Assessing a payment plan for unpaid strata levies

An owner will use the standard payment plan request form to propose a payment plan for review.

It is helpful if the strata manager or strata committee supports the strata property owner to work through the details of their payment plan request. However, they must not ask the owner for any additional information other than what is in the payment plan request form.

To approve the request, it will need to be reviewed and approved by a majority vote at an owners corporation meeting or strata committee meeting. This cannot be delegated to the strata managing agent.

The process to review an owner’s payment plan request (and ultimately decide whether to approve them having a payment plan) lets your strata scheme take into consideration its impact on scheme finances. The process may also result in extra negotiation that can adjust the proposed payment plan, so it can be approved. 
 

The owners corporation or strata committee needs to agree to payment plans by majority vote at a meeting. This cannot be delegated to the strata managing agent. 

As the payment plan request form allows an owner to additionally request that interest charges be waived, a separate decision on waiving interest charges may be made at the same meeting.  

A payment plan request may be reasonably refused if starting the payment plan would result in the owners corporation’s having insufficient funds (in the capital works fund and/or administrative fund). 

These funds may have insufficient funds if:

• the fund would fall into deficit, or
• there would not be enough money in the capital works fund for the owners corporation to meet its duty to repair and maintain the common property, or
• there would not be enough money in the administrative fund to pay for expenses, or
• there would not be enough money to comply with:  
  • an enforceable undertaking entered into with Fair Trading, or
  • a compliance notice issued by Fair Trading, or  
  • another order issued under another Act, such as an order from the Building Commission, the Tribunal or a court.

The owners corporation or strata committee must give a written response within 28 days to an owner requesting a payment plan. If a request is refused, the response must include reasons for the refusal and how they apply to the owner’s request. 

If the owner is approved to enter into the proposed payment plan, the strata scheme must give the owner a payment plan statement.  

The payment plan statement should include:

• the lot owner’s name, address and lot number
• the strata levies owing
• the amount of any interest payable for the overdue levies and the way in which it is calculated  
• payment schedule and information about payment methods
• what amount (if any) has been paid to date
• strata manager or strata committee contact details
• statement about the lot owner’s right to request to extend the payment plan – although the owners corporation doesn’t have to agree to this
• the date the payment plan was agreed to.

Repayments made under a payment plan must be applied in this order:

1. Repayments are applied first to overdue levies (oldest to newest debt).
2. Once overdue levies are paid, repayments are then applied to any interest.
3. Repayments are then applied to any debt recovery costs for recovering the overdue levies.

This requirement applies unless a Court or Tribunal order, or the owner themselves, specifies how payments must apply.

Action cannot be taken to recover overdue levies where a payment plan has been approved for those levies, and the plan is being followed.