457. The truth about being ‘unfinancial’ in strata
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Think you’ve got a month to pay your levies before it matters? Think again. I’m unpacking exactly what “unfinancial” means under the NSW strata law and busting some common myths along the way. Owners – tune in for practical tips to help you stay in good standing, and Managers – these are the technicalities you MUST be across.
Links mentioned:
- Get the transcript here!
- Podcast Episode 441: The Five Strata Law Reforms You Didn’t See Coming (NSW)
- Section 4 | Definition of Unofficial Owner | Strata Schemes Management Act 2015
- Section 83 | Levying of contributions | Strata Schemes Management Act 2015
- Section 85 | Interest, discounts on contributions and payment plans | Strata Schemes Management Act 2015
- Schedule 1, Clause 23 | Voting rights and voting procedures | Strata Schemes Management Act 2015
- Schedule 2, Clause 9 | Decisions at meetings | Strata Schemes Management Act 2015
- Strata Levy Payment Plan – Template Agreement (Member Only)
- Strata Levy Payment Plan – Template Agreement
Hi Amanda, Our Levies were struck at a late (by 3 months) AGM in 2024. These Levies as per 2024 AGM includes 1/7/2025. Since then a Management change. I asked the accountant at the new SM about how to pay the 1/7/2025 Levy as our AGM is much earlier than last year’s on 21 July 2025. Accountant said that levies are not due until after they have been decided at the 2025 AGM. How do I pay them to ensure that I am financial?
Hello,
I might not 100% grasped the situation, and writing below as an opinion only.
IMO, if you physically received (by post or email) a notice of a levy due on 1/7/2025 without any mentioning/explanation/comments regarding an extension of the due date, then pay it in July. Make sure you pay it into the account of the NEW strata management! This way you will be clear in the Stratamaster software and subsequently appear financial and will not incur any interest. If your next AGM changes (or already has changed) the levies, you will receive a new (adjustment) levy notice in due time.
Thanks Amanda for clarifying this situation. Why have things to be so complicated?
That was an interesting and useful podcast.
I can comment from experience (being a long time secretary of 131 lot strata).
1. Most of licensed-senior-strata-manager-girls have no idea that in the situation where a levy due date time falls between the meeting notice and the meeting, a lot owner is financial if (a) was financial at the day of the notice or (b) financial at the day of the meeting. In such cases I would explain and ask the strata manager girl to get a snapshot of the levy position report at the day of the notice. They would forget or consider it extra job (unpaid). They rely only on Stratamaster software, which generates AGM registration list with financial status only at the day of the meeting. As a result, as you have correctly noted, if a GM closely follows a levy due date, many lot owners would appear unfinancial, which is unfair/incorrect.
2. What you missed in your podcast is the “few cents arrears” syndrome. Sometimes coming to AGM registration, lot owners see in the registration list a few cents arrears, which technically makes them unfinancial. That happens if lot owners pay exactly the last levy overdue notice bill. By the time the payment takes place, they would accrue interest. In such situations I recommend an owner to pay 3% above the figure on the bill — it will cover with some excess.
Smarter lot owners, before trying to extinguish their debt, request a current balance of their account, and pay it. Even doing so leaves them with a few cents of the debt, which accrues during a few days delay between the date of the account balance the date when money appears in the strata trust account. In these situations i recommend lot owners to pay at least one dollar above their respective balance.
3. Given the above, it is debatable that if an owner turns up at an AGM, showing some kind of levy payment transaction, has the owner covered the “few cents arrears” effect or not. Strata manager will not have time to sort it on the spot when people are filing into a meeting room…
4. Finally, I would DISAGREE with you that a payment plan makes a lot owner clean of debt. Payment plan does not change levy due dates for that person. Levy due dates are set at an AGM by the WHOLE Owners Corporation, and can not be varied by a Committee for certain individuals based on the amount of crocodile tears shed. Payment plan does not cancel interest. It does not washes off the arrears (otherwise everyone would jump on repayment plans and would not pay any interest!) It does not make a levy non-payer miraculously good and financial. What a payment plan does — it just temporarily stops an arrears collection bulldozer — to give a breathing space to a struggling owner. Once the repayment plan is breached, the bulldozer kicks back into gear. But the owner is always unfinancial until the debt is extinguished in full.
Regards, Alex
Hi Alexandre,
You might be interested in tuning in to Amanda’s Friday Live today – it’s on Facebook. Here’s the link: https://www.facebook.com/share/v/195eTv9u1s/
Regards,
Rach – YSP Team
Alex – I have to say that I find your reference to strata staff derogatory – As per below. There are a lot of males now working in the industry. And the majority of all staff try to assist owners.
Your comments – Most of licensed-senior-strata-manager-girls have no idea that in the situation where a levy due date time falls between the meeting notice and the meeting, a lot owner is financial if (a) was financial at the day of the notice or (b) financial at the day of the meeting. In such cases I would explain and ask the strata manager girl to get a snapshot of the levy position report at the day of the notice.
Hi Alex,
Just my 5c worth….In relation to your point 4, have you considered that perhaps the reason the owner is financial in the event that they are on a payment plan and paid up in accordance with that payment plan, is because the payment plan is a contract or arrangement that supersedes the prior payment requirement, mutually agreed by both parties. By enacting a payment plan you are changing the date on which payments are due and payable.
Also I read with interest your reply to Rach regarding SSMA2015, s.4 “unfinancial owner means an owner of a lot in a strata scheme who has not paid all contributions levied on the owner that are due and payable, and any other amounts recoverable from the owner, in relation to the lot.” Have you considered that the interest on “contributions” are not “any other amount” if they are included in the payment plan? I would also have thought that a payment plan would stop the generation of interest accruing in order to allow the owner the ability to clear the debt. Does the interest form part of the contributions owing. I would say yes as Amanda pointed out special levies and other charges are treated differently to contributions.
Hi Nadia,
Thank you for sharing your thoughts! This is an insightful comment.
We encourage you to join our membership so you can take part in these discussions and get answers from Amanda directly inside our Q&A forum, enjoyed by paying members of our online community. Membership is just $97/month with no lock-in. Your instant access is here: http://www.stratamembership.com. We hope to have you on board!
Regards,
Rach
YSP Team
Thanks Amanda,
I listened to the Friday session, not live though. I completely agree that a payment plan effectively makes regular levies not payable on regular days, and that part of “unfinancial” definition is not satisfied.
However, the definition of the unfinancial owner (below)
SSMA2015, s.4 “unfinancial owner means an owner of a lot in a strata scheme who has not paid all contributions levied on the owner that are due and payable, and any other amounts recoverable from the owner, in relation to the lot.”
has another component: “any other amounts RECOVERABLE from the owner…”
“Recoverable” means capable of being recovered or regained, in general, potentially, without any specific timing attached.
I believe, interest is exactly that “recoverable” amount which makes an owner on a payment plan unfinancial. To understand, we need to know how interest is calculated in Stratamaster software. It is calculated daily and added to the debt daily. Therefore the interest is almost always there.
Why “almost”? Again, it is about the algorithm of Stratamaster. When an owner makes a payment to his/her account, the first thing Stratamaster does — it covers (cancels) the interest accrued by that day. The rest of funds (being split between Admin and Capital Works) is applied to partly reducing the debt on the levies as such.
So, on the day when funds are received to the owner’s account, the owner is financial (hooray!). On the next day and afterwards (until the next payment) he/she will revert to being unfinancial again because the interest is ticking daily.
I am writing the above for fun. We know that that discussion is purely “academic”. (You might write and post a discourse on that…)
No strata manager/chairperson would go into such tenets. For all practical purposes, any strata manager would treat a lot owner on the repayment plan as unfinancial. Registration list generated by Stratamaster would show the arrears and print “NO” in the financial status column (regardless of whether the lot owner is on the plan or not). That is it. We are the slaves of the software.
Regards, Alex
Just because stratamaster reports something does not mean it is correct.