Supporting strata owners in financial hardship
It is important your strata committee understands how it can help an owner explore alternative payment arrangements if they can’t pay their levies on time.
Key information
- You can support an owner to explore their options – such as waiving interest and an affordable repayment plan to repay overdue levies in instalments.
- In reviewing a payment plan proposal for an owner, your strata committee may look at how reasonable it is and its impact on strata scheme finances.
- There are additional supports for owners available, such as the National Debt Help line.
Understanding financial hardship and vulnerability
Some owners may have unpaid strata levies because of financial hardship.
Financial hardship can happen to anyone. Changed circumstances leading to financial hardship can include injury or illness, loss of a partner, reduced work hours or job loss, family disruption, natural disaster and other situations.
If an owner is also experiencing vulnerability, they may require further support. Someone may be vulnerable if they have experienced abuse or violence, serious illness, mental health difficulties, or age-related or cognitive impairments.
By providing effective support, your strata committee can help owners facing temporary financial hardship to:
- better understand their options
- take practical steps to help manage their financial situation.
Talk early when there are unpaid strata levies
An early conversation between the strata committee (or strata manager) and the owner can help resolve potential problems and payment issues more quickly.
Talking to each other can help overcome:
- language or cognitive barriers – these can limit understanding of written reminders and the obligation to pay strata levies
- lack of understanding of what strata levies are and the legal obligation of strata owners to pay their contribution in a timely manner
- an impression that the legal obligation to pay strata levies may not apply due to an unresolved dispute with the strata manager and/or owners corporation. Owners should be clearly advised that they can’t use any disputes or issues as a legal justification for not paying their strata levies.
You can use the information on this webpage to inform your discussion with an owner who has missed a levy payment. Be sure to pay special attention to an owner’s needs if they are facing financial hardship and/or experiencing vulnerability.
Inform owners about their options
An owner may approach the strata committee to ask about their options if they are unable to pay their strata levies by the due date. The strata committee may approach them directly if they have missed a levy payment.
The strata committee can make sure the owner understands that they can make a request for alternative arrangements due to financial hardship.
The owner can request:
- more time to pay
- a payment plan to repay overdue levies in instalments
- to waive interest charges on overdue levies
- other available options, as suggested by the committee.
You should also make the owner aware that they can pay something towards their strata levies at any time, based on what they can afford. This can help make their debt more manageable for them.
More time to pay
The strata committee can suggest to the owners corporation to give an owner more time to pay the strata levies that they owe. This must be introduced to an owners corporation meeting to be decided by vote.
Payment plans
It’s important to explain to owners what a payment plan is and the process for approval.
- Payment plans let an owner repay overdue levies in instalments over a set period. This can be up to 12 months.
- A payment plan should be affordable for the owners situation, on top of paying their future strata levies when they are due.
- The owner may wish to seek advice on managing their strata debt with their other expenses using the National Debt Helpline financial counselling. There is a live web chat and a phone service at 1800 007 007.
- Payment plans need to be approved by the owners corporation.
See the step-by-step information for developing and assessing a payment plan.
If an owner's payment plan is refused
If the owner’s payment plan request is refused by the owners corporation, or they have a dispute with the owners corporation about their levies, there are steps the owner can take:
- The owner can first apply for free mediation with NSW Fair Trading to help resolve the issue.
- The owner can apply next to the NSW Civil and Administrative Tribunal (the Tribunal) to help resolve the dispute.
Find details on dealing with payment plans at developing and assessing a payment plan.
Waiving interest charges
Whether alternative arrangements are decided upon or not, the strata committee or owners corporation can vote to waive interest on an owner's overdue levies. The request to waive interest needs to be submitted to the strata committee or the owners corporation to decide on. This applies whether the proposal is:
- to waive interest on an individual's overdue levies
- a general waiver of interest on overdue levies that arise.
Help owners to be well informed
You can support owners in your strata scheme to be well informed about their strata levy rights and responsibilities and to understand what their strata levies pay for.
This can help reduce misunderstandings that can result in delayed payment.
Your strata committee can remind owners of the following:
- Strata levies are paid into funds. These funds are managed according to directions from the owners corporation and the strata committee – so it is best if every owner takes part in meetings of the owners corporation. This will help you inform decisions for the strata scheme.
- The budget is approved at the owners corporation annual general meeting (AGM) sets out the total fee charges for everyone who owns property in the strata scheme.
- The strata manager’s fee (if your scheme has one) makes up a part of the strata levies to be paid, but the total levies also pay for other costs to run and maintain the strata complex.
- There can be consequences if you don’t pay your strata levies, so we encourage all owners to explore their options early if you have difficulty paying on time. Owners can visit the Help if you can't pay your strata levies page.
Proactive conversations to support newer owners
It can help owners if your strata manager or a committee member talks with new owners proactively about their strata levies. For example, give them a courtesy call or email. This lets you help with any questions they may have about making their first strata levy payment.
John is the owner of strata-titled apartment. His strata levies are currently $900 a quarter.
After John was made redundant, it took him time to get another job with a reliable income – which resulted in him struggling to pay his bills and other living expenses during this period. As well as quarterly strata levies, John’s expenses included his mortgage, council rates and power bills.
Not knowing which costs to pay first, John didn’t pay his quarterly strata levies by the due date.
Responding to John’s needs
John’s strata manager sent him a reminder notice to pay his strata levies. After not getting a response, the strata manager called John to talk about the missed payment.
The strata manager explained to John there were options if he was having difficulty paying his strata levies. One of the options was for John to ask to enter into a 12-month payment plan, which would let him pay the quarterly strata levies he owed in instalments.
The strata manager sent John a follow-up email. The email included information and a link to the webpage explaining his options when dealing with unpaid strata levies. This included how to access free financial counselling.
Next steps
Seeking support to manage his debts, John used the National Debt Helpline website to find a financial counsellor in his area. They helped him understand his financial position, prioritise dealing with his various expenses, and provided guidance for his next conversation with his strata manager.
John then prioritised dealing with his overdue strata levies and contacted the strata manager the next day. He asked for help to arrange a 12-month payment plan proposal and for the interest to be waived on the strata levies owing.
Once the payment plan proposal was developed, the strata manager referred the proposed payment plan to the strata committee for review. After this, the strata manager organised a meeting of the owners corporation to decide on John’s payment plan request, which included waiving the interest charges on the outstanding levies John owed.
Result
The support and options John received allowed him to pay his overdue levies in instalments according to the schedule in his approved payment plan. This helped John to successfully manage his temporary financial difficulty.
Contact Fair Trading
If you have any further questions about strata, you can contact Fair Trading via phone or in-person at a Service NSW centre.