This topic contains 14 replies, has 5 voices, and was last updated by Andy 3 weeks, 5 days ago.

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  • #36574
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    Andy
    Flatchatter

    Following the discussion in this other post, I’m a bit worried our OC might be outside of requirements. A few years ago we voted to charge interest on overdue levies. I need to check but think this is legit.

    The strata manager though now adds late notice penalty of $70 on top of the interest everytime a reminder is sent. There are some grumblings that this add-on is getting excessive.

    • This topic was modified 2 weeks, 3 days ago by Jimmy-T.
    #36577
    Sir Humphrey
    Sir Humphrey
    Strataguru

    Andy,

    I can’t answer for NSW, but in the ACT, our Act specifies 10% simple interest to be charged on overdue levies. This statutory default can only be changed to an amount less than 10% or up to 20% by special resolution. Perhaps your act has a similar provision.

    By way of comparison, our levy notices include a statement:

    “After levy due date             first letter  $0.00

    +14 days after                       second letter $55.00

    +14 days after                     final letter $110.00

    +7 days after                Notice to debt collection agency $250+legal fees”

    These service charges by the managing agent are included as terms in our management agreement, which are the managing agent’s default position. Since the management agreement is agreed by general meeting resolution, the OC has, in effect, resolved to agree to these service charges for overdue levies on top of the interest we are required to charge. In practice, a little bit more time tends to be left before getting heavy but our OC has not often had problems with unpaid levies.

    #36578
    Sir Humphrey
    Sir Humphrey
    Strataguru

    PS. We have also not proceeded to use a debt collection agency when we have been able to negotiate a payment plan between the owner, the EC and the managing agent. IE. We have been sensitive on the rare occasion when an owner had some genuine difficulty and we resolved it without acrimony, while also not disadvantaging the owners who did pay on time.

    #36588
    Jimmy-T
    Jimmy-T
    Keymaster

    Andy said:

    Following the above I’m a bit worried our OC might be outside of requirements. A few years ago we voted to charge interest on overdue levies. I need to check but think this is legit.

    Not just legit, but obligatory – unless the Owners Corp decides otherwise you must impose a 10 per cent penalty interest charge on overdue levies.

    Not sure about the $70 admin fee, though

    • This reply was modified 2 weeks, 3 days ago by Jimmy-T.
    #36607
    Avatar
    Andy
    Flatchatter
    Chat-starter

    Andy said:

    Following the above I’m a bit worried our OC might be outside of requirements. A few years ago we voted to charge interest on overdue levies. I need to check but think this is legit.

    Not just legit, but obligatory – unless the Owners Corp decides otherwise (by special resolution, I think) you must impose a 10 per cent penalty interest charge on overdue levies.

    Not sure about the $70 admin fee, though

    Ok the 10% was voted so all good. The admin fee seems to be ok also as it has to do with chasing unpaid levies by the SM.
    Still its exorbitant for the poor buggers who can’t pay due to their financial circumstances.

    #36609
    Jimmy-T
    Jimmy-T
    Keymaster

    Although the imposition of penalty interest charges is the default position, under section 85 (below) the OC – and I believe this means the committee, if they have been given those powers at a general meeting – can decide not to impose the penalty interest and can also organise a payment plan.

    85 Interest, discounts on contributions and payment plans
    (1) A contribution, if not paid when it becomes due and payable, bears until paid simple interest at an annual rate of 10% or, if the regulations provide for another rate, that other rate.
    (2) Interest is not payable if the contribution is paid not later than one month after it becomes due and payable.
    (3) However, an owners corporation may by resolution determine (either generally or in a particular case) that a contribution is to bear no interest.
    (4) An owners corporation may, by resolution at a general meeting, determine (either generally or in a particular case) that a person may pay 10% less of a contribution levied if the person pays the contribution before the date on which it becomes due and payable.
    (5) An owners corporation may, by resolution at a general meeting, agree to enter into payment plans, either generally or in particular cases, for the payment of overdue contributions. A payment plan is to be limited to a period of 12 months but a further plan may be agreed to by the owners corporation by resolution.

    #36611
    Avatar
    Andy
    Flatchatter
    Chat-starter

    Thank you Jimmy

    #36676
    Sir Humphrey
    Sir Humphrey
    Strataguru

    JT said:

    under section 85 (below) the OC – and I believe this means the committee, if they have been given those powers at a general meeting – can decide not to impose the penalty interest and can also organise a payment plan.

    My reading of the section you have quoted is that the OC can’t delegate this to the committee since it is specified that the decisions must by made by the OC by resolution.

    In our OC a certain function had been long believed to have been delegated to the OC. When things fell in a heap, our legal advice was that the OC did not have the power to delegate a function to the committee and the committee could not exercise a function of the OC if the Act specified that a resolution of the OC was required to exercise that function.

    Unless there is something elsewhere in the NSW Act that I am unaware of that allows an OC to resolve to delegate functions, including those for which the Act specifies a resolution of the OC. The ACT act does not have any such provision.

     

    • This reply was modified 2 weeks, 3 days ago by Jimmy-T.
    #36678
    Avatar
    dingo
    Flatchatter

    I thought this was interesting as well.
    The qualification of “reasonableness” in the right of recovery of expenses means that owners corporations cannot unilaterally appropriate payments made by lot owners for payment of levies towards expenses incurred without those expenses being either assessed as reasonable by a court or tribunal or otherwise agreed upon between the Owners corporation and the lot owner.

    #36680
    Jimmy-T
    Jimmy-T
    Keymaster
    Section 36 permits the strata committee, if so delegated, to make decisions on behalf of the owners corporation provided these decisions either don’t require a special resolution or the Owners Corporation at a general meeting have decided they can ONLY be made at a general meeting.
    One example would be the approval of minor building works (work that doesn’t impact significantly on common property). Section 110 of the Act says an owner  “may carry out work for the purposes of minor renovations to common property in connection with the owner’s lot with the approval of the owners corporation given by resolution at a general meeting …”
    I believe (but I’m prepared to be proved wrong) that this is generally accepted to mean that the work can be done with approval from the committee (provided it has the standard delegation). The work mentioned includes everything from renovating a kitchen to installing wiring and beyond.
    36   Functions of strata committee

    (1)  A strata committee has the functions conferred on it by or under this or any other Act.

    (2)  A decision of a strata committee is taken to be the decision of the owners corporation. However, in the event of a disagreement between the owners corporation and the strata committee, the decision of the owners corporation prevails.

    (3)  The following decisions cannot be made by the strata committee:

    (a)  a decision that is required by or under any Act to be made by the owners corporation by unanimous resolution or special resolution or in general meeting,

    (b)  a decision on any matter or type of matter that the owners corporation has determined in general meeting is to be decided only by the owners corporation in general meeting.

    (4)  An owners corporation may in general meeting continue to exercise all or any of the functions conferred on it by this Act or the by-laws even though a strata committee holds office.

    • This reply was modified 2 weeks, 3 days ago by Jimmy-T.
    #36687
    Sir Humphrey
    Sir Humphrey
    Strataguru

    The differences between the strata acts of different jurisdictions are many, strange and mysterious!

    #36689
    Avatar
    dingo
    Flatchatter

    Sir Humphery,

    The charges you mention to recover levies im your previous post may not pass the law. I noticed at our last agm the sm no longer charges these fees for sending letters such as the $110 stage 3 recovery letter.

    In the case i posted , this is what the judge had to say about one of these fees;

    A number of charges are exorbitant. By way of example, the managing agent has charged the sum of $143 for issuing a statutory notice which is, in effect, a pro forma letter of demand. It is an amount which does not appear to be justifiable in terms of the degree of work done or effort involved.

    #36691
    Jimmy-T
    Jimmy-T
    Keymaster

    Sir Humphrey said:

    The differences between the strata acts of different jurisdictions are many, strange and mysterious!

    Understatement of the year and it’s barely April!

    #36769
    Avatar
    crispy
    Flatchatter

    As an alternative to imposing fines on late levies, one of the strata in which we own has a discount system. So if your levies are due on 1st May, you get a 10% discount if you pay by COB 31st April. So if we pay our levies on time we save nearly $600!  We always pay on time 🙂

    #36771
    Jimmy-T
    Jimmy-T
    Keymaster

    This is also enshrined in the Act.  The Owners Corp can offer up to 10% off for early payment.

    Section 85 (4): An owners corporation may, by resolution at a general meeting, determine (either generally or in a particular case) that a person may pay 10% less of a contribution levied if the person pays the contribution before the date on which it becomes due and payable.

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