Levies in Arrears

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Forums Levies Levies in Arrears

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  • #230551
    puppyluv
    Member

    Hi Amanda,

    An owner has 5 lots and has been in arrears for 12 months. The OC  instructed the Strata manager to proceed with legal action. The owner was liable to pay interest and legal costs.

    At the AGM we were told that the owner paid the levies, we then discovered that  the owner did not pay the interest and legal cost. Can the lot owner vote at the AGM noting that the owner was not 100% financial. e,g Levies, interest and legal costs.

    I also note that the legal costs remains in the Ledger under expenses.

    your guidance is appreciated.

    Puppyluv

     

    #231419
    Amanda Farmer
    Expert

    Hi Puppyluv,

    Great question.

    Had legal proceedings been commenced against the owner? Or perhaps just some letters of demand issued?

    If legal proceedings were commenced, how were they concluded when the owner paid up?

    Under NSW law, an Owners Corporation is entitled to recover unpaid levies “together with” interest and “expenses”, in either the Tribunal or a Court. That’s in section 86.

    In my view, unless you have a by-law empowering you otherwise, the right to recover the “expenses” only triggers if you’ve reached the litigation stage and obtained a cost order from the court. If the owner pays up before you get there, you lose the right to claim legal costs.

    This previous Forum post on the topic may be of interest: https://yourstrataproperty.com.au/qanda/topic/charging-lot-owners-for-cost-of-levy-arrears-notice/

    [I am aware that the link to my paper on the subject is not currently working. Troubleshooting that for you now. I will come back and provide the correct link here].

    As for whether these unpaid ‘expenses’ render an owner unfinancial and therefore unable to vote: the starting point for this is clause 8 of Schedule 1 to the Act. It relevantly provides:

    8 MATTERS THAT MUST BE INCLUDED IN NOTICE OF GENERAL MEETINGS

    (1) The following matters must be included in, or accompany, the notice given of all general meetings–

    (f) a statement that an unfinancial owner, mortgagee or covenant chargee cannot vote at a meeting on a motion (other than a motion requiring a unanimous resolution) unless payment has been made before the meeting of all contributions levied on the owner, and any other amounts recoverable from the owner, in relation to the lot…

    Note the words “and any other amounts recoverable from the owner, in relation to the lot…” 

    The question is: are legal costs incurred pursuing levy recovery “other amounts recoverable from the owner”?

    I say, no: they are not “recoverable” unless and until the court says they are – by way of order confirming costs are payable. You’ll see this fleshed out a little more in my paper…when I provide you the correct link…

    I’ll be back.

    Amanda.

    #231471
    puppyluv
    Member

    Thank you Amanda.

    #231561
    Amanda Farmer
    Expert
    #231601
    puppyluv
    Member

    Thank you so much Amanda with your guidance on this matter.

    Kind Regards

    Puppyluv

     

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