Ten Tips For The Recovery Of Unpaid Body Corporate Levies

PART ONE: Issuing the statements

The recovery of unpaid body corporate levies is an issue close to the heart of most body corporate committees and managers. Experienced delinquent owners can in some cases drag out the process for many years and even avoid payment entirely.

This article (the first in a series of three on this topic) will focus on the practical steps a body corporate needs to take when issuing its levy statements to maximise the chances that its levies can be recovered quickly and efficiently.

This article is not intended to be a substitute for proper legal advice and, if you have any questions, we encourage you to contact us to discuss the matters raised in the article.

TIP 1. Make sure the levies are properly authorised by the general meeting

This may seem like a statement of the obvious, but we have seen situations where a clever delinquent owner has identified that a levy statement has not been properly authorised at general meeting and seized on that issue to avoid or delay payment.

The accommodation, standard and commercial modules all set out the process for raising levies, which in essence is as follows:

1. The body corporate sends out a notice of the general meeting to the lot owners;
2. The proposed budgets are sent with the notice; and
3. At the general meeting, the body corporate decides how much each owner will pay for the upcoming financial year and when each instalment will be paid.

If there is a defect in the manner in which this process is completed and the levies are not properly authorised, there is a risk that the levies will not be recoverable. Worse still, an attempt by the body corporate to fix up the problem and retrospectively authorise levies could be an invalid act (this was the opinion of the adjudicator in the recent decision of Sphere Southport Living [2013] QBCCMCmr 30).

TIP 2. Maintain evidence that the levy notices were actually sent

This would appear to be another statement of the obvious, but the physical issuing of levy notices is another troublesome area.

Delinquent owners commonly allege that they never received the levy notice. The body corporate needs to be in a position to provide evidence to comprehensively rebut that assertion. We recommend that whoever is responsible for issuing the levy notices (usually the body corporate manager) has a clear system in place for the issuing of notices and maintains evidence in its files of levy notices that have been sent.

TIP 3. Make sure that the levy notices are due on the correct date

The accommodation, standard and commercial modules all require the general meeting to authorise the date on which owners must pay the levy instalments. Make sure that the levy statements are payable on the correct date. A clever delinquent owner might attempt to avoid paying the entire levy on the basis that the date is incorrect and, depending on the circumstances, this argument might succeed.

TIP 4. Make sure the levy statements comply with the formal requirements of the relevant module

Each of the accommodation, standard and commercial modules set out the technical requirements for a levy notice. For example, for schemes governed by the standard module, the levy statement must be given to the lot owner at least 30 days before the contribution and it must set out:

1. the total amount of the contribution levied on the owner;
2. the amount of the contribution, or instalment of contribution, whose payment is currently required;
3. the date (the date for payment) on or before which the contribution, or instalment of contribution, must be paid;
4. any discount to which the owner is entitled for payment of the contribution, or instalment of contribution, by the date for payment;
5. any penalty to which the owner is liable for each month payment is in arrears; and
6. if the owner is in arrears in payment of a contribution or penalty, the arrears.

The failure by the body corporate to comply with the technical requirements has in the past invalidated a levy notice (see for example, Lakelands Signature Living [2009] QBCCMCmr 412).

The second article in this series will address the penalties and costs that can be passed on to a lot owner. For more information about body corporate law or property law, browse our website or use the enquiry form on the right to contact our lawyers.

If you have any questions regarding this article, please contact Andrew Kyle of ABKJ Lawyers on 5532 3199 or at AJK@ABKJ.com.au

Ten Tips For The Recovery Of Unpaid Body Corporate Levies

• Read part 2: Penalties and costs
• Read part 3: Legal proceedings