Managing body corporate levy arrears and collecting unpaid levies has never been so important. With inflation steadily rising and body corporate budgets increasing to meet essential operational costs, economic times are getting harder for many body corporate unit owners.
The domino effect of levy arrears
We are all part of a domino effect whether we want to be or not. For a body corporate to function it must rely on levied contributions (equity) from its Unit Owners to meet its annual operating costs. When a Unit Owner finds it difficult paying their body corporate levies on time it can result in devastating results for both the Unit Owner and the body corporate community.
Unpaid levies means accruing penalty interest, recovery of the body corporate’s legal fees, statutory demands and ultimately as a final resort, mortgagee sale of their Principal Unit to meet the unpaid levy arrears and accrued costs. These are heart-breaking times for anyone involved in the process.
If a body corporate’s cash-flow slows down to a trickle due to its inability to collect unpaid levies on time, it will affect the body corporate’s ability to meet the cost of essential services needed to keep the building and its residents safe. When essential safety compliance under the Building Act such as the Building Warrant of Fitness obligations cannot be met this puts the building’s insurance in jeopardy and has the potential to place all Unit Owners in breach of their mortgage obligations.
Collecting unpaid levies
There will be difficult decisions for Body Corporate committees if levy arrears are slow or difficult to collect. Proactive steps should be taken early to mitigate rising levy arrears, slow payers, and poor cash-flows. If the body corporate has not already adopted an agreed levy collection procedure, it would be wise to do so.
Owners finding themselves financially stressed and unable to pay their levies on time need to act quickly before penalty interest and legal costs start to escalate. Choosing to ignore their unpaid levies often results in a bigger debt and more financial stress.
If you are worried you can’t meet your levied contributions on time, talk to your Body Corporate Chairperson, Committee or Body Corporate Manager. Let them know your situation as soon as you can. There are often options available to help and the Committee may agree to a repayment plan.
If your body corporate has agreed to a robust levy collection process, and your Body Corporate Manager has been actively collecting levies on time, your body corporate should be in good financial shape.
