26/08/2019 at 6:28 pm #41336
Our NSW strata scheme has had a bit of a rough ride the last few years, including some issues with the administration of the accounts. The result is that some people paid their levy, some people haven’t paid their levy (as they didn’t want to or claimed they didn’t know they had to), and some people weren’t invoiced their levy (with some but not all chasing up the relevant strata manager to be invoiced).
The new strata managers haven’t been able to confirm who has paid and who hasn’t paid due to the lack of proper bookkeeping (as well as the lack of voluntary disclosure from parties who haven’t paid). The result is that there is an amnesty on those unpaid levies. You can imagine the problems this is causing in regard to fairness.
To be clear this is a levy in regard to the use of some amenities of the building which aren’t used by everyone. Essentially it’s a user pays system and was voted at a general meeting. Ir’s unclear whether it can even be described as a levy.
Can a general amnesty be provided on unpaid levies? The oustanding amount is anywhere between $20k and $50k so not exactly peanuts.27/08/2019 at 11:25 am #41359
Sounds like a mess.
This is not really Levies but instead a rather less formal fee for some sort of usage that is not in proportion to unit entitlements. As such, I don’t think that legislation that applies to actual proper levies can or must be applied.
Here is what I suggest. Since there seems to be no way to use the OC records to work out who has paid and who has not paid (of those who should) and the amounts are not trivial, perhaps the best approach is to appeal to people’s honesty, try to recover as much as you can and accept that a small number of people might dishonestly claim to have paid. The losses will hopefully be small.
Explain the situation in a letter and back it up with other communication so everyone knows that it can’t easily be overlooked.
Ask everyone to check their own financial records.
Ask those who have paid to confirm that in writing to the OC, ideally with evidence of payment. (Without spelling it out, it is clear that you can claim to have paid even if you can’t prove it. Some will honestly be sure they paid but their financial incompetence is such that they can’t find the evidence. You have no choice but to give them the benefit of the doubt. A few might boldly lie but they will have to actively write claiming that they paid while providing no evidence while knowing that everyone else will be providing evidence. A few might have the gall to do that but the unfairness is likely to be reduced. They will know who they are and they will know that you know they didn’t provide evidence. Most, I suggest, will not be so bold.)
Ask those who have not paid to please do so. Give them a new, longer time by which to pay to make it easy for them.
Near the end of the generous time, send a cover letter/summary to everyone saying that “As you may recall from our previous letter, we have been trying to resolve the … issue as fairly and equitably as possible. We are pleased to report that most units have now either provided evidence of earlier payment or have paid since that letter was sent. Could the remaining few units please remember check their records? These remaining units have details for payment and the relevant amounts on an invoice attached to this cover letter.”
I suggest that this approach will produce less inequity and less bad feeling if people feel that there has been openness, trust and honesty applied and most people have behaved well. It think it is likely that most will behave well.27/08/2019 at 2:22 pm #41363
The oustanding amount is anywhere between $20k and $50k so not exactly peanuts.
Have you considered the possibility of fraud by the previous strata manager?
The amount is large enough that there needs to be some serious questions asked about how the situation got so bad and where the money is.
A forensic accountant needs to go through the accounts left by the previous strata manager and their bank accounts. If evidence of fraud is found then a referral to police should be made. If the previous strata manager was committing fraud against your OC, then they’re doing it to other OCs.
How was payment supposedly made? Cheques and bank transfers are easy for the unit owners to prove they’ve paid. The untraceable method of cash payments without immediately issuing a receipt supports the possibility of fraud. If a receipt was issued but not accounted for then further inquiries need to be conducted.
Finally, time to have a bank transfer/BPAY only payment system. Easy to track and automatically issues receipts, shows payment status.
27/08/2019 at 3:01 pm #41376
- This reply was modified 3 weeks, 6 days ago by Jimmy-T.
Not withstanding all of the above, I think I would go a little tougher (or at least appear to do so).
Firstly (after approval from the comittee) I would issue an invoice for the previous year’s levies with the proviso that anyone who could prove a payment had been made (with the threshhold for proof fairly low) to have the proven amount credited against their account.
I would also add that anyone who hadn’t paid the full amount (or anything) would have the penalty interest of 10 per cent waived provided they paid up withing 30 days.
I would invite anyone who had paid but who did not have any evidence of payment to submit a notarised statutory declaration that they had paid, explaining how, when and why they had no proof, again within 30 days.
And finally I would offer the option of negotiating a payment plan for anyone who couldn’t pay what they owed, on a case by case basis, subject to negotiation.
Hopefully that would flush out the cheats without causing undue hardship to an unlucky few or, indeed, to those who had paid in full and were effectively carrying non-payers.
30/08/2019 at 11:59 pm #41484
- This reply was modified 3 weeks, 6 days ago by Jimmy-T.
Thank you all for your thoughts.
Firstly i don’t think there was any fraud by the previous strata manager just a lack of proper bookkeeping and oversight. Secondly and apologies if this was not clear the poor bookkeeping started a number of years ago and ended when a new strata managing agent took over recently. Incidentally this is a compulsory strata manager brought in to try and resolve such issues and kick start the budget. You guessed it no money in the bank.
A soft touch approach with an attempt at reconciliation of the various records was attempted last year before the new strata manager came in but it didn’t work, mainly because of a lack of general cooperation. I don’t agree with the amnesty we need the money.