Bankruptcy in Strata - SSKB - Strata Managers | Community Experts

Bankruptcy in Strata

During times of financial difficulty for lot owners, bodies corporate and owners corporations can often find themselves out of pocket with overdue and unpaid levies. This can be a huge concern to strata communities, especially if an owner declares bankruptcy and they face the possibility of losing payment of any overdue contributions and/or recovery costs.

In theory, there is always a risk that outstanding debt will not be paid at settlement. Even if the worst case scenario were to occur, the contributions and interest debt would stay with the lot, and as such become the responsibility of the new owner. Any outstanding recovery costs would stay with whoever the lot owner was at the time of settlement. The body corporate or owners corporation would then need to institute further proceedings against them.

In practice, and in the SSKB Levy Management Team’s experience, this generally does not occur. When an owner declares bankruptcy the mortgagee will take possession. In which case the body corporate or owners corporation debt then belongs to the mortgagee. This action differentiates the outstanding amount for the lot from other creditors in that it will then get paid by the mortgagee either at settlement or before.

At SSKB, the Levy Management Team actively watches how these matters progress and will suspend any current legal action and ensure all costs are included in the C205 search provided to the purchaser prior to settlement.

Thankfully, in most cases however the SSKB team are very successful in persuading the mortgagee to pay as soon as they take possession.

If you’d like any more information on the ways that the SSKB Levy Management Team can help you, please contact

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Recent Comments


Imad On October 31, 2012 | Reply

I need your help please? My strata management bankrupt me I had no idea about the law side. It’s going to costing me 70 thousand dollars after I paid my strata 11.816.23 I have until the second off november to pay ppb advisory 39.295 after paying 20.000 they want more please just tell me what to do. I went every where to find solution . Ppb advisory want me out off my home. After finishing my mortgage I just need help? As a family man looking after his family. I’m not saying it’s wasn’t my fault at the same time I didn’t think it would end like this. I’m only trying to find my way out off this mess I don’t no where to go?

    Chelsey On November 2, 2012 | Reply

    Hi Imad,

    In this situation we would suggest you seek legal advice. The process can be very involved and lengthy and we wouldn’t want to point you in the wrong direction!

    If you are unsure of who to contact, you may find the Living in Strata ‘Strata Market’ directory helpful. There are several solicitors who are listed that could help you out.

John On April 19, 2017 | Reply

Can a declared bankrupt be elected to a strata committee of the owners corporation? If so do they need to declare that they are in fact bankrupt and will be representing the owners in making monetary decisions on behalf of owners? They are not the owner of a lot in the SP.

    SSKB On May 15, 2017 | Reply

    Good morning John,
    The advice we have received from Office of Fair Trading (NSW) is that there is nothing in the Act preventing a bankrupt person being voted on to a Committee. The owner would have to give the person their proxy in writing that they wish for this person to act on their behalf, or in person at the meeting.

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