It is imperative bodies corporate ensure that all lot owners pay their levies when they fall due. A failure to do so places a financial burden on the Body Corporate as well as your diligent levy paying neighbour.
What Happens When Levies Aren’t Paid?
When levies are not paid, the Body Corporate will encounter problems such as:
- Budgets being increased to cover the shortfall;
- Special levies raised to meet the essential expenses;
- Reduction in value as the property lacks maintenance;
- Borrowing funds from elsewhere such as the sinking fund;
- Tension between diligent and delinquent paying owners;
- Imposition on committee members to ensure they do not disregard their duties.
Recover Your Debt
A Body Corporate should always attempt to recover the debt first by issuing notices, making telephone calls and attempting to liaise with the non paying lot owner.
It is essential a Body Corporate implement a policy on payment of levies. In our view, the policy should be short, simple and provided to all lot owners in a ‘Welcome Pack’. In order for such a policy to be successful, the Body Corporate must strictly follow the policy in order to educate lot owners: if you say you’re going to issue a notice after 30 days – do it without delay!
OMB Solicitors are experienced in dealing with non paying lot owners and (as a result) we are pro-active. All lot owners are treated equally and with respect (remember – every lot owner is a member of your community). Also, the Body Corporate Manager and committee are provided regular reports as to the status of the levy recovery process.
Levy Recovery Process
The process involved in legal recovery includes:
- Claim – a court document setting out the Body Corporate’s claim against the lot owner.
- Service – once the Claim has been filed it will need to be personally served on the lot owner. Sometimes an order for substituted service is required if the location of the lot owner is unknown.
- Default Judgment – the lot owner has a 28 day period to respond to the Claim failing which the Body Corporate will be at liberty to apply for default judgment. Judgment is a document where the Court states the amount owed to the Body Corporate including interest and costs. If the lot owner disputes the debt (this is rare), the matter will proceed to a hearing.
- Enforcement Proceedings – if the debt continues to remain unpaid, the Body Corporate can apply to the Court for an enforcement warrant directing the court bailiff to seize and sell the lot property to satisfy the debt.
We aim to ensure the Body Corporate recovers the debt at no cost to the Body Corporate. Click to read a review on the Body Corporate’s unique rights in recovering a debt.
The Court of Appeal (Supreme Court) in its decision of Westpac Banking Corporation v Body Corporate for The Wave Community Title Scheme 36237  QCA 73 provides a very solid and important summary of the position of the Supreme Court (QLD) as to why a body corporate is entitled to charge and recover its reasonable recovery costs from the lot owner.
Read more Body Corporate News regarding the recent developments in this area of law.