Q&A Strata Levies: Special Levies, Levy Payments and Overdue Levies -All You Need to Know
- A lot owner in our small block has consistently been in arrears with strata levies. Although they are on a payment plan the situation is not improving. Do we have other options to recover the overdue levies?
- How can I stop the never-ending nightmare of raising special strata levies?
- My strata manager is withholding some of my levy notices. How do I ensure these late notices are sent to me, as the strata manager is ignoring my emails?
- One lot owner is refusing to pay levies. What is the correct/recommended procedure to pursue debt recovery and in what order should those steps be taken?
- We did not receive a levy invoice or a notice of arrears. The next period notice invoice for levies, strata is charging interest and there is a notice of arrears fee. Do we have to pay the arrears notice fee and interest if we never received the invoice?
- We receive a delayed strata levy. On the levy it shows 2 quarters plus interest, however, this was sent late from the strata. Are the owners still responsible for the interest?
- When recovering late levy payments, can the Owners Corporation recover the costs of using a lawyer/debt collector from the recalcitrant owner?
Q: A lot owner in our small block has consistently been in arrears with levies. Although they are on a payment plan the situation is not improving. Do we have other options to recover the overdue levies?
We have one owner in our small strata block of six that has consistently been in arrears for over 18 months. The owner makes small monthly contributions but is always 6 months + behind. They get charged the standard 10% interest on the overdue amounts.
Our Strata Manager has indicated there’s not much he can do if the owner is adhering to the payment plan. Is this correct or are there other options to recover the overdue strata levies faster?
Answer: Even if the defaulting owner is on a “payment plan”, the Owners Corporation can initiate legal proceedings for debt recovery.
Your Strata Manager is not strictly correct. Even if the defaulting owner is on a “payment plan”, this does not limit the rights of the Owners Corporation to initiate legal proceedings for debt recovery as outlined in Section 85 (7) of the Strata Schemes Management Act 2015.
85 Interest, discounts on contributions and payment plans
- The existence of a payment plan does not limit any right of the owners corporation to take action to recover the amount of unpaid contributions.
Q: How can I stop the never-ending nightmare of raising special strata levies?
We purchased a unit in April 2018 with special strata levies meant to finish in June 2020. The strata have continued to raise special levies and the quote agreed on in 2016 (apparently) has more than doubled.
I want this money back. I do not want the doors and windows replaced. My windows are in excellent condition and don’t need replacing.
The special levy was meant to raise $250,000 and now it’s meant to raise over $500,000. Can we get them to stop the levy? It’s outrageous to double the cost mid levy. The quote should have been accepted and once the cost was covered, they should have stopped.
How can I stop this never-ending nightmare of special strata levies?
Answer: If the owners corporation has passed the proper resolutions, you are liable to pay the expenses of the owners corporation in proportion to your unit entitlements.
Irrespective of whether you consider that your windows are in excellent condition, it appears that the owners corporation decided to replace all windows and doors either as a repair function or upgrade special resolution.
On the assumption that the owners corporation has passed the proper resolutions, you are liable to pay the expenses of the owners corporation in proportion to your unit entitlements.
You, however, as an owner, have the right to make an application to NCAT for Orders that the levies are “excessive” in which case NCAT can order a refund. Should you elect to pursue this course, we recommend you seek expert strata legal advice.
Q: My strata manager is withholding some of my levy notices. How do I ensure these late notices are sent to me, as the strata manager is ignoring my emails?
I think my strata manager is withholding some of my levy notices. They say I am unfinancial, therefore I could not vote at the last AGM. I’ve sent three emails asking for the levy notices that I’m missing.
How do I ensure these late notices are sent to me, as the strata manager is ignoring my emails?
Answer: Not receiving a notice isn’t a reason to not pay the levy.
I would definitely put it in writing if you haven’t already. When you do put it in writing, I’d give a reasonable timeline for compliance, ie the timeline for that Strata Managing Agent to respond.
If you feel that they haven’t yet responded, then you need to take further action and that is to apply to NCAT – your first step is mediation. I just wanted to note how we have a Section 83(4) of The Strata Schemes Management Act that doesn’t actually require a strata managing agent or the delegated Treasurer of an owners corporation to issue a levy notice. Although it’s a standard common industry practice that you would be served a notice every quarter reminding you and prompting you of the amounts due and payable, it’s not a legal requirement under the Act. Not receiving a notice is no reason to not pay the levy.
You should be writing to the Strata Managing agent, putting in writing, giving them a reasonable deadline to respond. If they haven’t responded, I would then make an application to the tribunal, and mediation is the first step.
I’m confident that when they receive an application for mediation, they will respond. Otherwise, they would have to give reason as to why they haven’t responded.
Another option is if your managing agent provides access to their portal you could uplift a levy statement. If you don’t already have access, request access to the portal, obtain your login details and try uplifting the levy statement through that portal.
Q: One lot owner is refusing to pay levies. What is the correct/recommended procedure to pursue debt recovery and in what order should those steps be taken?
I am the “Honorary Administrator” of a self-managing strata scheme of four townhouses.
We may need to take levy recovery action against one owner who is refusing to pay the 4 equal quarterly levy contributions discussed and agreed to as an agenda item at our AGM.
I have sent several friendly reminders and a formal letter of demand to pay by 4 equal quarterly instalments as required under the NSW Strata Schemes Management Act and the Owners Corporation, but he is refusing.
The lot owner has requested to pay by setting up a periodic payment arrangement with his bank to pay in small fortnightly instalments.
After sending out reminder notices and a formal letter of demand, what is the correct/recommended procedure to pursue debt recovery and in what order should those steps be taken?
Answer: The process is as follows
Generally speaking, the process is as follows:
- 1st Letter of Demand by strata manager for unpaid levies
- 2nd Letter of Demand by strata manager for unpaid levies
- 3rd Letter of Demand by strata manager for unpaid levies
- 4th Letter of Demand by lawyer/debt collector for unpaid levies
- Legal proceedings for debt recovery are commenced
Q: We did not receive a levy invoice or a notice of arrears. The next period notice invoice for levies, strata is charging interest and there is a notice of arrears fee. Do we have to pay the arrears notice fee and interest if we never received the invoice?
Answer: It depends whether you are asking about an unanimous, special or ordinary resolution. No one can vote against an unanimous resolution for it to pass. With a special resolution no more than 25% of the value of votes cast can be against the resolution. An ordinary resolution only requires a simple majority.
Unfortunately, you are liable to pay the strata levies, irrespective of whether you received the notice or not (see below bolded):
83 Levying of contributions
- An owners corporation levies a contribution required to be paid to the administrative fund or capital works fund by an owner of a lot by giving the owner written notice of the contribution payable.
- Contributions levied by an owners corporation must be levied in respect of each lot and are payable (subject to this section and section 82) by the owners in shares proportional to the unit entitlements of their respective lots.
- Any contribution levied by an owners corporation becomes due and payable to the owners corporation on the date set out in the notice of the contribution. The date must be at least 30 days after the notice is given.
- Regular periodic contributions to the administrative fund and capital works fund of an owners corporation are taken to have been duly levied on an owner of a lot even though notice levying the contributions was not given to the owner.
You are liable for interest and arrears etc unless the owners corporation determines generally or specifically to you that such fees will not apply.
Q: We receive a delayed strata levy. On the levy it shows 2 quarters plus interest, however, this was sent late from the strata. Are the owners still responsible for the interest?
Answer: If the levy was issued late, they should not be charged any interest.
They shouldn’t be responsible for the interest. If it was was issued late and interest was charged due to the lateness of that notice then No, but they might want to check if the interest relates to those two quarters and it doesn’t relate to a previous amount. But no, if it was issued late, they should not be charged any interest.
Q: When recovering late levy payments, can the Owners Corporation recover the costs of using a lawyer/debt collector from the recalcitrant owner?
In a previous response you mentioned that when recovering late levy payments, the fourth letter of Demand should be “by lawyer/debt collector”. Who is preferred in the first instance, a lawyer or a debt collector, and why?
Can the Owners Corporation recover the costs of using a lawyer/debt collector from the recalcitrant owner?
If the services of a lawyer become necessary, do the lawyers charge their fees to the Owners Corporation or do they pass their fees on to the recalcitrant?
Answer: The lawyer’s fees are recoverable from the defaulting owner and form part of the overall debt.
Our practice is that the first three letters of demand are issued by our office and, if they do not generate a satisfactory response, then a lawyer is engaged to either elicit a response or commence debt recovery proceedings.
The lawyer’s fees are recoverable from the defaulting owner and form part of the overall debt.
For the full questions and our detailed responses about strata levies, visit the original publication at Look Up Strata.
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