Overdue levies are reaching tipping point

During the COVID pandemic, the Victorian Government introduced certain legislation that would have the effect of providing relief to those who could not pay their debts on time.

It also required debt collectors and suppliers to wait a longer period of time before debt recovery action in VCAT and the courts could be commenced.

However, several years on from the pandemic, owners’ corporations (OC) that rely on owners paying their annual fees on time are still struggling to enforce owners to pay off their historical debts. And the interest on these overdue fees is mounting ever higher.

Taken from the Strata Community Australia (SCA) Benchmarking Survey, 6.09 per cent is the Victorian national average of strata owners who have their levies in arrears for greater than 30 days.

While this may not seem like a large number – what this does mean is that, in any given building in Melbourne, OCs ought to be setting budgets that are in excess of 100 per cent of planned expenditure to account for late payers and the prospects of paying (sometimes substantial) legal professional fees to chase the late payers in VCAT and the courts.

It can take between six to 12 months to obtain a judgment for levy arrears in VCAT, and to enforce that judgment via the Sheriff’s Office Victoria (for individuals) or via the Federal Court (for companies).

However, it occurs to me that OCs could be doing more to incentivise lot owners to pay their fees and levies as they fall due and payable. Apart from setting budgets at 106 per cent of actual planned expenditure, an OC could adopt a discount for those who pay on or before the due date. Similar to the methods employed by utility companies for gas and electricity bills, a prompt payment discount would reward those owners that do the right thing and pay their fees on time.

The other message is for the owners who do fall behind on their levies: the most common reason for non-payment of fees on time is because lot owners don’t receive a copy of the quarterly levies in the post. Not surprisingly, this is no defence for not paying the fees, and if the OC has incurred fee collection charges for sending Letters of Demand and Final Fee Notices, then the owner will need to pay those charges and any interest in addition to the levy amounts.

So, if you change address, ensure that the OC manager is given notice of the new contact details.

And, if owners know that they don’t have sufficient funds to pay the levies, the best thing to do is to pick up the phone and tell the OC manager, so that a payment plan can be drafted. There is no shame in admitting that you can’t pay on time. All of us experience cash flow issues at various times in our lives.

An agreement to catch up the quarterly levy by paying a few hundred dollars per month will mean both the owner and the OC can avoid incurring the late payment collection fees charged by many management companies and collection agencies. •