In NSW, owners corporations can commence legal proceedings to recover unpaid strata levies, subject to sufficient notice being given. Section 86 of the Strata Schemes Management Act 2015 permits an owners corporation to commence legal proceedings if a contribution by a lot owner remains outstanding one month after it becomes due and payable.
This process is advantageous to an owners corporations for various reasons. A legal notice issued before commencing proceedings may prompt a lot owner to repay the debt, which means that further legal action will not be required. However, if that debt remains unpaid 21 days after the notice being issued, legal proceedings can be commenced for the recovery of unpaid contributions. Legal proceedings are often an effective step in recovering unpaid contributions, as most defendants would want to avoid a judgment being entered against them.
In this article, we provide a run through of what steps would occur should the debtor persist in their non-payment of strata levies.
Notice
Before heading to Court or the Tribunal, an owners corporation must provide the debtor 21 days’ notice of forthcoming legal action should the debtor not repay the monies owed or arrange a payment plan. Among other things, it is crucial that the notice alerts the debtor of the amount owing, when it was due, how to repay the debt, and in which forum the potential legal action will be heard.
Obtaining and Enforcing Judgment Debt
If the debtor does not organise a payment plan or repay the outstanding monies within 21 days, then the owners corporation can apply to a Court or Tribunal, such as the Local Court of NSW or the NSW Civil and Administrative Tribunal, seeking an order for payment of the outstanding monies. These forums will determine whether the debt is owing, and if so, the quantum of that debt, including the legal costs that are recoverable by the owners corporation. Before lodging any application, owners corporations must be aware that the amount owing will determine which Court or Tribunal has authority to hear the proceeding.
Once judgment is obtained in favour of the owners corporation, there are several options for enforcing and recovering the judgment debt against the lot owner. These include, for example, garnishee orders, statutory demands, and writs for the levy of property. Commencing bankruptcy action might also be an option. The appropriate enforcement method will depend upon the amount owed and whether the lot owner is an individual or corporation, has realisable assets, and is employed.
Click here for more details on debt enforcement methods available to creditors.
Need Advice?
Professional legal advice should always be sought to ensure compliance with relevant laws and regulations.
At Hunt & Hunt, we have a specialist debt recovery and insolvency team who can assist you with anything debt recovery related, including advising and acting for you throughout the process of recovering strata levies.
If you require advice on your specific circumstances, please don’t hesitate to get in touch.
Written by Matt Gauci (Partner), Jeremy Bodon (Associate) and Dallas Torresan (Paralegal)
