The guide to Paying Strata Levies in New South Wales
The Strata Schemes Management Act 2015 NSW sets out the management of levies for an owners corporation.
WHAT ARE STRATA LEVIES?
Strata levies are payments owners must all make to cover the strata building’s running costs. Levies are set at each annual general meeting when the budgets are approved for the next 12 months and regular administrative or capital works fund (previously named sinking fund) levies are usually payable quarterly.
HOW ARE LEVIES SET?
The individual levies for each lot are determined by:
- Approval of the estimated budget considered by the owners corporation at the annual general meeting (AGM).
- The unit entitlement (UE) for your lot as set out in the schedule on the registered Strata Plan.
WHEN IS THE LEVY NOTICE SENT?
The due date on the levy notice must be at least 30 days after the notice has been given. It is sent to an Australian address provided by you, your settlement lawyer, or your property manager. Should an address not be provided, then the levy notice is sent to the actual address of your lot.
Note: You have the option to receive levy notices via email or by post.
WHEN MUST THE LEVIES BE PAID?
Each owner and/or property manager needs to be aware of their owners corporation’s levy cycle. The due dates for the levy cycle are determined at the AGM. If money is not received to the trust account at the end of one month after it is due and payable, it bears interest at the rate of 10% (as prescribed by the regulations) from the due date until it is paid. Example: If a levy is due 1 September and received during that month, then interest does not accrue. If the levy is paid in October, then interest accrues from 1 September until the date it is received in the trust account.
WHO IS THE INTEREST PAID TO?
The interest is paid to the trust account of the owners corporation, that is, it becomes a deposit to the trust monies of the owners corporation.
CAN AN OWNERS CORPORATION WAIVE INTEREST?
An owners corporation may, by special resolution at a general meeting, determine (either generally or in a particular case) that a contribution is to bear no interest. Note: A strata manager does not have the authority to waive the interest as it is not money owing to the strata manager.
WHO IS RESPONSIBLE FOR THE PAYMENT OF UNPAID LEVIES?
Contributions to the administrative and capital works funds are levied on the owner of the lot via the AGM. The courts have determined that a non-receipt of a levy notice is not a sufficient reason for non-payment. If a lot is sold and there are unpaid levies, then both the owner at the time the contributions were levied and the new owner are jointly and severally liable for the payment of the contribution and the interest payable. This is a matter for your conveyancing lawyer to address. Similarly, if your strata manager does not receive timely notification of purchase, then the penalty interest and charges should be addressed with your conveyancing lawyer.
HOW DOES AN OWNERS CORPORATION RECOVER UNPAID CONTRIBUTIONS AND INTEREST?
The legislation allows an owners corporation to recover as a debt any contribution not paid at the end of one month, together with any interest payable and the expenses of the owners corporation incurred in recovering those amounts. Through your strata management agency agreement, your strata manager is contracted to manage unpaid levies. Costs associated with this process are charged to the owner and appear on the lot statement. At your AGM, your owners corporation also resolves to appoint a debt collection lawyer.
THE DEBT RECOVERY PROCESS
- A reminder notice is sent if a contribution is unpaid for more than 30 days.
- If the total amount of contributions and interest is unpaid for 90 days, then a final notice is sent advising the owner (or property manager) that they have 30 days to pay before the matter is sent for debt collection.
- 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.
Note: That in addition to the reminder notice and the final notice, the next quarterly levy notice due would also have been issued.
Any questions, just ask your accredited Strata Plus strata manager.Read more
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