FLAT CHAT WRAP

FLAT CHAT WRAP


Podcast – all you need to know about levy debt

July 17, 2022

Last week saw the publication of a confected scandal of an elderly couple who’d been given bad advice, blaming their owners corporation for a special levy of $18,000 that had blown out to a debt of $44,000.

As we pointed out in this story, and on this podcast, the owners corp were probably just fulfilling their legal obligation to fix common property and charge owners according to their unit entitlements.

But the appallingly one-sided yarn glossed over the influence of the financial and legal advisers who got the couple into that financial hole and instead took potshots at the strata committee and owners corp.

Anyway, purely by coincidence, the previous week I had sat down with David Sachs, principal of Sachs Gerace Lawyers to talk about levy debts, how they can be recovered and what you should and shouldn’t do when they mount up for one owner.

This includes tracking down overseas investors who leave their units empty and never pay levies ... which may involve hiring private detectives in foreign countries. Ooooh... exciting!

But seriously, David provides a calm voice of reason in what can be a highly emotive area … something that was notably lacking in the previously mentioned “fake news” travesty.

TRANSCRIPT IN FULL

Jimmy  00:03

Last week, before the story blew up about the old couple in Earlwood being (allegedly) driven out of their home because of a levies debt, I interviewed David Sachs from our sponsors, Sachs Gerace Lawyers, mainly about debt.

That was something we'd organised well in advance, so it's purely coincidental... and this is by way of an explanation, if people listen to this and think "well, why are you not talking about that story that was in the Sun-Herald?" The reason is, it hadn't happened yet.

I'm Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review. And this is a very special Flat Chat Wrap.

[MUSIC]

Jimmy

I am with David Sachs of Sachs Gerace Lawyers,  here in Woolloomooloo, technically, and we're going to talk about levy debts and what you can do about them and what you can't do about them. Good afternoon, David.

David Sachs  01:26

Hi, Jimmy.

Jimmy  01:27

Okay, question one; there is a mandatory 10% penalty rate for unpaid levies, or overdue levies... When does that kick in?

David Sachs  01:38

Well, I would never use the word 'penalty.' It's actually a bit of a black mark for lawyers, because penalties mean, you can't recover it. But, there is interest that is chargeable, and it is chargeable from, I guess, the day after the levy is due, but unpaid, but, there's a grace period, so that if you pay within a month after the levies are due, then you're not charged the interest. But, if you paid two days later, then you'll pay for the full 30 days, plus two days.

Jimmy  02:09

Which is a proportion of the 10%.

David Sachs  02:12

Yes, it's 10% per annum, just calculated in the ordinary ways. So if there was a $100 debt, then 10% of it will be $10, and that would be calculated on a daily basis. It accrues notionally for the first month, but it's only able to be recovered, if the levies are not paid within that one month grace period.

Jimmy  02:34

What processes does a strata scheme have to take, to get unpaid levies back?

David Sachs  02:42

So there's procedures that are specified in the Act that every strata manager would know about, but it's essentially, you make sure that a valid levy has been struck that the notices to pay the levies have been issued, that the requisite amount of time has been allowed for people to pay. You've got to allow at least 30 days for people to pay, then if they don't pay them, you've got to give them a notice with information that's required under the Act about that payment; how the things' been calculated, etc. And then, after that point, an owners corporation can recover it like any other debt. So most of the time, you'll be commencing a case in the small claims d...