Welcome to part three of a ten part series discussing the most commonly misunderstood issues related to strata living.
3. The committees involvement in the process leading to legal action.
Part two of this series demonstrated the processes and time frames used in house with the SSKB Levy Management Team. This week, we will discuss the processes involved when unpaid body corporate contributions proceed to legal action. It is a common misconception that SSKB is responsible for pushing owners into legal action, when it is the committee that is responsible for making these types of decisions.
In order to conduct any recovery action on overdue contributions, the Committee for each body corporate must agree to adopt the SSKB arrears recovery policy. Once this has been adopted, the Levy Management team handles the processes as demonstrated in part two.
If all negotiations have failed, the matter is referred back to the committee to resolve to engage solicitors to proceed to legal action in order to recover the debt. The committee must resolve specifically against that lot and this resolution will stand for that and any future legal action in reference to that lot owner. The levy management team then refer the file to one of the panel of solicitors that we use. The solicitors will then file a claim and statement of claim and this is served to the owner. The owner has 28 days to either pay or defend the claim. If they do neither the matter then proceeds to a default judgment which places a default on the lot owners credit rating. A copy of the judgement is sent to the owner giving a further 14 days to pay.
If they still do not pay the matter is then referred back to the Committee to advise if they wish to proceed with enforcement. They do not need to meet or minute this decision; this can simply be communicated via email to the levy management team. If the committee agree we then obtain an enforcement warrant and the first step is to notify the mortgagee of the debt. In many cases the mortgagee pays the debt.
In the event that there is no mortgage over the property the general step is to begin bankruptcy proceedings against the owner. If the mortgagee does not pay, the bailiff will then be engaged to seize and sell the property and the debt is paid from the sale proceeds.
It is important to note that none of SSKB’s debt recovery matters have proceeded to this level since we have had the current arrears recovery policy in place.
If you have any more questions on the committees involvement in legal proceedings please comment below and a member of the SSKB Levy Management Team will be in contact with you.