Collecting arrear levies is part and parcel of body corporate management. One of the ways to do this, without approaching the Community Schemes Ombud Service (“CSOS”) or a court for help, is for the body corporate to enter into a payment plan agreement with an owner who is willing to pay off their debt, but unable to do so immediately.
Here are our tips for entering into a watertight payment plan that protects the interests of the body corporate:
1. If the owner has disputed any levy or charge, this should be discussed so that it is clear that the owner knows that acknowledging the debt in writing binds them to payment.
2. The trustees or managing agent should, once the trustees have approved the suggestion, prepare a written payment plan including the following information:
a. the owner’s name and property details (unit/s and exclusive use areas);
b. the owner’s address for service of notices;
c. the total amount overdue, broken down by individual amounts that relate to each unit or exclusive use area;
d. the rate of interest payable on the overdue amounts as decided by trustee resolution;
e. a schedule of payments for the overdue amounts and the period for which the plan applies;
f. how the payments are to be made, including details of the bank account into which payment must be made;
g. contact details for one of the trustees or the managing agent responsible for dealing with any matters arising in relation to the payment plan;
i. a statement that a further plan may be agreed to by the body corporate by trustee resolution;
j. a statement that the existence of the payment plan does not limit the body corporate’s rights to take action to recover the outstanding debt amount;
k. a statement that should the owner fail to abide by the payment plan, the full balance of the outstanding debt amount, as well as all legal costs becomes due and payable, in which case the body corporate will proceed to demand immediate payment of the full balance of the outstanding debt amount, and legal costs;
l. a statement that should the owner fail to make immediate payment of the full balance of the outstanding debt amount, the body corporate will apply to the CSOS or other competent court for relief;
m. an undertaking by the body corporate, at the request of the owner, to prepare and deliver a written statement setting out the payments made during that period and the amounts and interest owing.
3. The owner must sign and return the payment plan agreement to the body corporate.
4. The payment plan agreement should be signed by two trustees or one trustee and the body corporate’s managing agent and kept as part of the body corporate’s records.
It is important to note that the trustees are not empowered to accept a settlement (lesser amount) of the full outstanding levy debt [Zikalala v Body Corporate of Selma Court and Another (AR255/2020)  ZAKZPHC 81 (23 September 2021)].
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Article reference: Paddocks Press: Volume 17, Issue 12.
Jennifer Paddock is a dual-qualified lawyer with experience working as a strata title managing agent and solicitor in New South Wales. Prior to this, she served as a specialist sectional title attorney and practice manager at Paddocks for five and a half years. She brings a wealth of knowledge and expertise to the Paddocks team. Contact her at firstname.lastname@example.org.
This article is published under the Creative Commons Attribution license.