere?
The unit has been rented over the past 3 years….could we garnish the rent.?
Hopeful for advice -
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10/03/2013 at 12:14 pm #18009
Assuming this is NSW, my understanding is that the Strata Manager is legally obliged to charge 10 percent penalty interest on unpaid levies.
Also, all costs associated with recovering strata debt are payable by the defaulting owner so the “costs more than it’s worth” argument is spurious.
Time you called in the debts – and there are plenty of reputable agencies that specialise in strata debt collection – and then thought about getting a Strata Manager who knows what they are talking about.
You’d have to wonder how many other issues they casually drop in the ‘too hard” basket.The levies arrears should have been noted in the accounts statement prepared for the AGM. If they weren’t there, the Strata Manager needs to explain why. If they were there, your solicitor needs to explain why you were charged for an incomplete search.
Meanwhile, this is what the Act says on Levies:
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.
18/03/2013 at 7:08 pm #18073Hi… occasional reader, first time poster.
As a Liquidator and Bankruptcy Trustee, I felt I just had to respond to this issue…. I will start with this part of the OP:
“SM has told owners it is too hard to case and would cost too much in legal fees to do so.” – Bollocks!
Your Strata Manager is incompetent if he/she thinks $20K in back levies is not worth chasing, whether you are in a block of 4 or 400.
I would recommend you do the following ASAP:
1. Sack the Strata Manager. Now.
2. Issue a statutory demand from the Owners Corp to the owner.
3. Take steps to wind up (if owner is company), or bankrupt (if owner is individual). Costs will be about $4K.
Now, one of two things will happen:
1. The owner craps themselves and pays up. You should make sure they cover all legals as well, otherwise…
2. Continue with bankruptcy/liquidation. The trustee/liquidator will then sell the apartment. Now, here is the kicker: strata levies receive a special priority on settlement, so the OC is guaranteed payment.
You have nothing to lose by taking the above steps. Plus it sends a strong message to others that this sort of nonsense will not be tolerated.
I’m not specifically coming on here to spruik etc, but if you or anyone would like further advice, please feel free to PM me. Thanks and Good luck!
19/03/2013 at 6:59 pm #18091Many thanks….good info…
We have our AGM in April….I have asked for UNPAID LEVIES to be put on the Agenda….SM has agreed…..we will see how things go and take it from there. Some owners believe ..we have tried and it is “too hard”….others want something done ASAP.
I have yet to find out how the Chairman thinks….it would be good to have him on side in all this, especially if we need to sack SM. as I said, we are new to the complex and sometimes the OC don’ t like to be reminded they might have erred on doing the “right thing”
Re the Statutory Demand….Do i need a find a solicitor who has experience in this field of debt recovery?
I want to do this correctly ….so I need to know the correct procedure before I jump in……..If you don’t mind I could need you advice again…..20/03/2013 at 9:20 am #18095Are we talking about a company or individual because
The Owners Corporation may issue a Statutory Demand to recover unpaid strata levies from a company lot owner, instead of issuing a Statement of Claim at the Local Court, District Court or Supreme Court. However, the Statutory Demand cannot be issued if the lot owner is not a company.
I’d assume an individual (most common) so do what Jimmy suggests Google “strata debt collection” and speak to them about your situation as they will be able to handle everything AND add their costs to the bill the owners WILL have to pay. Just chose the debit collection agency you feel most comfortable with and put a motion to the AGM to let company x pursue lot x,y and z for undue levies, then sit back and wait for the money to roll in (don’t forget the 10% penalty)
As formerrenter says the debit is against the lot and so even if the owners sells the new owner becomes responsible for the unpaid dues (buyers sol should pick this up and withhold money from seller).
26/03/2013 at 4:49 pm #18128We live in a two unit strata scheme. The scheme has a CTTT order to undertake long overdue repairs. We were the successful applicants – we are also the minority UE holders. We asked the CTTT for a compulsory strata manager with all the powers of the OC and the executive with orders to undertake the repairs. We were successful.
The other owners are in arrears in their quarterly levies and the SM has started debt collection procedures.
The SM has been ordered by the CTTT on our application to raise a very large special levy to undertake the repair orders. We are happy to pay our share.
However, the SM has told us that in the event the other owners do not pay their share, that he will raise another special levy effectively making us pay twice. We are talking about a six figure sum doubled in a two unit scheme! The SM further added that if we do not pay our share again that not only will he bankrupt the other owners but us as well.
We were left shocked by this statement. It has caused us considerable distress and sleepless nights. We are an aged couple and full pensioners one of whom is an octogenarian with heart disease. Our home is our only asset. We face being made homeless.
We are unable to pay twice in the event that the other owners do not pay their share of the six figure special levy.
We are the successful applicants – the “good guys” in this matter.
This is extremely inequitable. The SM is using his unlimited power in an intimidatory and heavy handed manner. It may constitute a “fraud of the minority”.
When he was asked why he is doing this the SM said that “he had to fulfill the orders of the CTTT”.
The CTTT is not a police force. The CTTT will only take action if we the successful applicants lodged a complaint that the orders have not been completed within the time frame.
We have sought an alternative source of funding through a strata finance company. They are prepared to advance the OC sufficient funds to complete the orders. The effect of this would be that the orders could be completed within the ordered time frame and without delays. The SM could then pursue the other owners who are in arrears. We have tried to contact the SM by phone and email to put this alternative funding proposal to him. He does not respond.
The majority of strata schemes in NSW are two unit schemes. It would seem that owners in these schemes have a real risk of losing their homes in situations such as this.
Owners, potential purchasers and mortgagees should be aware of the extra risks involved in buying into two-unit schemes as detailed above.
We are completely at the mercy of this SM and have the “Sword of Damocles” hanging over us, ruining our health and quality of life.
Nobody, let alone aged pensioners, should be subjected to this.
We seek your thoughts and advice and what to do.
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