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We are a 6 unit strata plan. We have just appointed our new strata managing agent. However recently we have received a EGM regarding to raising special levy, and I realized the special levy is raised just because two of the owners didn’t pay their levies.
And now there’s bills to pay for fixing the swage line in the common property and to renew our insurance. So what can we do to get the owners to pay? Isn’t there legal binding about owner have to pay their levy? Our current strata agency suggested to search for legal advise to sue our previous agency which we sacked, because they reckon they still holds our management and will not let go of our funds, and one of the owner is supporting the previous agent, because thy are friends. But we already had proper procedures terminating the previous agent under the supervision of a lawyer.
We don’t want to spend more money in lawyer, could anyone helps us on how to sort his out? I am the treasurer by the way and also the owner.
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There is no way you should be paying a special levy to make up for those who won’t pay. Instead you should be looking fro a strata debt collection service who will get all the money for you at NO COST to the owners corp. Google ‘strata debt collection’ to get a list of companies.
If you need to raise the money to cover for a shortfall, contact Lannocks, who are sponsors of this site, to organise bridging finance.
And if your new Strata Manager can’t sort all this out for you, they’re not much use. It is illegal for the old SM to hang on to your documents and finances. If your SM won’t do it, call Fair Trading (13 32 20) and get them on the case.
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.
+1 to what Jimmy said
Also I know it’s not much but any overdue strata fees can be charged an interest rate of 10% / year until payed. (in QLD it’s 30% and so I’m more than happy to see late payments as where else can we earn 30% interest).
Also make sure the SM slugs the overdue lot owners any extra charges that the SM incurs due to late payment.
Ditto to all that. You have an obligation to ensure that the insurance is paid and maintenance done. If levies have not been paid you have no choice but to take a loan. I am not so familiar with the NSW details but I expect there is a mechanism to not only charge interest for overdue levies but to charge the extra costs to the owners that have not paid. Even if there is not a mechanism, I would suggest writing to all owners:
Dear Unit Owner,
The EC has no option but to act responsibly and to comply with the Act to do the maintenance and renew insurance. Taking a loan is necessary because two owners have not paid their levies. We have engaged a strata debt collector to act on behalf of the owners corporation. Under section XXX of the Act those owners will be charged 10% interest until the levies are paid and other associated costs to the greatest extent possible.
Then a para reiterating how the previous manager was correctly terminated in accordance with legal advice.
Even though you are only 6 units, I think it is sometimes helpful be formal. If necessary, it will be proof that no owners had any excuse for not being on the same page. I would avoid naming names. Just state the number of units that have not paid and the consequences in firm but neutral, factual tone. The easiest common accusation people make when they really don’t have a leg to stand on is ‘poor communication’.
Dealing with this well should stand you in good stead for the future.
Another advantage you have whilst the owners haven’t paid their dues is that they are unable to vote (at a committee meeeting or owners meeting AGM) untill the debt is cleared. So it might suit your purpose to keep quiet about this untill you have a meeting and then tell the chairperson to reject their vote. They can attend the meeting and have their say it’s just they cannot vote.
This is a fundamental fact and it applies to most states and so any Strata Manager should be well aware of it.
I’d just like to chuck another question into the mix. If the Owners Corp has to get some kind of bridging loan to cover the shortfall in levies, can the interest on the loan be calculated as a legitimate cost of debt recovery which the recalcitrant owners would also have to pay?
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.
No. You can only recover costs associated with recovering the debt, and interest on a strata loan has nothing to do with debt recovery.
@scotlandx said:
No. You can only recover costs associated with recovering the debt, and interest on a strata loan has nothing to do with debt recovery.Yes, I suspected that might be the case – wishful thinking on my part.
Something that might work, though, would be a letter to the non-payers explaining how much they were likely to pay if they didn’t fork out pronto. Get some estimates from strata levies debt recovery agencies then put together a note that says something like:
Failure to pay your levies by this date will lead to the imposition of a 10 percent penalty interest charge (as dictated by the Strata Schemes Management Act) plus, if necessary, all costs associated with the recovery of the debt including fees and court costs estimated at but not limited to $XX. It is therefore in you best interests to pay this debt as soon as possible before debt recovery action is commenced.
That should get the backsliders’ attention.
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.
@kiwipaul said:
Another advantage you have whilst the owners haven’t paid their dues is that they are unable to vote (at a committee meeeting or owners meeting AGM) untill the debt is cleared. So it might suit your purpose to keep quiet about this untill you have a meeting and then tell the chairperson to reject their vote. They can attend the meeting and have their say it’s just they cannot vote.This is a fundamental fact and it applies to most states and so any Strata Manager should be well aware of it.
While I agree with all that, I think it is a good practice to include a statement in the notice of any general meeting that only owners who are fully financial are eligible to vote.
I don’t think there is anything preventing a non-financial owner who is a member of the EC from voting at an EC meeting. They can’t vote at a general meeting, but Committee matters are a separate issue.
This is bearing in mind that a person can be nominated to the EC by any lot owner, and that person doesn’t even need to be an owner.
@scotlandx said:
I don’t think there is anything preventing a non-financial owner who is a member of the EC from voting at an EC meeting. They can’t vote at a general meeting, but Committee matters are a separate issue.Scotlandx I believe you are correct in NSW.
Seems strange that as the committee speaks for the OC a non financial member can vote but if it was a general meeting he could not.
In QLD it’s different and a lot who is in debt their representative is not entitled to vote at a general OR committee meeting.
ilovebbq, if your previous manager is holding on to your money they are breaking the law. Take Jimmy’s suggestion and ring Fair Trading NOW. You don’t have to throw more money away by suing them, just lodge a complaint demanding they release your money and any records they have.
No offence but your current agent doesn’t sound that great either.
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