Body corporate levies — known as owners corporation levies in Victoria and body corporate levies in Queensland, NSW, and other states — fund the maintenance, insurance, and management of strata-titled properties. When lot owners fail to pay their levies, the body corporate or owners corporation faces a funding shortfall that can affect maintenance programs, insurance renewals, and the body corporate's ability to meet its obligations.
The legal framework
Each state and territory has its own strata titles legislation that addresses levy recovery. In NSW, the Strata Schemes Management Act 2015 gives the owners corporation a charge over the lot for unpaid levies — meaning the debt is secured against the property. In Victoria, the Owners Corporations Act 2006 provides a similar mechanism. In Queensland, the Body Corporate and Community Management Act 1997 applies.
The key practical point in each jurisdiction is that unpaid levies are recoverable as a debt, and in most states the body corporate or owners corporation has a statutory charge over the lot that takes effect on registration of the plan. This makes levy recovery more robust than unsecured trade debt — the creditor has security over real property.
Practical recovery steps
- Formal demand: issue a formal demand for payment of all outstanding levies, interest (where the rules or legislation permit), and any recovery costs. The demand should specify a clear payment deadline.
- Instalment arrangements: for lot owners experiencing genuine financial difficulty, a payment arrangement may be appropriate and often produces better outcomes than immediate legal action.
- Debt recovery proceedings: levy debts can be recovered through the courts as ordinary debt claims. In NSW, the Civil and Administrative Tribunal has jurisdiction over certain strata disputes. Court proceedings can produce a judgment that is then enforced against the lot owner's assets.
- Caveat or charge enforcement: where the body corporate holds a statutory charge over the lot, this charge may be enforceable — ultimately through a mortgagee-style sale process — if the debt is substantial and other recovery methods have failed. This is a significant step that requires legal advice.
- Notice to mortgagee: in some states, the body corporate can notify the lot's mortgagee of the outstanding levy debt, which may prompt the mortgagee to pay the arrears to protect their security and add it to the loan balance.
Interest and recovery costs
Most strata legislation allows the body corporate to charge interest on unpaid levies and to recover reasonable recovery costs, including legal fees. The applicable rate and the process for claiming costs vary by state. Ensure your recovery demand includes all properly claimable amounts.
Contact Merion if you are an owners corporation or body corporate manager dealing with persistent levy arrears — we can assist with the debt recovery process in compliance with the applicable state legislation.