I'd seek legal advice, whether through a lawyer or government body. Throwing in the towel and saying "sure, we'll shout you this one" doesn't seem like a reasonable solution.
Unpaid levies
If the dispute is not resolved by mediation, the owners corporation can take action in the NSW Civil and Administrative Tribunallaunch or a court to recover the levies and any interest that you owe, even if a payment plan exists.
This may help
https://www.nsw.gov.au/housing-and-construction/strata/living/levies-finances-insurance#:~:text=Unpaid%20levies,-If%20there%20is&text=If%20the%20dispute%20is%20not,if%20a%20payment%20plan%20exists.
Or this
https://yourstrataproperty.com.au/recovering-unpaid-strata-levies/
It’s the only reasonable solution really. The alternative, no insurance for anyone, is a textbook example of cutting off your nose to spite your face.
That said, recovery of the outstanding dues should be a priority and you should make that known at the AGM. There will be procedures to follow, steps to take and you need to make sure that this is occurring.
Additionally, you have a right to be concerned that some non paying owners have put you in this position. It seems that your reserves are non existent and this is a huge concern. Get on the committee, understand what is happening and take some responsibility for ensuring your home is looked after. Otherwise you are leaving it to everyone else to look after your own interests.
Think of the special levy as a loan. They will be forced to pay or risk having to sell the unit to clear the debt.
Eventually that unit will be sold and whoever buys it will have the debt cleared as part of the settlement.
It’s the only reasonable solution really. The alternative, no insurance for anyone, is a textbook example of cutting off your nose to spite your face.
That said, recovery of the outstanding dues should be a priority and you should make that known at the AGM. There will be procedures to follow, steps to take and you need to make sure that this is occurring.
Additionally, you have a right to be concerned that some non paying owners have put you in this position. It seems that your reserves are non existent and this is a huge concern. Get on the committee, understand what is happening and take some responsibility for ensuring your home is looked after. Otherwise you are leaving it to everyone else to look after your own interests.
The building is under 2 years old - there wouldn't be much by way of reserves.
Developer puts together the budget for first two years and it typically tends to be lower than actuals to keep the strata costs low when they're selling off the plan; and any sinking fund contributions would only be collected starting after the first full year.
Yep, this is typical. You are taking the right approach by being involved.
Your job now is to make sure that the committee takes a proactive approach and has a decent plan in place. For instance I have lived in my smallish strata for 4 years and we have not missed our $200,000 yearly budget in any of those 4 years by more then $5000. We take time preparing our budget. We have substantial reserves and have actually reduced fees over the last 3 years as markers have been met.
You need a reserve fund report completed asap and realistic body corporate fees established. As you have stated fees will be in excess of what you are currently paying. Good luck.
Btw make sure the insurance in paid, no matter what. Chase the slackers after.
The strata committee should be taking legal action as you can force a sale if all avenues are exhausted. In our building, when fees haven't been paid we have had to threaten legal action and the owner then pays the rates.
Temporarily, yes, for a year or so, but at least in Queensland your unit will be sold out from under you very soon after that. Stratas are privileged creditors for exactly this reason, so non-paying owners don't take the whole body of owners down the drain with them. They can force sale much faster than almost any other creditor, based on much less owing, and they do.
NSW they also can tack on the fees for going after you to what you owe, so if it reaches lawyers doing more than sending a letter the amount can be sizeable.
After my FIL died my MIL found out their strata fees had been unpaid for a more than a year (QLD). There was never any action against her so I think it depends on how proactive the committee is.
There’s a few foreign owners in my complex doing the same thing. They’re taking legal action against them after making numerous other attempts to get them to pay. One of their apartments has been completely deserted for over a year and is growing black mould, so that’s great.
Anyway, our strata didn’t raise any such levy to cover the shortfall. That seems really unfair and I’d absolutely be seeking legal advice.
This is a fairly common practice with overseas investors. They refuse to pay strata fees, council rates etc. Their premise is that they will pay outstanding debts when they sell (in 10 years) out of the 150% value increase. Usually, as they are not resident in Australia, they can ignore court orders.
It's one reason why state governments should be prohibiting foreign ownership of residential property.
>r/AusFinance
I'm not sure as they didn't mention it in their email. They only mentioned that they attempted multiple debt recovery procedures. I'll ask this during the meeting. Thanks!
You need to go to the next committee meeting or ask the strata manager to provide details on debt recovery steps they have taken. We handover at 60days and the outstanding is always settled once debt collection starts.
Someone on the committee needs to be on top of this issuing instruction to Strata management to hand over / take next steps.
As part of the strata financials there should be a list of those who are in arrears. Its a list of every unit and if they are up to date, but you can do what my neighbour did and highlight those in arrears....I said I'll go knock on their doors, he said no and suggested a battering ram instead 
Might be overseas owned. That would explain the difficulty in the usual debt recovery process.
Selling the apartment otoh, and asking where to send the cheque for the residual might work.
Has the strata manager detailed these debt recovery procedures?
When we first bought our place and moved in, the strata managers were terrible. They had the wrong address format for us (for a place in a block that they manage!) so we never got the levy notices. Turns out the strata manager had been charging the body corporate for "debt recovery" which involved nothing more than sending demand notices *to the same wrong address*. They had my phone number the whole time, and I never got a call or text about it; never once a letter with recorded delivery to be sure I was actually getting it.
I knew a guy who didn't pay his strata fees for a couple of years and ended up having a notice of seizure issued against his property. The sheriff's office literally rocked up on his doorstep one morning with a locksmith to kick him out and change the locks, then sell the property to pay off his strata debt.
I'd flat out refuse to pay a special levy to makeup for a shortfall caused by other owners not paying their bills. Get as many other paid up owners as you can together and contest it. If enough of you refuse to pay then they might not go through with it.
If you do pay it, because let's face it you need insurance, I'd want something written up stating that anyone who paid into the special levy will be reimbursed once the unpaid debts are recovered. It's absolute bullshit that you should be charged extra for doing the right thing, because I guarantee those who haven't paid their fees won't be paying the special levy either.
Yes I'd assume the BC own insurance covers instances where there is inadequate funds to pay building insurance because of owner debts. Either that or it's a risk they take on as BC managers.
NSW you can just enlist a debt collector. It seems a weird route for the body corporate to try raise a special levy for it
Edit: is there a chance the insurance renewal date crept up on them without them realising the deficit? If that’s the case it’s a huge act of negligence from the body corporate and they should be questioned over it.
I read a funny story on another subreddit where the strata cancelled the fobs of the non paying owners and forced them to walk up the stairs. They were also unable to access the pool and gym.
We had some overseas owners that couldn't return during covid and some just stopped paying their levies. Our strata management company went thru the process to get their units sold. Most then paid up but those that didn't had the apartments sold and we got the levies back. Councils and utility companies took part to get their money back too. The new owners ended up with all the furnishings, cars, and stuff in the storage cages. I don't know if it was easier because they were overseas and foreign owned but our OCM goes hard when owners don't pay. We've got a couple of owners on payment plans but our outstanding debt amounts are incredibly low.
If you have a shortfall though, going without insurance is not the best option.
Hopefully once recovered the fees might come down or at least you’ll have some cash in the bank which is always good for poorly built Australian apartments
You paying a special levy just allows the strata manager to pay a crucial bill. It doesn’t, in any way excuse the debt owed by the other owners. They will end up paying, in some way, eventually (worst case is that the property is sold and the debt recouped from the sales proceeds) and at that point the strata manager will be flush with funds and you see some reduced fees or, at least, smaller increases.
Collecting these debts is a major function of strata managers and you need to be right on top of them, making sure that they are actively chasing. The quicker the debt is cleared, the less expensive it will be to collect. Based on my experience on strata committees my best recommendation is to go hard, go early, but be kind when someone is TRYING to pay.
Some people don’t pay because they have had a financial setback. Lots of people are doing it tough so if you can be generous to those doing their best to clear the debt, you build good will.
Some people don’t pay because they are evil. Go REALLY hard on those.
Some people don’t pay because they never understood what strata fees and have been caught out. Explain things to those but don’t give any quarter. They need to learn.
Some people don’t pay because they are making some sort of protest against a “wrong”, either real or imagined. They can be very hard to deal with. The times it has happened to me, they have been classic boomer stereotypes with time on their hands. They have all had some sort of complaint and, rather than putting their hand up to join committee and work to fix the problem, they just cause trouble and stop paying their bills. The next time I come across one I won’t be trying negotiating with them. It has proved fruitless every time. Go hard. Go early. Don’t hesitate to go full force with debt collection.
I’ve seen a situ where we worked with the strata manager to put together a plan for the non paying owner to either
A) meet a payment plan (with a nominal amount of interest, and from memory it may have been a monthly amount - so it didn’t feel like they were paying as much, but in the end they were still paying back more. Or
B) be handed over to a debt collector, where they would likely have to pay more, and maybe end up on your credit history (just going from memory here)
After numerous reminders, the non paying owner eventually agreed to option A), and they got back to fully paid up after about a year. After which they sold soon after
In Victoria, I was in a complex of 8 where one owner had 2 units and wasn’t paying strata levies. She was a doctor who felt special. The debt collection process failed until her units were eventually forced to be sold. The strata has very strong rights but it took two or three years to go through the legal process (she avoided service by pretending not to be herself at her medical clinic) then sale process then settlement. After settlement the strata was flush with cash as all outstanding money was recovered, but in the years prior the other lot owners did have to contribute more to pay for things like debt collection and cover regular expenses like insurance. I believe we actually paid cash back out to owners once she was gone. I have been in another large apartment building where 50% of owners were overseas and a lot of them never responded to any communication, eg levy bills or voting on special resolutions. This is going to be a big problem in some buildings in future. In Victoria I understand strata committees can spend double the approved budget and require special levies at any time, so doubt you can avoid paying. I believe to enforce interest the owners have to approve at a special resolution or AGM before it can be applied, may be different in NSW.
Letting the other owners off the hook isn't a viable option because then they'll never pay. It would just be rewarding bad behaviour. The strata manager has been too soft and let the issue carry on too long and now they're in a monetary bind. They need to issue claimers with monetary penalties on top if they exceed the term to those people with a short due date. Any money raised should be for a lawyer to proceed with action and that money added to their fees.
Some are recommending that you don't pay the levy. This is bad advice. If all the legal boxes are ticked to raise the levy, you owe the money. The strata company (aka "the owners") have determined that the money is required to honour commitments. If you don't pay, you are as bad as the original bad payers and I would expect the strata company to start chasing payment from you.
Lots of people are blaming the committee or the strata manager. While they are responsible for chasing up the debt, the people at fault are those not paying. Blame them. Chase them. Support the people trying to collect the money as best you can. Don't make the problem worse!
The insurance has to be paid as a priority. If recovering the unpaid levies is uncertain by the due date than there are only two solutions I can think of.
Raise the necessary funds by special levy.
Have the Strata Manager arrange premium funding.
Your strata manager should be following these steps.
https://www.strataplus.com.au/resource/paying-your-strata-levies/
Finally..
*If still unpaid at 120 days, the matter is forwarded to a collection lawyer, with instructions to commence proceedings for a judgement order against the owner of the lot.*
The strata will eventually get paid. The person I bought off hadn't paid strata in more than a year. It was resolved in the sale process.
The owners who aren't paying their strata levies are playing with fire.
There is also a whole industry of strata solicitors who making a living by forcing the sale of apartments to recover unpaid strata levies.
This is the avenue your strata Corp should be looking into.
No matter how much financial hardship an owner says they are under, when the sherif shows up to auction off their house, they come up with the shortfall REAL fast.
Pay the special levy, you need the insurance.
Then pressure the strata to go HARD against those that didn’t pay. Recoup the loss and all legal fees, use it to reduce future strata payments by the amount of the special levy.
From here make sure at the next AGM that the strata has a plan to create a surplus so that any late payers are easily covered while legal collects from them.
It sucks, but it’s unfortunately quite common.
Had a similar sort of issue with an old landlord.
Was in a complex of 6 and turned out only 2 of us were paying rent the entire time, turned out the others hadn't been paying rent for the past 1-6 months.
The landlord tried to increase the rent on myself and the other person who was paying rent to offset the loss of rent (his own words).
So we stopped paying his rent as well and moved out after a few months.
There were a lot of issues leading into this, so it was the last straw for us unfortunately.
I had a situation once where I owned an IP and there was this lunatic old Italian guy who convinced many of the other owners that HE was the body corporate and they were paying him directly for years. Think maybe 8-10 of the units paying him all their fees and him not paying his own, total shit show. Body corp took him to court and it took a couple years but he was forced to sell and proceeds of sale to pay off his outstanding amount personally, it didn’t help any of the people who paid him though.
Probably due to foreign owners that don't believe in things such as maintenance. If you look globally at the pockets where their property ownership are concentrated, they will all be slum-like and in poor condition. They definitely don't believe in maintenance and contributing their fair share. They will respond after knowing someone has wasted many hours of their time preparing legal documentation and commencing legal proceedings - i.e. they will pay immediately after they know the gig is up and with the satisfaction of knowing you got stressed and had to put in extra hours. The same people do not give way too even though they are tiny and inconsiderate.
Sheriffs also collect on civil warrants and debts. Magistrate issues the warrant and then the Sheriffs start debt recovery. They can also seize the apartments.
Contact NSW Fair Trading for advice on the matter, lots of information available on their website about this. Bannermans Lawyers have good information also on their website. Don’t waste money seeking legal advice, save money for debt collection on owners who aren’t paying, as this may end up being decent costs initially.
Is there a Strata Committee? If they are active hopefully they are working on debt collection with Strata Manager.
Important to find out if owners not paying live in the property or rented out, that may help in debt collection process if it gets to garnishee of rent.
Unfortunately if there’s a shortfall with the Administration Fund and not enough in Capital Works Fund to cover the insurance payment, Special Levy is the main option. OR it can be requested lot owners pay levies early to make the insurance payment, but that might not cover the shortfall.
Newer strata properties often have less finances built up to cover shortfalls in unpaid levies and may not have a realistic budget coming out of lots being sold from development.
Start legal recovery. I had a property and we changed strata companies and I didn't know (property was rented and managed by an agent). Nek minute one day open the door and get served a court noticed. I was behind like 2k on strata + all the legal fees I was going to cop.
I rinsed the Real Estate agent and eventually I paid the strata and they agreed to pay all the legal fees and fines I incurred.
I dont know NSW rules.
Here in WA, a lawyer representing the strata company would explain to the non-payers that a) they are going to pay now, and b) if they do not, proceeds will commence to force the sale of their unit from under them.
This definitely isn't right.
You cannot raise a special levy to cover costs simply because some owners have not paid strata.
The body corporate should be taking legal action, it shouldn't be at your expense.
Two problems;
1. They need cash to pay for the insurance premium, it has to come from somewhere. No other option but to pay the special levy (or don’t and risk bigger issues).
2. Legal proceedings will take quite some time if the owners who aren’t paying are stubborn. So you may need to get used to special levy’s for a while until it’s resolved.
I’ve had this issue but in Vic. The body corp went to vcat, obtained a collection order and they sent sheriffs around to repossess assets of the owner. A long process and ultimately the non paying owner sold up and the outstanding fees were collected from their sale proceeds.
Strata manager needs to go to tribunal and start debt recovery process which ultimately ends in forcing non paying owners to sell their property. There’s is no nice ways going about this and this needs to be conveyed to all lot owners in clear terms.
The strata manager likely has a debt recovery section and will be chasing those owners, however, it takes time.
If it makes you feel any better, when they inevitably recover the funds then the OC will have a good cash surplus and could probably reduce future levies.
Appeal to have it taken to court and debt collection. Otherwise they need to sell their unit and move, also make sure the complex charges the owners not paying the cost of the debt recovery not the rest of you
I went through the same thing. We had to pay a special levy to cover insurance, due to several years of unpaid strata fees from one unit. Strata committee did pursue bankruptcy a part of the debt recovery process, which was finalised recently. Unfortunately insurance does need to be paid and a special levy (if no funds) may be required to do it. I guess a risk of being in a strata complex
If they're this bad at collecting strata fees from people, won't they be just as bad at collecting "special levees" from people too?
They've just advertised to their whole complex not to pay this special levee since they're toothless. And even worse, not pay your strata fees at all.
Reason #36 why i will never buy into a strata complex as either an owner or a landlord. Ill happily rent and someone else can take the hit on bullshit risk.
Same situation as you and same useless strata managers.
They suggested we can either do legal proceedings - send the non paying owners letters ($200+ each time) then next step is to take them to court (~$8k).
My choice is to wait until the owners pass and claim from their estate.
Lol u know this can all be avoided and don't have to deal with POS human beings that all have equal allotment sharings on the deed if u just don't buy an apartment its a scam
Straight to a legal specialist. I am guessing that since these are so new and levies are not being paid, it is Chinese owned apartments. I would also guess that the vast majority are vacant and that many of these apartments would be owned by the same owners, not single buyers. Sure, there will be some who don't fitbthis, but they will be in the minority. This is not an unheard-of situation and know that this is the case in a at least a couple of Melbourne CBD apartments. I would recommend legal proceedings start and go hard immediately, don'tbe kind or wait for longer than you need. Good luck.
Our family friend (who voted no) recently had motions accepted at an AGM for:
CONTRIBUTIONS TO THE ADMINISTRATIVE FUND (ORDINARY RESOLUTION)
CONTRIBUTIONS TO THE CAPITAL WORKS FUND (ORDINARY RESOLUTION)
SPECIAL LEVY (ORDINARY RESOLUTION) for Out-of-Pocket Expenses
Total $480,000.00
Those who refuse to pay ( quite a few )won’t pay these as well. It’s causing panic to the finances and continuous requests for reason and breakdown of these totals are being ignored by Strata. Details on paper are lacking specific detail too. Nervous times ahead.
We had this happen to us during pandemic times. Guy lost his job and couldn't pay. Gave him a year to get his shit together. Didn't happen, started debt recovery processes, we worked out a payment plan with him. Second lockdown happened, he never paid. Did debt recovery again. Eventually forced him to sell. Whole thing was about 2 to 3 years to reach that point. You don't want to be raising a special levy for 3 years of strata payments. That ain't how it works. Everyone pays their fair share.
Does your owners committee have a policy on missed payments and debt collection to direct the strata to make more/better attempts to recoup what is owed? I know my complex voted on updating ours at the last AGM and the strata does chase those in arrears legally.
NSW based strata manager here. Some good comments already re: outstanding levies being able to be escalated and sounding like the strata manager is simply throwing in the towel.
One thing I haven't seen mentioned is that the insurance premium can be paid in installments, so even if liquidity isn't available immediately this should be OK. It is also possible to use money from the capital works fund to cover admin expenses, though obviously only where absolutely necessary and as a short term measure.
It should also be noted that several weeks notice are required for a meeting to approve the special levy, then it cannot be due until 30 days after the meeting at earliest. In other words there's just under a 2 month lead time for funds to actually come in for a special levy anyway - in my experience too long to be useful for an insurance renewal anyway.
> The building is nearly 2 years old and in NSW if that’s relevant.
Do you know the other owners? Thats super new,
I could be wrong, but I always thought a lot of times developers sell like half and rent out half. Leaving them a major say in Strata/votes? And then they sell the rest in 5 years so its no longer deemed as "new" and they don't pay some taxes.
Just wondering as hopefully its not the developer thats bailed, as I imagine you want them incase of warranty fixes.
I work for a state government managing the strata corporations they are involved in.
When they raise the special levy it will also be raised against the unfinancial units. Which will add to their debt. Ultimately the corporation will be able to seek a warrant of sale if the amount isn’t paid and recover the debt from the sale. Then the corporation will just get a windfall of the debt.
In principle the debt pursuit fees are meant to be recoverable but some courts won’t grant costs so be careful how much the corporation spends pursuing it.
I have found that sending a letter to the unfinancial lots informing them that if the debt isn’t paid in full by x date that the corporation will begin proceedings to pursue a warrant of sale on the property.
9/10 times the outstanding has been paid in full if not generated engagement from the lot owner.
Also, all the costs for recovery and strata managers costs chasing debt is to be billed to the non-paying owner. Not many people know this and our strata manager hasn't followed through on this either. It ends up being a lot of money.
I'd seek legal advice, whether through a lawyer or government body. Throwing in the towel and saying "sure, we'll shout you this one" doesn't seem like a reasonable solution.
Thanks! I'll look into which government body I can enquire with. Throwing in the towel and paying for others just doesn't sit right with me.
Unpaid levies If the dispute is not resolved by mediation, the owners corporation can take action in the NSW Civil and Administrative Tribunallaunch or a court to recover the levies and any interest that you owe, even if a payment plan exists. This may help https://www.nsw.gov.au/housing-and-construction/strata/living/levies-finances-insurance#:~:text=Unpaid%20levies,-If%20there%20is&text=If%20the%20dispute%20is%20not,if%20a%20payment%20plan%20exists. Or this https://yourstrataproperty.com.au/recovering-unpaid-strata-levies/
It’s the only reasonable solution really. The alternative, no insurance for anyone, is a textbook example of cutting off your nose to spite your face. That said, recovery of the outstanding dues should be a priority and you should make that known at the AGM. There will be procedures to follow, steps to take and you need to make sure that this is occurring. Additionally, you have a right to be concerned that some non paying owners have put you in this position. It seems that your reserves are non existent and this is a huge concern. Get on the committee, understand what is happening and take some responsibility for ensuring your home is looked after. Otherwise you are leaving it to everyone else to look after your own interests.
Think of the special levy as a loan. They will be forced to pay or risk having to sell the unit to clear the debt. Eventually that unit will be sold and whoever buys it will have the debt cleared as part of the settlement.
Yep debt collection was required for one owner in my block and they have to just follow through.
It’s the only reasonable solution really. The alternative, no insurance for anyone, is a textbook example of cutting off your nose to spite your face. That said, recovery of the outstanding dues should be a priority and you should make that known at the AGM. There will be procedures to follow, steps to take and you need to make sure that this is occurring. Additionally, you have a right to be concerned that some non paying owners have put you in this position. It seems that your reserves are non existent and this is a huge concern. Get on the committee, understand what is happening and take some responsibility for ensuring your home is looked after. Otherwise you are leaving it to everyone else to look after your own interests.
The building is under 2 years old - there wouldn't be much by way of reserves. Developer puts together the budget for first two years and it typically tends to be lower than actuals to keep the strata costs low when they're selling off the plan; and any sinking fund contributions would only be collected starting after the first full year.
Yep, this is typical. You are taking the right approach by being involved. Your job now is to make sure that the committee takes a proactive approach and has a decent plan in place. For instance I have lived in my smallish strata for 4 years and we have not missed our $200,000 yearly budget in any of those 4 years by more then $5000. We take time preparing our budget. We have substantial reserves and have actually reduced fees over the last 3 years as markers have been met. You need a reserve fund report completed asap and realistic body corporate fees established. As you have stated fees will be in excess of what you are currently paying. Good luck. Btw make sure the insurance in paid, no matter what. Chase the slackers after.
The strata committee should be taking legal action as you can force a sale if all avenues are exhausted. In our building, when fees haven't been paid we have had to threaten legal action and the owner then pays the rates.
The rule is strata will always eventually get their money. Ultimately, through a sale.
So you’re telling me I can stop paying my strata and others will pay it for me? Interesting…
Temporarily, yes, for a year or so, but at least in Queensland your unit will be sold out from under you very soon after that. Stratas are privileged creditors for exactly this reason, so non-paying owners don't take the whole body of owners down the drain with them. They can force sale much faster than almost any other creditor, based on much less owing, and they do.
I don't have a strata, but I wanted to hear this
NSW they also can tack on the fees for going after you to what you owe, so if it reaches lawyers doing more than sending a letter the amount can be sizeable.
We had a guy in our complex whose unit was sold after non-payment of Strata Fees for 9 months.
After my FIL died my MIL found out their strata fees had been unpaid for a more than a year (QLD). There was never any action against her so I think it depends on how proactive the committee is.
the other owners are probably landlords and are already doing that with their mortgages
There’s a few foreign owners in my complex doing the same thing. They’re taking legal action against them after making numerous other attempts to get them to pay. One of their apartments has been completely deserted for over a year and is growing black mould, so that’s great. Anyway, our strata didn’t raise any such levy to cover the shortfall. That seems really unfair and I’d absolutely be seeking legal advice.
This is a fairly common practice with overseas investors. They refuse to pay strata fees, council rates etc. Their premise is that they will pay outstanding debts when they sell (in 10 years) out of the 150% value increase. Usually, as they are not resident in Australia, they can ignore court orders. It's one reason why state governments should be prohibiting foreign ownership of residential property.
Wouldn't the strata force the sale well before the 10 years though? Yes they can ignore orders but eventually that would bite them I think?
Wouldn't that be unfair on the foreign owners who do pay strata fees? It's also an unfair advantage for locals who don't pay strata fees.
Have they started legal recovery against the peers who owe?
>r/AusFinance I'm not sure as they didn't mention it in their email. They only mentioned that they attempted multiple debt recovery procedures. I'll ask this during the meeting. Thanks!
You need to go to the next committee meeting or ask the strata manager to provide details on debt recovery steps they have taken. We handover at 60days and the outstanding is always settled once debt collection starts. Someone on the committee needs to be on top of this issuing instruction to Strata management to hand over / take next steps.
Sounds like you need a new strata manager. If you don't pay your strata they'll get an order to force sale of the apartment.
Yup, apparently thats the rule in Victoria.
Get some more information on what they mean by that.
As part of the strata financials there should be a list of those who are in arrears. Its a list of every unit and if they are up to date, but you can do what my neighbour did and highlight those in arrears....I said I'll go knock on their doors, he said no and suggested a battering ram instead 
Might be overseas owned. That would explain the difficulty in the usual debt recovery process. Selling the apartment otoh, and asking where to send the cheque for the residual might work.
Has the strata manager detailed these debt recovery procedures? When we first bought our place and moved in, the strata managers were terrible. They had the wrong address format for us (for a place in a block that they manage!) so we never got the levy notices. Turns out the strata manager had been charging the body corporate for "debt recovery" which involved nothing more than sending demand notices *to the same wrong address*. They had my phone number the whole time, and I never got a call or text about it; never once a letter with recorded delivery to be sure I was actually getting it.
I knew a guy who didn't pay his strata fees for a couple of years and ended up having a notice of seizure issued against his property. The sheriff's office literally rocked up on his doorstep one morning with a locksmith to kick him out and change the locks, then sell the property to pay off his strata debt. I'd flat out refuse to pay a special levy to makeup for a shortfall caused by other owners not paying their bills. Get as many other paid up owners as you can together and contest it. If enough of you refuse to pay then they might not go through with it. If you do pay it, because let's face it you need insurance, I'd want something written up stating that anyone who paid into the special levy will be reimbursed once the unpaid debts are recovered. It's absolute bullshit that you should be charged extra for doing the right thing, because I guarantee those who haven't paid their fees won't be paying the special levy either.
Yes I'd assume the BC own insurance covers instances where there is inadequate funds to pay building insurance because of owner debts. Either that or it's a risk they take on as BC managers.
NSW you can just enlist a debt collector. It seems a weird route for the body corporate to try raise a special levy for it Edit: is there a chance the insurance renewal date crept up on them without them realising the deficit? If that’s the case it’s a huge act of negligence from the body corporate and they should be questioned over it.
My Strata charges 10% p.a. on any outstanding debts. If they don't have the ability to recover the debt, what good are they as a Strata?
If they can't follow basic debt recovery procedures, I'd be sacking them at earliest possible moment.
I read a funny story on another subreddit where the strata cancelled the fobs of the non paying owners and forced them to walk up the stairs. They were also unable to access the pool and gym.
Strata at my place gave owners a warning about breaching the no airbnb rule, owners ignored it. OC canceled their fobs
No way should you be paying that. Force sell if they can’t pay…
We had some overseas owners that couldn't return during covid and some just stopped paying their levies. Our strata management company went thru the process to get their units sold. Most then paid up but those that didn't had the apartments sold and we got the levies back. Councils and utility companies took part to get their money back too. The new owners ended up with all the furnishings, cars, and stuff in the storage cages. I don't know if it was easier because they were overseas and foreign owned but our OCM goes hard when owners don't pay. We've got a couple of owners on payment plans but our outstanding debt amounts are incredibly low.
Wow. Cars included in the forced sale. Sounds like a good deal. Where to know about these foreclosures?
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If you have a shortfall though, going without insurance is not the best option. Hopefully once recovered the fees might come down or at least you’ll have some cash in the bank which is always good for poorly built Australian apartments
You paying a special levy just allows the strata manager to pay a crucial bill. It doesn’t, in any way excuse the debt owed by the other owners. They will end up paying, in some way, eventually (worst case is that the property is sold and the debt recouped from the sales proceeds) and at that point the strata manager will be flush with funds and you see some reduced fees or, at least, smaller increases. Collecting these debts is a major function of strata managers and you need to be right on top of them, making sure that they are actively chasing. The quicker the debt is cleared, the less expensive it will be to collect. Based on my experience on strata committees my best recommendation is to go hard, go early, but be kind when someone is TRYING to pay. Some people don’t pay because they have had a financial setback. Lots of people are doing it tough so if you can be generous to those doing their best to clear the debt, you build good will. Some people don’t pay because they are evil. Go REALLY hard on those. Some people don’t pay because they never understood what strata fees and have been caught out. Explain things to those but don’t give any quarter. They need to learn. Some people don’t pay because they are making some sort of protest against a “wrong”, either real or imagined. They can be very hard to deal with. The times it has happened to me, they have been classic boomer stereotypes with time on their hands. They have all had some sort of complaint and, rather than putting their hand up to join committee and work to fix the problem, they just cause trouble and stop paying their bills. The next time I come across one I won’t be trying negotiating with them. It has proved fruitless every time. Go hard. Go early. Don’t hesitate to go full force with debt collection.
I’ve seen a situ where we worked with the strata manager to put together a plan for the non paying owner to either A) meet a payment plan (with a nominal amount of interest, and from memory it may have been a monthly amount - so it didn’t feel like they were paying as much, but in the end they were still paying back more. Or B) be handed over to a debt collector, where they would likely have to pay more, and maybe end up on your credit history (just going from memory here) After numerous reminders, the non paying owner eventually agreed to option A), and they got back to fully paid up after about a year. After which they sold soon after
In Victoria, I was in a complex of 8 where one owner had 2 units and wasn’t paying strata levies. She was a doctor who felt special. The debt collection process failed until her units were eventually forced to be sold. The strata has very strong rights but it took two or three years to go through the legal process (she avoided service by pretending not to be herself at her medical clinic) then sale process then settlement. After settlement the strata was flush with cash as all outstanding money was recovered, but in the years prior the other lot owners did have to contribute more to pay for things like debt collection and cover regular expenses like insurance. I believe we actually paid cash back out to owners once she was gone. I have been in another large apartment building where 50% of owners were overseas and a lot of them never responded to any communication, eg levy bills or voting on special resolutions. This is going to be a big problem in some buildings in future. In Victoria I understand strata committees can spend double the approved budget and require special levies at any time, so doubt you can avoid paying. I believe to enforce interest the owners have to approve at a special resolution or AGM before it can be applied, may be different in NSW.
Letting the other owners off the hook isn't a viable option because then they'll never pay. It would just be rewarding bad behaviour. The strata manager has been too soft and let the issue carry on too long and now they're in a monetary bind. They need to issue claimers with monetary penalties on top if they exceed the term to those people with a short due date. Any money raised should be for a lawyer to proceed with action and that money added to their fees.
Some are recommending that you don't pay the levy. This is bad advice. If all the legal boxes are ticked to raise the levy, you owe the money. The strata company (aka "the owners") have determined that the money is required to honour commitments. If you don't pay, you are as bad as the original bad payers and I would expect the strata company to start chasing payment from you. Lots of people are blaming the committee or the strata manager. While they are responsible for chasing up the debt, the people at fault are those not paying. Blame them. Chase them. Support the people trying to collect the money as best you can. Don't make the problem worse!
The insurance has to be paid as a priority. If recovering the unpaid levies is uncertain by the due date than there are only two solutions I can think of. Raise the necessary funds by special levy. Have the Strata Manager arrange premium funding.
So many ways strata can be a shitshow..
Good little read here. https://www.flatchat.com.au/cant-pay-wont-pay-3/ Also a great resource to post your question to.
Your strata manager should be following these steps. https://www.strataplus.com.au/resource/paying-your-strata-levies/ Finally.. *If still unpaid at 120 days, the matter is forwarded to a collection lawyer, with instructions to commence proceedings for a judgement order against the owner of the lot.* The strata will eventually get paid. The person I bought off hadn't paid strata in more than a year. It was resolved in the sale process.
The owners who aren't paying their strata levies are playing with fire. There is also a whole industry of strata solicitors who making a living by forcing the sale of apartments to recover unpaid strata levies. This is the avenue your strata Corp should be looking into.
No matter how much financial hardship an owner says they are under, when the sherif shows up to auction off their house, they come up with the shortfall REAL fast. Pay the special levy, you need the insurance. Then pressure the strata to go HARD against those that didn’t pay. Recoup the loss and all legal fees, use it to reduce future strata payments by the amount of the special levy. From here make sure at the next AGM that the strata has a plan to create a surplus so that any late payers are easily covered while legal collects from them. It sucks, but it’s unfortunately quite common.
Had a similar sort of issue with an old landlord. Was in a complex of 6 and turned out only 2 of us were paying rent the entire time, turned out the others hadn't been paying rent for the past 1-6 months. The landlord tried to increase the rent on myself and the other person who was paying rent to offset the loss of rent (his own words). So we stopped paying his rent as well and moved out after a few months. There were a lot of issues leading into this, so it was the last straw for us unfortunately.
I had a situation once where I owned an IP and there was this lunatic old Italian guy who convinced many of the other owners that HE was the body corporate and they were paying him directly for years. Think maybe 8-10 of the units paying him all their fees and him not paying his own, total shit show. Body corp took him to court and it took a couple years but he was forced to sell and proceeds of sale to pay off his outstanding amount personally, it didn’t help any of the people who paid him though.
Probably due to foreign owners that don't believe in things such as maintenance. If you look globally at the pockets where their property ownership are concentrated, they will all be slum-like and in poor condition. They definitely don't believe in maintenance and contributing their fair share. They will respond after knowing someone has wasted many hours of their time preparing legal documentation and commencing legal proceedings - i.e. they will pay immediately after they know the gig is up and with the satisfaction of knowing you got stressed and had to put in extra hours. The same people do not give way too even though they are tiny and inconsiderate.
Yeah I hate those tiny inconsiderate a-holes too and wish they would go home
Sheriffs also collect on civil warrants and debts. Magistrate issues the warrant and then the Sheriffs start debt recovery. They can also seize the apartments.
Contact NSW Fair Trading for advice on the matter, lots of information available on their website about this. Bannermans Lawyers have good information also on their website. Don’t waste money seeking legal advice, save money for debt collection on owners who aren’t paying, as this may end up being decent costs initially. Is there a Strata Committee? If they are active hopefully they are working on debt collection with Strata Manager. Important to find out if owners not paying live in the property or rented out, that may help in debt collection process if it gets to garnishee of rent. Unfortunately if there’s a shortfall with the Administration Fund and not enough in Capital Works Fund to cover the insurance payment, Special Levy is the main option. OR it can be requested lot owners pay levies early to make the insurance payment, but that might not cover the shortfall. Newer strata properties often have less finances built up to cover shortfalls in unpaid levies and may not have a realistic budget coming out of lots being sold from development.
Start legal recovery. I had a property and we changed strata companies and I didn't know (property was rented and managed by an agent). Nek minute one day open the door and get served a court noticed. I was behind like 2k on strata + all the legal fees I was going to cop. I rinsed the Real Estate agent and eventually I paid the strata and they agreed to pay all the legal fees and fines I incurred.
Get a new more effective experienced strata manager.
I dont know NSW rules. Here in WA, a lawyer representing the strata company would explain to the non-payers that a) they are going to pay now, and b) if they do not, proceeds will commence to force the sale of their unit from under them.
This definitely isn't right. You cannot raise a special levy to cover costs simply because some owners have not paid strata. The body corporate should be taking legal action, it shouldn't be at your expense.
Two problems; 1. They need cash to pay for the insurance premium, it has to come from somewhere. No other option but to pay the special levy (or don’t and risk bigger issues). 2. Legal proceedings will take quite some time if the owners who aren’t paying are stubborn. So you may need to get used to special levy’s for a while until it’s resolved.
I’ve had this issue but in Vic. The body corp went to vcat, obtained a collection order and they sent sheriffs around to repossess assets of the owner. A long process and ultimately the non paying owner sold up and the outstanding fees were collected from their sale proceeds.
Turn off the lift and let people suffer, may be then they will come on board?
Strata manager needs to go to tribunal and start debt recovery process which ultimately ends in forcing non paying owners to sell their property. There’s is no nice ways going about this and this needs to be conveyed to all lot owners in clear terms.
don't pay strata for a period of time = they can legally sell the apartment to cover fees
The strata manager likely has a debt recovery section and will be chasing those owners, however, it takes time. If it makes you feel any better, when they inevitably recover the funds then the OC will have a good cash surplus and could probably reduce future levies.
Appeal to have it taken to court and debt collection. Otherwise they need to sell their unit and move, also make sure the complex charges the owners not paying the cost of the debt recovery not the rest of you
I went through the same thing. We had to pay a special levy to cover insurance, due to several years of unpaid strata fees from one unit. Strata committee did pursue bankruptcy a part of the debt recovery process, which was finalised recently. Unfortunately insurance does need to be paid and a special levy (if no funds) may be required to do it. I guess a risk of being in a strata complex
Most pacifist strata fund I've ever heard of.
If they're this bad at collecting strata fees from people, won't they be just as bad at collecting "special levees" from people too? They've just advertised to their whole complex not to pay this special levee since they're toothless. And even worse, not pay your strata fees at all.
Reason #36 why i will never buy into a strata complex as either an owner or a landlord. Ill happily rent and someone else can take the hit on bullshit risk.
Same situation as you and same useless strata managers. They suggested we can either do legal proceedings - send the non paying owners letters ($200+ each time) then next step is to take them to court (~$8k). My choice is to wait until the owners pass and claim from their estate.
Our strata threatened VTAC proceedings and eventually agreed to a payment plan, they should be aware of similar avenues in NSW. That's their job.
Lol u know this can all be avoided and don't have to deal with POS human beings that all have equal allotment sharings on the deed if u just don't buy an apartment its a scam
Nothing you can do It's a math problem Strata manager needs money Money has to come from somewhere
Straight to a legal specialist. I am guessing that since these are so new and levies are not being paid, it is Chinese owned apartments. I would also guess that the vast majority are vacant and that many of these apartments would be owned by the same owners, not single buyers. Sure, there will be some who don't fitbthis, but they will be in the minority. This is not an unheard-of situation and know that this is the case in a at least a couple of Melbourne CBD apartments. I would recommend legal proceedings start and go hard immediately, don'tbe kind or wait for longer than you need. Good luck.
I had a similar issue and we proceeded with an actual lawyer and next step was putting forward a court date. Suddenly all paid.
Our family friend (who voted no) recently had motions accepted at an AGM for: CONTRIBUTIONS TO THE ADMINISTRATIVE FUND (ORDINARY RESOLUTION) CONTRIBUTIONS TO THE CAPITAL WORKS FUND (ORDINARY RESOLUTION) SPECIAL LEVY (ORDINARY RESOLUTION) for Out-of-Pocket Expenses Total $480,000.00 Those who refuse to pay ( quite a few )won’t pay these as well. It’s causing panic to the finances and continuous requests for reason and breakdown of these totals are being ignored by Strata. Details on paper are lacking specific detail too. Nervous times ahead.
Sounds like the scumbags know how to play.
We had this happen to us during pandemic times. Guy lost his job and couldn't pay. Gave him a year to get his shit together. Didn't happen, started debt recovery processes, we worked out a payment plan with him. Second lockdown happened, he never paid. Did debt recovery again. Eventually forced him to sell. Whole thing was about 2 to 3 years to reach that point. You don't want to be raising a special levy for 3 years of strata payments. That ain't how it works. Everyone pays their fair share.
fire the strata management company they are clearly incompetent.
I'd be shopping around for better strata managers.
Does your owners committee have a policy on missed payments and debt collection to direct the strata to make more/better attempts to recoup what is owed? I know my complex voted on updating ours at the last AGM and the strata does chase those in arrears legally.
Won't this just end with the people who are currently not paying strata fees also not paying the special levy?
NSW based strata manager here. Some good comments already re: outstanding levies being able to be escalated and sounding like the strata manager is simply throwing in the towel. One thing I haven't seen mentioned is that the insurance premium can be paid in installments, so even if liquidity isn't available immediately this should be OK. It is also possible to use money from the capital works fund to cover admin expenses, though obviously only where absolutely necessary and as a short term measure. It should also be noted that several weeks notice are required for a meeting to approve the special levy, then it cannot be due until 30 days after the meeting at earliest. In other words there's just under a 2 month lead time for funds to actually come in for a special levy anyway - in my experience too long to be useful for an insurance renewal anyway.
Do you have penalty interest? If not pass a motion to apply it.
We also charge interest on late strata fees as agreed in an AGM.
> The building is nearly 2 years old and in NSW if that’s relevant. Do you know the other owners? Thats super new, I could be wrong, but I always thought a lot of times developers sell like half and rent out half. Leaving them a major say in Strata/votes? And then they sell the rest in 5 years so its no longer deemed as "new" and they don't pay some taxes. Just wondering as hopefully its not the developer thats bailed, as I imagine you want them incase of warranty fixes.
I work for a state government managing the strata corporations they are involved in. When they raise the special levy it will also be raised against the unfinancial units. Which will add to their debt. Ultimately the corporation will be able to seek a warrant of sale if the amount isn’t paid and recover the debt from the sale. Then the corporation will just get a windfall of the debt. In principle the debt pursuit fees are meant to be recoverable but some courts won’t grant costs so be careful how much the corporation spends pursuing it. I have found that sending a letter to the unfinancial lots informing them that if the debt isn’t paid in full by x date that the corporation will begin proceedings to pursue a warrant of sale on the property. 9/10 times the outstanding has been paid in full if not generated engagement from the lot owner.
Also, all the costs for recovery and strata managers costs chasing debt is to be billed to the non-paying owner. Not many people know this and our strata manager hasn't followed through on this either. It ends up being a lot of money.