Levies are the financial lifeblood of a strata community. They cover everything from building maintenance and insurance to everyday services such as cleaning, gardening, and waste removal. When levies go unpaid, the consequences are felt far beyond the individual in arrears — the entire community is impacted.
For owners who fall behind, the debt can escalate quickly. Interest is usually added to unpaid levies, so the longer they remain outstanding, the more the debt grows. If arrears continue, the Body Corporate may begin formal recovery proceedings. This often starts with reminder notices but can escalate to debt collection or even legal action. On top of the unpaid levies, the owner is generally required to cover recovery costs, making the debt more difficult to resolve.
The ripple effect across the community can be serious. Because levies are the source of funds for day-to-day operations, any shortfall creates pressure on the scheme’s budget. This may result in delayed maintenance, reduced services, or, in some cases, the need for a special levy to make up the gap. Left unchecked, funding shortfalls harm the condition of the building, reduce property values, and unfairly increase the burden on owners who pay on time.
The best way to avoid these outcomes is through open communication. If an owner is struggling to meet their levy commitments, it is far better to speak with the committee or community manager early rather than let arrears build up. Many schemes will consider payment plans or alternative arrangements that make contributions more manageable. Acting early helps avoid unnecessary costs and keeps the scheme running smoothly for the benefit of all owners.
Helpful Tips for Owners and Committees
1. Don’t ignore arrears
Debts grow quickly with interest and recovery costs. Addressing levy arrears early prevents the situation from escalating and avoids unnecessary legal fees.
2. Be transparent with the community
Committees should communicate openly about the importance of levy contributions. Reminding owners how levies fund everyday services helps reinforce why paying on time benefits everyone.
3. Explore solutions, not just penalties
Where owners are genuinely struggling, offering options like payment plans can help resolve the issue without conflict. A balanced approach protects the community’s finances while showing understanding.
FAQs About Unpaid Levies
What happens if I can’t pay my levies on time?
Contact your committee or community manager as soon as possible. In many cases, a payment plan can be set up. Ignoring arrears only makes the problem bigger.
Can the committee charge interest on arrears?
Yes. Most schemes are entitled to charge interest on unpaid levies, usually at a rate set by legislation. This is designed to encourage timely payment and protect the community from financial loss.
What if levies remain unpaid?
If arrears continue, the debt may be referred to a collection agency or legal proceedings may begin. The owner in default will generally be responsible for paying both the outstanding levies and the recovery costs.
Does unpaid debt affect property values?
Yes. Persistent arrears can cause maintenance delays or service cuts, which affect the condition of the property. This can reduce the value of everyone’s investment in the scheme.