Every owners corporation faces the issue of arrears at some point, which brings the question:
What is the solution for dealing with owners who refuse to pay their owners corporation fees?
Owners Corporations require money in order to function. Maintenance, insurance, and accounting all require capital, and when some owners don’t pay their fees, it can put stress on the budget resulting in delayed works, breaches of contracts with providers, and even an insurance policy being cancelled.
Melb OC sets out a fee recovery policy for all precincts that we manage. While this varies from community to community, it effectively runs like this:
30 days before owners corporation fees are due:
Fee notices sent out to all owners.
1 day after owners corporation fees are due:
A friendly reminder notice sent out to all owners who haven’t paid their fees.
14 days after owners corporation fees are due:
A second reminder notice sent out to all owners who haven’t paid their fees.
28 days days after owners corporation fees are due:
A “Final Fee Notice” sent out to all owners who haven’t paid their fees, and the addition of late fees and interest*.
42 days after owners corporation fees are due:
A final warning letter sent out to all owners who still haven’t paid their fees, stating that if not paid within a further 14 days, their details will be handed to a solicitor for debt recovery proceedings* where any additional debt recovery costs will be on-charged to the individual owner.
56 days after owners corporation fees are due:
A letter from the owners corporation solicitor sent out to all owners who haven’t paid their fees, incurring additional debt recovery costs of at least $250, and an ultimatum that if the fees are not paid within a further 7 days, legal proceedings will be lodged at a court of competent jurisidiction*.
63 days after owners corporation fees are due:
Proceedings lodged* against all owners with unpaid fees.
*Note: Resolutions are required at an AGM in order to charge late fees and interest, and to direct the owners corporation manager to commence proceedings. Melb OC can review your previous AGM minutes to ensure that these resolutions are already in place, and if they are not, Melb OC can write resolutions for you.
The owners corporation applies to the court for any legal fees to be on-charged to the owner, in the event that the debt recovery goes this far.
Melb OC specialises in recovering long outstanding debts from recalcitrant payers.
Of course, we also understand that many owners are doing it tough at the moment, and we are always happy to put payment plans into place where appropriate.
The total arrears for an owners corporation is available for all committee members to view on the Owners Corporation Portal and app (see our article on owners corporation portals for more information). This means that committee can watch in real time, as the arrears are brought down.
Melb OC has internal KPIs for having arrears at less than 3% of the total annual fee. Talk to us about how we can bring more cash into your owners corporation.