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 email@example.com.