With the current economic climate and the number of natural disasters, as a body corporate manager I am finding that the cash flow of some bodies corporate is being adversely affected by a handful of owners who default on their levy payments. This can result in cash flow problems for the body corporate which can affect the general maintenance of the building, as work is put off due to lack of funds. The ripple effect is increasing resistance and disharmony from other owners to pay their levies due to the lack of maintenance on their property.
Levy arrears may result in visible deterioration of the complex as repairs and gardens and grounds maintenance goes unattended. Other problems may include a decrease in the resale value of the property, a decrease in owner’s returns as rental income declines or the adverse effect on prospective sale when a search agent discovers large arrears owed on a Lot.
As the body corporate levies cover the maintenance on the common property, it is in every owner’s interest to ensure that they pay their body corporate levies on time to ensure the constant upkeep of the complex.
Cash flow is critical to the achievement of the careful planning the budget committee devotes to the preparation of the budget each year to keep levies to a minimum. This is to ensure the complex can continue to attend to general maintenance issues.
Many bodies corporate have implemented a 2.5% per month interest charge on outstanding levies as well as a 20% discount or incentive if their levies are paid prior to the due date which many owners take up to ensure they are not paying more levies that they are required to. However, this does not alleviate all levy arrears and therefore bodies corporate rely on their body corporate management companies to try and control the arrears by ensuring reminder letters are send and if required, to conduct searches to ascertain if the owners still reside at the address given to the body corporate. The possibility of agreeing to a payment plan or if all else fails instruct a Solicitor to commence legal proceedings to recover the outstanding levies.
At SSKB we have a dedicated Arrears Recovery Team and processes that are constantly evolving to achieve the best results for bodies corporate. Taking legal proceedings against an owner is the last resort when all other avenues are exhausted. Often, receipt of a letter of demand on legal letterhead spells the end of the process rather than the first step in an expensive legal procedure. However, the decision to make legal action needs to be taken in some cases to ensure that the body corporate cash flow is protected and the integrity of the complex is not compromised.
If your body corporate does not have dedicated teams for Arrears Recovery and the high standard of processes in place that SSKB have implemented, click here to talk to our expert team today.