Recovering Unpaid Levies: Guidance for Strata Companies in Western Australia
Levies are essential to the financial viability of any strata scheme, enabling the strata company to maintain common property, pay insurance premiums, and meet ongoing administrative costs. When lot owners fail to pay levies, it places a burden on the remaining owners and can hinder the effective management of the scheme.
The Strata Titles Act 1985 (WA) (“the Act”) provides a clear framework for strata companies to recover unpaid contributions. Below is an overview of the process and the relevant statutory provisions.
Imposing Contributions
Before a strata company can recover unpaid levies, it must first ensure the contribution was validly imposed. Under sections 100(1) and 100(2) of the Act, a strata company may determine the amounts to be levied on proprietors for payment into the administrative and, if applicable, reserve funds. The contributions must be proportionate to unit entitlements unless the by-laws provide otherwise.
Issuing a Demand
Once a contribution becomes payable, the strata company should issue a written notice to the lot owner specifying the amount owed and the due date. Although the Act does not prescribe a formal demand process, this is a recommended first step.
It is to be noted that interest will accrue on the unpaid amount in accordance with section 100(4)(b) of the Act. Currently, the interest rate is 11% per annum, as specified at regulation 78 in the Strata Titles (General) Regulations 2019. However, the strata company retains discretion as to whether it applies interest on unpaid levies, alternatively it can apply a lesser rate of interest.
Recovery Proceedings
If the debt remains unpaid, the strata company may commence recovery proceedings. Under section 100(4)(c), unpaid contributions (including any applicable interest) may be recovered as a debt in a court of competent jurisdiction, typically the Magistrates Court for amounts under $75,000.
Legal costs incurred in the course of recovery can also be claimed, provided they are reasonable and permitted by the scheme’s by-laws or otherwise ordered by the court.
Enforcement Options
If the court awards judgment in favour of the strata company, there are several enforcement options available to ensure payment is received in circumstances where the lot owner does not pay as ordered by the court.
Under the Civil Judgments Enforcement Act 2004 (WA), the strata company can apply for various enforcement orders such as:
- Time for payment orders (debt to be paid immediately, or by a set date, usually after a means inquiry);
- Instalment order (debt is paid over a period of time, in regular instalments such as monthly payments);
- Earnings appropriation order (if employed, the lot owner’s employer is directed to pay a portion of the lot owner’s salary directly to the strata company, but this option can only be utilised if an instalment order has been disobeyed or cancelled).
Conclusion
Where levies issued to lot owners are unpaid and overdue, the Act provides strata companies with practical tools to recover the debt.
Legal advice should be sought if there is uncertainty about recovery steps or enforcement options.