Frequently Asked Questions About Levies & the Impact of COVID-19
Owners Corporations are challenged with balancing its statutory obligations with the rights of owners and occupiers (and the broader community) during this unfortunate pandemic. As the uncertainty surrounding COVID-19’s impact on the nation, and the world, continues OMB Solicitors address three frequently asked questions about current levy recovery procedures.
Whilst Owners Corporations and residents must consider the impact of COVID-19 on their buildings, including implementing appropriate steps to limit transmission of the virus, Strata Committee’s need to continue making decisions to ensure the obligations of the Owners Corporation are met.
How might a Strata Committee deal with a failure of a lot owner to pay levies considering the impact of COVID-19?
Given the social and economic impacts of COVID-19, Strata Committees need to draw an appropriate balance between compassion for individual circumstances and maintaining a scheme’s healthy financial status. In this regard, it is likely that Strata Committees may be faced with increased hardship and payment plan requests from lot owners. It is important, during these times, for Strata Committees to consider each matter on a case by case basis and (if necessary) ask lot owners to provide evidence of financial hardship (i.e. redundancy letters or a Statement of Financial position) prior to making a decision.
Whilst there is no obligation on a Strata Committee to waive any portion of the debt, circumstances may arise which warrant a waiver of interest or a payment plan that would see the debt satisfied within a reasonable period of time.
In this regard, any payment plan requests need to be considered having regard to the lot owner’s payment history, the future needs of the scheme, how many lots are in the scheme and how the payment plan request may impact upon the day to day running of the scheme i.e. paying for insurance, caretakers or other essential expenses.
If an owner has been in arrears for a significant period of time and prior to March 2020, then the Strata Committee ought to consider a separate strategy of the management of that debt (in consultation with its legal advisors).
How is OMB Solicitors dealing with levy recovery processes during the COVID-19 Pandemic
OMB Solicitors have implemented several strategies in dealing with levies moving forward. These strategies include:
- a compulsory telephone call from our experienced staff to all owners referred to levy recovery to ensure a specific examination of the individual circumstances, which will result in an appropriate management of the debt; NEWS FOR OWNERS CORPORATIONS LEVIES & THE IMPACT OF COVID-19 As at 27 March 2020
- providing additional advice to the Strata Committee prior to the institution of legal proceedings (if such proceedings are necessary), including advice on hardship and payment plan requests;
- increasing the timeframes for debt management and exploring the financial options with each individual lot owner; and
- discussing with the Strata Committee how to manage and meet its financial obligations during the COVID-19 Pandemic.
Should the Strata Committee refer a lot owner to levy recovery given the COVID-19 Pandemic?
The short answer is yes.
An Owners Corporation is responsible for looking after common property and attending to all repairs. Accordingly, to ensure the Owners Corporation can meet its financial obligation of insurance, repair, maintenance and cleanliness – contributions must continue to be paid by owners.
Whilst there are legislative change with respect to enforcement of Judgments (i.e. bankruptcy and Statutory Demands), unfortunately there are no amendments to the regulations governing how an Owners Corporation recovers a levy from a lot owner (at this stage). Accordingly, Strata Committees are doing their best to manage the impact upon the financial circumstances of their scheme by operating “business as usual” with the overriding considering of addressing the effect of the virus on lot owner’s individual circumstances.
A message from OMB Solicitors
During these times of uncertainty, OMB Solicitors have implemented an action plan to ensure all levy recovery matters are actioned in a timely and appropriate fashion. We confirm that we are currently running business as usual and are taking steps to continue to minimise any disruption.
Over the last 2 years, OMB has invested heavily in technology which allows us to seamlessly work remotely if required and have been operating electronic Body Corporate files for approximately 12 months.
As this pandemic is ever evolving, our action plan and our levy recovery processes are fluid and will continue to adjust as we monitor the situation via the Australian Government Department of Health and World Health Organisation.
At OMB Solicitors we are all doing our part to minimise the risk of infection including practicing social distancing. In conjunction with this, we ask that all meetings are conducted via phone call or video conferencing. Should an onsite meeting be required, we further request that you advise if you have previously been in contact with the Coronavirus or have travelled within the last 14 days prior to the meeting.