WA: Q&A Lot Owner’s Overdue Strata Levies. What are the rules?

In strata properties, the strata levy debt follows the owner. That means when you purchase a strata property, any outstanding debt must be paid by the new owner.

Typically, the vendor pays the levies due at settlement, but if not, the conveyancer or settlement agent will distribute it between the vendor and the purchaser. The settlement agent will also include this amount in the financial settlement distribution.

It’s not the responsibility of the strata company or its managers to keep track of who paid what and when. They only receive funds and collect debts.

To resolve the issue, check your financial breakdown itemisation to see if this was included. If not, contact your settlement agent to clarify whether this is an oversight or error in the settlement or if you are responsible for this levy.

I am confident that this can be easily resolved with more information from your settlement agent.

Jordan Dinga Abode Strata E: abode@abodestrata.com.au P: 08 9368 2221

This post appears in Strata News #632.

Question: How much notice do strata companies have to give for the quarterly strata fees? I know my levy is due in 6 days but the strata company hasn’t sent me the levy notice yet.

Answer: There is no provision under the Act or Regulations that a levy invoice must be issued to an owner.

In fact, neither the Strata Company (nor their Strata Manager) are bound to provide owners with a levy invoice.

In accordance with the Strata Titles Act, the only notice period that must be provided to owners regarding levy contributions, is in accordance with Section 129 Notice requirements for all general meetings.

All owners of lots in a strata titles scheme and first mortgagees of those lots must be given at least 14 days’ notice of every general meeting of the strata company for the scheme.

The notice must include –
1. The date, time and venue of the meeting; and
2. For an annual general meeting, notice of each item of business referred to in 127(3); and
3. For special business, notice of the general nature of that business;

The levy contributions are issued in accordance with Section 100 Administrative and reserve funds and contributions.

A strata company must –
1. determine the amounts to be raised for payment into the administrative fund; and
2. raise amounts so determined by levying contributions on owners of lots

Any contribution levied under this section –
1. becomes due and payable to the strata company in accordance with the terms of the decision to make the levy

The minutes of the general meeting (being annual or extraordinary) specify the levy contribution amount and the date the contribution levy is due and payable by. Unless the minutes list the contributions lot by lot, you can calculate this by multiplying the dollar amount required per unit of entitlement of each lot by the unit of entitlement specific to each lot as noted with the strata plan.

In summary, there is no provision under the Act or Regulations that a levy invoice must be issued to an owner. This is usually done as a courtesy, as we’re all used to receiving invoices for services. We suggest owners take note of the minutes of general meetings and schedule payments in advance to ensure payments are made prior to the due date and to avoid interest being charged in accordance with the Regulations.

ESM Strata Team ESM Strata E: esm.support@esmstrata.com.au P: 08 9362 1166

This post appears in Strata News #600.

Question: For recovery of unpaid levy contributions in WA, we understand that 11% interest is charged on or after the due date. Due to this, how many days should interest be applied?

Answer: Most Strata Companies do not charge interest for the first 30 days and give this as a “grace” period, however if not paid within that timeframe then the interest is charged as of the day the levy became due.

The interest charges on levies are set out in Section 100 (4), (5) & (6) below of the Act and Regulation 78.

Section 100 (4)(a) also states that the levy becomes due and payable in accordance with the terms of the decision, meaning that the minutes of the General Meeting, where the levies were struck, would note that the levy is due and payable on (date). The Strata Company can then charge interest, at the regulated rate of 11%, as of that date. For example: Quarterly Levy due 1st January 2022 for the period to 31st March 2022 – the interest is due and payable as of 1st January 2022.

Most Strata Companies do not charge interest for the first 30 days and give this as a “grace” period, however if not paid within that timeframe then the interest is charged as of the day the levy became due ie: 1st January 2022 in the above example.

Interest is applied until the outstanding amount is paid.

Administrative and reserve funds and contributions

Section 100 states:

Any contribution levied under this section —
1. becomes due and payable to the strata company in accordance with the terms of the decision to make the levy; and
2. if not paid when it becomes due and payable, bears interest on the amount unpaid at the rate of simple interest specified in the regulations, unless the company determines (either generally or in a particular case) that an unpaid contribution bears no interest or interest at a lesser rate; and
3. including interest accrued under paragraph (b), may be recovered as a debt by the strata company in a court of competent jurisdiction and the strata company may agree to a compromise of such a debt.

Interest paid or recovered under subsection (4) or (6) forms part of the fund to which the contribution belongs.

The owner of a lot is liable in respect of any contribution levied under this section and any interest on the contribution, jointly and severally with any person who was liable to pay that contribution and interest when that owner became the owner of that lot, to pay so much of that contribution and interest as was unpaid when the owner became the owner of that lot.

Regulation 78. Rate of interest on unpaid contributions

For the purposes of section 100(4)(b), the rate of simple interest specified is 11% per annum.

Shelley Fitzgerald Emerson Raine E: shelley@emersonraine.com.au P: 9330 3959

This post appears in Strata News #565.

Question: Can our strata company charge a full 10% penalty for late fees rather than 11% simple interest?

Our strata company charges 10% penalty for late fees. I believe the Strata Titles Act only allows for simple interest to be charged at 11% per annum or as set by AGM. As such a one month late $800 payment should only incur interest of 1/12th of the annual 10% simple interest – eg. about $6.90 interest. Is that correct – or does the “as set by AGM” allow for the strata company to set a “penalty” of the full $80 to be charged to late payers?

Answer: The rate calculated in your example would exceed the 11% per annum set under the general regulations.

Section 100 of the Strata Titles Act 1985 sets out that a Strata Company must establish a fund for administrative expenses. If it is a designated Strata Scheme (10 lots and above or has a building replacement value of $5 million or above) it also must have a reserve fund and ten year maintenance plan.

The funds to meet these budgets is raised by levying contributions so determined on the owners in proportion to the unit entitlement of their respective lots (unless the scheme has a by-law in place varying this method).

The contributions become due and payable on the 1st day of the period in which they are for and section 100(4) provides that overdue levies bears interest on the amount unpaid at the rate of simple interest set out in the general regulations. Section 78 of the general regulations provides that the rate of simple interest specified is 11% per annum. This applies unless the company determines (either generally or in a particular case) that an unpaid contribution bears no interest or interest at a lesser rate.

The rate calculated in your example would exceed the 11% per annum set under the general regulations. The Act and its regulations does not allow for a Strata Company to determine an amount above the prescribed rate. It would appear that your Strata Company may be having difficulty understanding how to apply the rate of interest and as such I would recommend they seek advice or assistance from an accountant.

Some other points to note:

Outstanding levies and any interest accrued can be recovered as a debt by the strata company in a court of competent jurisdiction.

The strata company may agree to a compromise of such a debt. Interest paid or recovered forms part of the fund to which the contribution belongs.

The owner of a lot is liable in respect of any contribution levied and any interest on the contribution, jointly and severally with any person who was liable to pay that contribution and interest when that owner became the owner of that lot.

Luke Downie Realmark E: ldownie@realmark.com.au P: 08 9328 0999

This post appears in the April 2022 edition of The WA Strata Magazine.

Question: One lot owner in our 4 lot scheme hasn’t paid levies in over 30 years. We are looking to improve common property but I don’t think it’s fair to make any improvements that benefit this lot owner.

I own a townhouse in a block of 4 units. One owner (a lawyer) hasn’t lived here for 30 years nor paid levies for 30 yrs. Over 20 years ago, we took her to court over unpaid levies with no success as she plays the system representing herself at no cost with appeals etc and it has cost us a fortune.

We are looking to spend money to upgrade the common property. Part of this includes improvements to the carport that belongs to the owner who does not contribute to levies. I’m against any improvements that will benefit this lot.

How can we recover the 30 years of levies? If the outstanding levies cannot be recovered at this time, can we make improvements to common property, excluding any that benefit the unfinancial owner?

Answer: The Strata Company has a general duty to ‘control and manage the common property for the benefit of all of the owners of lots’.

In accordance with the Act, a Strata Company must, as a minimum, establish an Administrative fund sufficient to maintain the common property, and, in order to raise these funds, levy lot owners.

100. Administrative and reserve funds and contributions

A strata company must —
1. establish a fund (an administrative fund) for administrative expenses that is sufficient in the opinion of the strata company for the control and management of the common property, for the payment of any premiums of insurance and the discharge of any other obligation of the strata company; and
2. determine the amounts to be raised for payment into the administrative fund; and
3. raise amounts so determined by levying contributions on owners of lots —
  1. in proportion to the unit entitlements of their respective lots; or
  2. if the scheme by-laws provide for a different basis for levying contributions, in accordance with that basis;
4. recover from the owner of a lot, by action in a court of competent jurisdiction if necessary, any sum of money expended by the company for repairs or work done by it or at its direction in complying with a notice issued, or order made, under a written law in respect of the lot.

It would be remiss of me to comment, without knowing the determination of the case presented to the Court. I would presume that the presiding Judge would have made orders that both the Strata Company and the lot owner were to abide by, in relation to outstanding contributions owed to the Strata Company and that the decision would have taken into account the Debt Recovery Procedure adopted by the Strata Company.

Provided the levies were raised correctly at General Meetings, then in theory the Strata Company should be able to recover the levies in either of two ways. They can take the matter to Court, where the Judge will make a determination based on a number of factors. Or, when the lot is sold, the outstanding debt passes on to the new lot owner (unless an arrangement has been made otherwise at the time of settlement). Should the Strata Company still have a considerable amount of contributions owed, it would be prudent for them to engage legal advice to recover the monies, which could possibly result in the ‘seizure and sale’ of the lot in order to recover the outstanding contributions.

That being said, the Strata Company does have a general duty to ‘control and manage the common property for the benefit of all of the owners of lots’. We would need to consider whether the Common Property Car Port used by the owner is subject to any Exclusive Use bylaws, or whether it needs to be ‘improved’ or simply maintained and repaired. The Strata Company still has a responsibility to ‘keep in good and serviceable repair, properly maintain, and, if necessary, renew and replace the common property’, but the Strata Company is not obliged to make improvements to the common property.

ESM Strata Team ESM Strata E: esm.support@esmstrata.com.au P: 08 9362 1166

This post appears in Strata News #546.

Question: We are likely to have at least one owner who absolutely refuses to pay any further increases in fees. This will make it difficult to carry out any maintenance under the 10 Year Plan. What should we do?

Answer: Alternative methods of collecting funds may be required

The opportunity to vote at a general meeting for changes to the amounts being levied is done by Ordinary Resolution, so a majority vote is required.

If all the increases are reasonable and can be demonstrated as being necessary, then the amount of money raised for the 10 year plan would be justified by the time schedule listed for the replacement or servicing of major common property items.

If the amounts raised or proposed to be raised in the budget are extortionately high then there could be grounds to make an application to the Tribunal (SAT) to review the fees and charges.

Alternative methods of collecting funds may be required so that half the ownership isn’t bankrupted in the process.

It might be that adjusting the scheduling of maintenance or setting different priorities for the accumulation of funds is an option?

A strata loan may be required to enable urgent maintenance and pick up the short fall in accumulated funds.

The Strata Company does have within its authority the ability to come up with payment plans for individual owners.

A straight refusal to pay any increases may also lead to few options as to how it all plays out:
- Debt recovery is also an option that the strata company has available to it.
- This can at its worst, end up with the sale of the property.

In summary

An older building that hasn’t been maintained properly may result in higher costs to fix the problem.

Funds allocated to a Reserve Fund for a 10-year plan are a good indicator or an active group of strata owners who are aware of the need to have the buildings maintained.

A fixed income may result in some owners not being able to pay the necessary increases, resulting in a need to sell and move elsewhere which is more affordable.

Shane White Strata Title Consult E: shane.white@stratatitleconsult.com.au

This post appears in the November 2021 edition of The WA Strata Magazine.

Question: Can our committee request all levies be paid within 30 days from receipt of invoice?

Our Committee recently issued a letter stating that they have decided all strata fees have to be paid within 30 days from receipt of invoice. Can this be enforced?

If I do not pay my levies on time and I become unfinancial, what does this mean?

Answer: The dates that the levies fall due are voted on by the lot owners and enshrined at the annual general meeting of the strata company.

After passing the budget at your annual general meeting, you then approved the levy schedules and the dates that the levies are to be raised and fall due. In the end, the owners vote on that generally quarterly, (some schemes we actually see by-annually and some schemes we actually see annual levies) but those dates are enshrined at the annual general meeting of the strata company.

You are aware when the levies for due by either reading the minutes or attending the annual general meeting of the strata company.

It’s not 30 days from receipt of the invoice, it’s actually the day that the levy determines its due and payable. In most instances, a strata manager would issue a levy three to four weeks before it’s due but the owner has the responsibility to pay that before the levy is due and then after that date, yes, it will incur interest. The current prescribed rate is 11% unless the Strata company has passed a motion that determines a lesser rate. Yes, the Strata company can then start undertaking Debt Recovery procedures. In saying that, it is encouraged that they have a bylaw to assist that debt recovery, or at least as a minimum pass emotion at each Annual General Meeting detailing what those Debt Recovery procedures may be.

If at a general meeting, you are unfinancial, you’re limited on your capacity, to vote on ordinary resolutions and special resolutions. You do need to be financial to be able to vote on the motions. It doesn’t preclude you from voting on unanimous resolutions and resolutions without dissent.

Ultimately, the strata company relies on its owners to pay the levies to assist it in continuing to operate. It’s very important that the strata company is able to get that money. There were a lot of concerns early last year when COVID hit that we would see an increase in debtors, but you’re talking to my colleagues across Australia there isn’t really any evidence of that at the moment. It is really important that the Strata company does have means to be able to breach owners if they’re not paying their levies.

Scott Bellerby B Strata E: scott.bellerby@bstratawa.com.au P: 08 9382 7700

This post appears in Strata News #513.

Question: What is the current interest rate payable on WA overdue strata levies? Is the amount still 15% with the new Strata Titles Act, 1 May 2020?

Answer: As of 1 May 2020 the interest rate changed to 11%.

Jordan Dinga Abode Strata E: abode@abodestrata.com.au P: 08 9368 2221

This post appears in Strata News #464.

Question: How do you “handle” owners who are not financial but are attending the AGM. We find they sometimes cause a disruption at meetings.

Answer: The chair would have the right to insist that any member disrupting the meeting, financial or non-financial, refrains from their behaviour. If the behaviour persists, ask the person to leave the meeting.

Under the Strata Titles Act 1985 and as amended in 2018 there is no probation on any unfinancial owner attending an AGM. If they do attend:

they do not form part of the quorum of the meeting,
they cannot nominate for the strata council of owners,
they cannot vote on any Ordinary Resolution, nor any Special Resolutions.

However, they can vote on a Resolution without Dissent and an Unanimous Resolution.

Yes, they can participate in the discussion but on voting as mentioned above, cannot have a valid vote and that would be on most strata decisions as the majority would fall under the jurisdiction of an Ordinary Resolution.

Now if any member financial or non-financial are disrupting the meeting the chair would have the right to insist that the person refrains from their behaviour or if the behaviour persists ask for the person to leave the meeting.

An AGM is no different from any other organisational meeting and proper meeting protocols need to be adhered to.

Brian Rulyancich StrataTAC E: strata@stratatac.com.au P: 0428 970 067

This post appears in the March 2021 edition of The WA Strata Magazine.

Question: Can I still vote if I don’t pay a special levy? In WA, would I be unfinancial if I have an overdue special levy?

A special levy to raise $170000 was voted in at the last meeting of our strata. We did not attend this meeting as the only notice of this was via email and filtered straight to my husband’s junk mail and so forwent our right to vote.

We now have a $22k bill for repairs we do not agree with. My question is – will we be unable to vote on other matters if we don’t pay this special levy?

For WA, I have not been able to find information which makes the distinction between regular strata fees and a special levy. I understand that if regular strata fees are not paid, we are not entitled to vote but my question is in regards to a special revenue raise?

Answer: Includes all levies standard or special as passed at an AGM or EGM.

Jordan Dinga Abode Strata E: abode@abodestrata.com.au P: 08 9368 2221

This post appears in Strata News #456.

Question: Can a proxy of an unfinancial lot owner be counted as a quorum for an AGM? What section of the act shows this?

Answer: The simple answer is no, an unfinancial owner cannot be counted as a quorum for an AGM.

The simple answer is no, an unfinancial owner cannot be counted as a quorum for an AGM.

Under section 130 a quorum is made of those “who are entitled to cast the votes”.

Under section 120 an owner is not “entitled to cast the votes” if unfinancial.

130.Quorum at general meetings

At a general meeting of a strata company for a strata titles scheme other than a 2‑lot scheme, a quorum is constituted if there are present persons who are entitled to cast the votes attached to 50% of the lots in the scheme.

120. Voting

However, the owner of a lot is not entitled to cast the vote attached to the lot if —

there is an outstanding amount recoverable under this Act owed to the strata company by the owner of the lot.

Jordan Dinga Abode Strata E: abode@abodestrata.com.au P: 08 9368 2221

This post appears in Strata News #397.

Question: In WA, can the Strata Manager change the locks to your premises for non-payment of outstanding strata levies?

Answer: Short answer is no.

Short answer is no.

The strata manager and the council of owners do not have the authority to change locks due to non-payment of fees.

The strata company does not have a legal interest in a strata lot and can only recover fees in accordance with the provisions of the act and regulations. Clause 100 of the Strata Titles Amendment Act 2018 applies. The strata manager under instructions from the council of owners can impose interest at the prescribed rate and can again under instructions also instigate recovery action in a court of competent jurisdiction, Clause 100(10(d).

Brian Rulyancich StrataTAC E: strata@stratatac.com.au P: 0428 970 067

This post appears in Strata News #350.

Question: We have outstanding fees due to non payment of Strata levies. We are selling our apartment and planning on paying the full amount owing at settlement. Is this permissible?

We are lot owners and we are trying to sell our apartment.

We have outstanding fees due to non payment of Strata levies. We advised the Strata Manager we would pay the full amount owing at settlement. Is this permissible?

Answer: The matter would need to be referred to the council of owners for a decision.

That arrangement can be done, however, the strata manager would not have the authority to agree to the proposed arrangement and would need to refer the matter to the council of owners for a decision.

The role of the strata manager would be to advise the council as the strata manager would be privy to all the facts and would provide all relevant information to the council for due consideration.

The council of owners would have the right to impose conditions if they saw fit and also impose interest under Clause 100(4)(b) of the Strata Titles Amendment Act 2018. The role of the council of owners and the strata manager is to work on a balance so as to protect the interest of the strata company, which is paramount and their role but at the same time assist the lot owner during a difficult time.

Brian Rulyancich StrataTAC E: strata@stratatac.com.au P: 0428 970 067

This post appears in Strata News #350.

Question: A lot owner’s personal financial problems have lead to overdue strata levies. Everyone in the building knows of the problem. Is this a privacy issue?

Our WA Strata scheme of 16 owners has one owner who has personal financial problem which have lead to overdue strata levies.

The Strata Manager has passed the problem to the Council of Owners. Consequently, all the lot owners and residents are aware of the personal financial problems via COO meeting minutes and by word of mouth.

I thought the Council of Owners didn’t get involved with Strata Fee collection and that it was the Strata Manager’s area of responsibility. The Family who is behind in payments are now aware that all their neighbours know of their personal issues. It has been highly upsetting for all involved.

Should this information not have been kept private? Can you please advise if this is how it should be?

Answer: It is standard practice that the lot owners position is included within the AGM Agenda Financials.

Please note: this response was provided prior to the proclamation of the new strata title amendments.

Having shared ownership in strata titled property is very similar in shared ownership of a business. Do you think you would have the right to know that your business partner is not meeting the contributions all parties agreed upon in order to protect your investment? The cash flow of your property relies on payments by all lot owners. What if all of a sudden you don’t have enough funds to pay the insurance renewal?

At any time, with notice, an owner is allowed to inspect the strata company records – which would bring to light the financial position of all owners.

It is also standard practice that the lot owners position is included within the AGM Agenda Financials. The Strata Manager bringing it to the Strata Councils attention is very standard so that the council can decide how they want to deal with it. Note that the Strata Manager makes no decisions. It isn’t their position to do so. We provide best practice options and assist under instructions.

I can appreciate that everyone has difficulties paying bills from time to time. I am the first to have sympathy for some owners when we deal with cost recovery. But it shouldn’t ever be to the detriment of other owners and there are systems in place for that purpose.

So ultimately to answer your question it sounds like everything is as it should be.

Jordan Dinga Abode Strata E: abode@abodestrata.com.au P: 08 9368 2221

This post appears in Strata News #253.

Question: In our self managed scheme, one owner owes money for the painting of the eaves. To recover outstanding fees, can we sue him for the money owed plus all costs to do so?

We have some eves that run the circumference of the building and they require painting. Money were required to be put in the Sinking fund to pay for the work. One owner has not put any money forward and is not replying to any requests relating to this subject and has previously cried “poor” on any issue.

What are our options? To recover outstanding fees, can we sue him for the money owed plus all costs to do so? He attended one meeting where we discussed the painting issue and raised no objections, but now is just stonewalling us.

We are located in Western Australia and at the moment self manage our Residential site.

Answer: Unless a specific Cost Recovery By-Law has been passed and lodged then NO, costs may not be recovered.

Please note: this response was provided prior to the proclamation of the new strata title amendments.

Are the eaves common property according to the strata plan?

Was the meeting valid?

Schedule 1 By Law 11.(5)

If one or more of the below was omitted the meeting may be invalid.

Postal Delivery time: unless there is a by-law which sees electronic correspondence the agent must be posted to all owners at least 18/20 days prior to the meeting.

AGM agenda motion: was the motion within the AGM agenda and was it specific? ie what was to occur, was a quote included, the total amount to be sent and how were funds raised ie $5,000 expenditure to repair eaves payable by one instalment of $500 per unit entitlement on or before (insert date).

AGM: was there a quorum, was this motion passed by a majority?

Levies due and payable? Section 36 of the Act explains the strata company’s duty and responsibility relating to levies and collection.

Cost Recovery? Unless a specific Cost Recovery By-Law has been passed and lodged with Landgate or the Court of Jurisdiction ordering the owner to reimburse the Strata Company for Costs incurred as a result of Debt Recovery on that lot owner; then NO, costs may not be recovered. Debt Recovery Costs may not be used by the Strata Company unless they are noted within the adopted budget for the property.

Top Tips

Strata Manager – To avoid risk, liability, unnecessary conflict and drama we suggest employing the services of a professional strata manager.

Debt Recovery By Law – a necessary by law in today’s marketplace.

AGM agenda – It’s true that Prior Preparation Prevents Poor Performance. Yes, you may set a suitable date for an AGM however the preparation for your AGM starts after the last one. Only once you have all proper content for a clear and concise AGM, should you finalise and then set the AGM date, noting that the postal delivery time is met.

Elizabeth Florence Abode Strata E: abode@abodestrata.com.au P: 08 9368 2221

This post appears in Strata News #297.

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