Owners corporations and body corporates must charge fees or levies for each lot. These fees and levies are used to maintain and improve common areas, cover administration costs, and perform other tasks associated with managing the property.
Paying strata levies is not optional. If you own a property that is part of an owners corporation or body corporate, it is a legal requirement. However, sometimes late or non-payments can arise due to financial hardship, forgetfulness, or a wilful refusal to pay in the case of a dispute. When someone doesn’t make their levied contributions, it puts pressure on everyone involved with the owners corporation or body corporate. This is because levy arrears can delay important repair works or maintenance services, which can potentially cause the property to fall into disrepair.
Therefore, if an owners corporation or body corporate has significant levy arrears, it is important to recover that debt to help keep the property running smoothly.
Strata levies are periodic payments made by all owners to cover the costs associated with managing and maintaining an owners corporation or body corporate.
These contributions are determined at each AGM, where the amount and payment schedule are proposed.
Strata, owners corporation, or body corporate properties may need to raise special levies to cover unforeseen expenses or instances of insufficient funds in the trust account.
These are proposed at a general meeting and are in addition to the regular levies paid by the lot owners.
The contributions raised from strata levies are generally split between the administrative and capital works/sinking fund, which is used to cover tasks such as:
If levies are set too low, the building may not be adequately maintained. Following a maintenance plan is the best way to ensure enough money is raised to adequately fund the needs of a property. The plan should detail the condition of building assets and the likely timeframe and cost of their repair or replacement.
Paying strata levies is not optional, but a legal requirement for all owners within an owners corporation or body corporate property. The effective running of the property depends on these contributions being made, in full and on time. Much like a company, an owners corporation or body corporate may need to borrow from a financial institution if there are insufficient funds to cover expenses.
Despite this, many lot owners fall into arrears because of financial hardship, forgetfulness, or a wilful refusal to pay, in the case of a dispute. When someone doesn’t pay, it puts pressure on the whole scheme, which can hold up maintenance requirements and affect the upkeep of a property.
Failure to pay strata levies can impact both the individual owner and the overall owners corporation or body corporate property. For example:
The steps and actions to recover debt typically begin with a motion at an annual general meeting, which authorises the committee or strata manager to issue notices, collect payments, and follow up with debt in arrears. This can usually result in the following:
Strata schemes across Australia are governed by state-specific legislation that outlines the responsibilities of owners corporations (also known as bodies corporate) in issuing levy notices and recovering unpaid levies. Here is what you need to know for each state.
If levies remain unpaid, the owners corporation can initiate debt recovery proceedings.
A body corporate can initiate debt recovery proceedings on levies that are not paid within 30 days from the due date.
If levies remain unpaid, the body corporate can initiate recovery proceedings if the debt is $50.00 or more and authorise the body corporate manager and/or the committee to do action collection processes as per the scheme’s agreed terms:
If levies remain unpaid, the body corporate can initiate debt recovery proceedings.
The body corporate or owners corporation may recover the cost of overdue levies through a payment plan. This approach can provide support to owners who are genuinely experiencing financial hardship and also help get the property’s funds and accounts back on track.
A payment plan is usually a request that needs to be approved by the committee. This would then allow a property owner to repay their overdue levies via periodic instalments over an agreed timeframe. Usually, an application needs to be completed in 12 months. However, this timeframe can be extended if the body corporate or owners corporation agrees.
To support those experiencing financial hardship, owners from our eligible branches can submit an online payment plan application to the committee for consideration and approval. Please check the eligible branches that can use this form.
There are several steps owners corporations, body corporates, and strata managers can undertake to minimise levy defaults, including:
Recovering unpaid levies can be difficult, especially if there is no predefined process in place to anticipate shortfalls. Hence, the owners corporation or body corporate should take a proactive approach and agree upon the procedure for debt collection in an annual general meeting.
Levy payment-related matters should be clearly outlined in the by-laws and building rules so that all owners are aware of the process, their responsibilities and the consequences of breaches. This makes it easier to collect on unpaid levies when they happen and helps prove due diligence, especially if the matter goes to court.
It’s important to weigh the costs resulting from unpaid levies against the cost of recovering them. If your levies are relatively low, they may not be worth chasing until they exceed a certain amount. This is because the costs involved in recovering them usually outweigh the amount in arrears.
The larger the debt, the harder it is to recover. People can more easily find a few thousand dollars than tens of thousands. Some state legislation requires owners corporations or body corporates to allow a flexible payment plan for owners who have fallen into arrears owing to genuine concerns. However, it is best practice to provide this as an option regardless.
You should consider starting the collections process when levies have been unpaid for 30 days or more. Each of these steps has costs, so you need the help of an efficient debt collections manager who understands your needs, and has a strong track record of collecting payments before they go too far.
For more than 70 years, Kemps Petersons Receivables has consistently collected 85% of debts without having to initiate court action. Our goal is to recover monies as quickly, efficiently, and cost-effectively as possible for your strata, owners corporation, or body corporate property.
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Depending on the size of your complex, unpaid strata levies could add up quickly. It’s best to address any issues and chase payments promptly. Since the first Australian strata scheme was established in 1948, we’ve come a long way in our knowledge and experience across various property types. Whether you are new to strata management or an active committee member, we have developed an extensive library of resources to assist you.
This article is edited by Lauren Shaw Regional General Manager and Licensee-in-Charge on May 2025.
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