Lot owner’s contributions are made by all individual owners in a community scheme to cover body corporate/owners corporation expenses. The annual levies determining how much each lot owner will pay is decided every year at the Annual General Meeting.
The body corporate/owners corporation must, by ordinary resolution, determine administrative and sinking fund budgets for the financial year, work out how much each owner will pay based on these budgets, and determine the number and dates of how the levies will be paid in instalments. Additional levies must also be agreed to by an ordinary resolution. These generally occur in the form of special contributions, collected by the body corporate if there are unexpected costs which were not budgeted for.
The body corporate/owners corporation must then issue each owner a written notice of the owed contributions 30 days before they are due. However in some situations where owners do not pay their body corporate fees, the body corporate/owners corporation is entitled to begin a debt recovery action to claim the amount due.
The SSKB process for the recovery of outstanding levy fees has four steps. These steps also include accumulating fees associated with the issuing of the notices. Failure to comply with the final of these steps can result in the owner being order to pay penalty arrears.
Step 1 – Reminder Notice (contributions unpaid over $300)
If fees over $300 remain unpaid 14 days after their due date, a Reminder Notice may be issued.
Step 2 – Overdue Notice (contributions unpaid over $500)
An overdue notice can be issued 10-14 days after the Reminder Notice if fees remain unpaid.
Step 3 – Letter of Demand
A Letter of Demand for any payments not made can be issued 14 days after the Overdue Notice date, and can include follow up calls or emails if payments are still not made.
Step 4 – Letter of Demand follow up
If, after 14 days from the original Letter of Demand, payments still have not been made, a follow up will be taken up with the owners and the committee. This will determine whether legal action, to recover the fees is necessary. Legal action is generally a last resort.
The body corporate may fix a penalty to be paid by owners of lots if a contribution is not received by the due date for payment as per the notice of contribution. This penalty must consist of simple interest at a stated rate (of not more than 2.5%) for each month the contribution or instalment is in arrears.
If you are unsure about payment of levies or late payments of owner’s contributions in your community, speak to your committee or your SSKB Community Manager. We can provide you with expert advice on your scheme, to ensure the best outcome for you and your body corporate/owners corporation.