ACT: Q&A Levy Payments, Arrears and Interest for Overdues

This article includes questions about strata maintenance fees and who pays for what in ACT strata properties.

Table of Contents:

• QUESTION: Can owners corporations recover the legal costs incurred when chasing up outstanding monies from owners?
• QUESTION: Can an owners corporation write their own maintenance plan or does it have to be drafted by a third party?
• QUESTION: A few years ago, our EC implemented a trash pak service for green waste. With the ACT Gov free green bin service, not many lot owners are still using the trash pak. Do all owners still need to pay for the trash pak service?
• QUESTION: In the ACT, are there any rules or regulations around how much notice Strata must give before a levy (or Special levy) is due?
• QUESTION: The balconies of 5 of our 7 units require work. Costs have been divided equally although my apartment does not have a balcony. Am I required to pay the special levy?
• QUESTION: Why do owners on the ground floor of our building need to contribute to the facilities such as lift, which they do not use?
• QUESTION: Is there a 30 day grace period for levy payments in Canberra before interest is charged on the overdue amount?

Question: Can owners corporations recover the legal costs incurred when chasing up outstanding monies from owners?

Answer: This is covered under Section 31 of the Act.

The relevant legislation is governed by the Unit Titles (Management) Act 2011 (including recent amendments) – November 2020.

Relevant section below – Section 31 (4).

31 Recovery of expenditure resulting from member or unit occupier’s fault

1. This section applies if an owners corporation for a units plan has in carrying out its functions incurred an expense, or carried out work, that is necessary because of—
   
   1. a wilful or negligent act or omission of a member of the corporation, or an occupier of the member’s unit; or
   2. a breach of its rules by a member of the corporation, or an occupier of the member’s unit.
2. The amount spent or the cost of the work is recoverable by the owners corporation from the member as a debt.
3. If the owners corporation recovers an amount under subsection (2) from a member for an act, omission or breach of an occupier of the member’s unit, the member may recover the amount from the occupier as a debt.
4. In this section:
   
   • expense, includes a reasonable legal expense reasonably incurred, including a legal expense relating to a proceeding in the ACAT.
   • work, carried out by an owners corporation, means maintenance or anything else the corporation is authorised under this Act to do.

Jan Browne
Bridge Strata
E: jan@bridgestrata.com.au
P: 02 6109 7700

This post appears in Strata News #643.

Question: Can an owners corporation write their own maintenance plan or does it have to be drafted by a third party?

Answer: Our understanding is that Owners can draft their own Maintenance Plan, however…..

Our understanding is that Owners can draft their own Maintenance Plan.

That being said the Maintenance Plan inspection is the most involved of all of the inspections we do and depending upon the size or complexity of the scheme can require a detailed knowledge of many Codes, Standards or maintenance intervals.

QIA Group
E: info@qiagroup.com.au
P: 1300 309 201

This post appears in Strata News #584.

Question: A few years ago, our EC implemented a trash pak service for green waste. With the ACT Gov free green bin service, not many lot owners are still using the trash pak. Do all owners still need to pay for the trash pak service?

A previous Executive Committee (EC) in our Strata complex approved getting a trash pak service for our green waste many years ago. Everyone (regardless of whether or not they use it), is charged for it equally. Recently the ACT Government introduced a Green Bin service in about 2019. Some owners in our complex opted to get green bins, and not use the trash paks.

However, the current EC refuses to exempt these owners from the trash pak fees, because all the anti-binners are on the committee. There are a handful of owners who are opposed to using trash paks due to their own personal needs. It is possible to add these fees as a levy to the owners who want them, and not charge the others. 

The trash paks are currently in a common location and one excuse is that they can’t police who is using them. It has been suggested that those who want trash paks can get their own service with the paks stored on their own property, so that no one else will have access to them, negating the need to police them. 

Can the committee force owners to pay for a free govt service, against their wishes?

Answer: Shared areas and services are common and although not every owner might make use of them, they are still required to pay a portion of the service through their levies as agreed at the AGM.

If the Trash Paks are located in a shared waste room/area they are the responsibility of all Owners; if that’s the decision of owners at the AGM.

Shared areas and services are common and although not every owner might make use of them, they are still required to pay a portion of the service through their levies as agreed at the AGM.

Should you believe it is financially beneficial for your complex to cease use of the Trash paks, and instead, organise shared Green Waste bins via Access Canberra, we suggest this be discussed with all owners at the next AGM. Questions to consider would be:

• Are there benefits to the trash paks rather than the Green Bins?
• Will it encourage residents to maintain their gardens more?
• What changes will need to be made to the budgets?

Ultimately, the cost forms part of the annual budget which is proposed at each Annual General Meeting. This discussion should take place at that meeting.

Mark Zezulka
ACT Division Manager
Civium Communities
E: mark.zezulka@civium.com.au

This post appears in Strata News #551.

Question: In the ACT, are there any rules or regulations around how much notice Strata must give before a levy (or Special levy) is due?

Answer: The notice period for levies is 28 days.

In the ACT, the notice period for levies is 28 days.

All details on how communication surrounding levies must be dealt with is found in (Section 79 of the Unit Titles (Management) Act 2011 which states the following regarding Notice of Contributions.

79 General fund—notice of contributions

1. An owners corporation for a units plan must give notice of a determination of general fund contributions to each unit owner.
2. The notice must include the following information:
   
   1. the general fund contribution payable for the unit;
   2. the general fund contributions payable for each other unit;
   3. the general fund for which the contribution is required, the proportion of the contribution to be paid into each fund, and the total amount to be paid into each fund;
   4. the proportion of the total general fund contribution payable for the unit and how the proportion is worked out;
   5. the date when the contribution is payable, if paid in full (which must be not later than 28 days after the date of the notice);
   6. if the contribution is payable by instalments—the dates when the instalments are payable;
   7. how the contribution may be paid;
   8. details of any discount for early payment decided by the owners corporation under section 93;
   9. details of interest payable for late payment under section 94.

Mark Zezulka
ACT Division Manager
Civium Communities
E: mark.zezulka@civium.com.au

This post appears in Strata News #549.

Question: The balconies of 5 of our 7 units require work. Costs have been divided equally although my apartment does not have a balcony. Am I required to pay the special levy?

I own a ground floor apartment in the ACT in a complex of 7. Five apartments need balcony work done at a cost of $110,000. One of the balconies alone will cost approx $60K as it is larger and needs a new balustrade. 

My apartment does not have a balcony. Do I have to contribute to this special levy, which is approx $10,000 each? Also, shouldn’t the owner of the larger unit contribute more as they are gaining greater value to their property?

Answer: As the Owners Corporation consists of all units, and the balconies are a defined part, they are Common Property.

It seems there are much needed maintenance repairs happening at your scheme.

It can be a slight misconception that balconies form part of the common property due to the Maintenance responsibility of the balcony falling to the Owners Corporation, However, I can confirm that whilst the responsibility of maintenance falls with the Owners Corporation, they are a unit subsidiary as specified on the Units Site Plan and are considered a part of the unit itself.

It would be similar to repairs happening to the roof of your scheme. Although you’re on the ground floor, all units would need to contribute towards the maintenance or repairs of the roof.

The Owners Corporation can decide at a General Meeting how a Special Levy might be calculated and charged. It sounds as your Owners Corporation decided to equally divide the costs. An alternative would have been using the Unit of Entitlements registered against the Scheme for each unit; typically this does make cost sharing more equal.

Mark Zezulka
ACT Division Manager
Civium Communities
E: mark.zezulka@civium.com.au

This post appears in Strata News #541.

Question: Why do owners on the ground floor of our building need to contribute to the facilities such as lift, which they do not use?

Do ground floor apartments contribute to the sinking fund for lifts? If certain properties do not or cannot access common facilities are these factored into sinking fund contributions, or is it just a per square metre calculation?

Answer: Unless there is a split budget, all owners contribute to all the expenses of the owners corporation.

Unless there is a split budget, all owners contribute to all the expenses of the owners corporation. This includes ground floor units contributing to lift maintenance even though they may rarely use these facilities.

In order to move away from a standard administrative and sinking fund into the territory of a split budget an Alternate Rule would need to be adopted. This would set out criteria and formula by which the budget is separated. Under the new legislation, this can be done by way of a special resolution as opposed to an unopposed resolution as was required prior to November 2020.

Nina Cannell
Signature Strata
E: nina@signaturestrata.com.au
P: 02 6185 0347

This post appears in Strata News #537.

Question: Is there a 30 day grace period for levy payments in Canberra before interest is charged on the overdue amount?

Our strata manager claims that there is a 30 day grace period in Canberra that follows the due date for payment of levies during which time levies don’t have to be paid. They also claim that arrears and penalty interest do not accrue until after the expiration of the grace period. I can’t find any reference to a grace period in the Unit Titles Management Act. On the contrary, it is very clear that levies are due and payable on the due date and that interest accrues if levies are not paid by the due date. Is our strata manager correct?

Answer: Most strata managers have a default grace period

Most managers have a default time frame for grace especially to cover late meetings, public holidays, reduced quorum decisions having to wait 28 days etc.

No interest is charged during the grace period but if paid outside the grace period then the interest is normally calculated back to the due date. The Owners Corporation can also vary the rate of interest to be charged but the usual default is 10% but I do know that during high interest rates some plans increased this to 20% as the interest rate on outstanding levies at 10% was less then some mortgage rates.

But each management company and Owners Corporation may set their owner rules.

Jan Browne
Bridge Strata
E: jan@bridgestrata.com.au
P: 02 6109 7700

This post appears in Strata News #514.

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