Body Corporate Debt Recovery… how to get tardy lot owners to pay their levies.

Body Corporate Debt Recovery… how to get tardy lot owners to pay their levies

Because of the effect that non-payment of outstanding body corporate levies can have on the body corporate, other lot owners, and residents, there are provisions in the Body Corporate and Community Management Act 1997 (QLD) and the module regulations to recover outstanding fees.

These instruments allow a body corporate to recover:

  1. The amount of the contribution or instalment;
  2. Any penalty for not paying the contribution or instalment;
  3. Any costs (recovery costs) reasonably incurred by the body corporate in recovering the amount.

The Office of the Commissioner for Body Corporate and Community Management Practice Direction 24 also allows for a body corporate to be able to recover the following:

  1. Amounts incurred by a body corporate in repairing damage caused by an owner or in carrying out work which was the obligation of the owner;
  2. Agreed charges for the supply of services by the body corporate; or
  3. Amounts an owner is required to pay under an exclusive use by-law.

The Body Corporate Debt Collection Process

It is reasonable for the body corporate to have taken the following steps:

  1. Set the contributions to be levied on owners;
  2. Given the correct notice of contribution payable;
  3. Set any discounts for timely payment (if at all);
  4. Set any penalty interest on outstanding levies (if at all); and
  5. If a lot owner is in arrears, serve an arrears notice.

If these steps have been done without success then the body corporate may need to commence debt recovery proceedings and engage Miller Sockhill Lawyers.

The various module regulations prescribe that both the Queensland Civil and Administrative Tribunal (“QCAT”) and a Queensland court of competent jurisdiction.  An adjudicator does not have jurisdiction in a debt dispute. The jurisdictions of the Tribunal and the Courts in relation to civil debt claims is determined by the amount of the debt.

  • QCAT – If the debt is under $25,000.00;
  • Magistrates Court – If the debt is under $150,000.00

The body corporate would have likely taken a serious wrong-turn in a lot owners’ debt is more than $150,000.00 so most legal action would be commenced in QCAT or the Magistrates Court. There are advantages and disadvantages with commencing legal action in either QCAT or the Magistrates Court – as a general rule-of-thumb, as solicitors we prefer to commence legal action in the Magistrates Court. The main purpose of commencing legal proceedings is to obtain an enforceable money order.  Once the body corporate obtains the enforceable money order then the lot owner debtor will either pay, or the body corporate can enforce the money order.

Enforce the Money Order

There are a number of ways to enforce a judgment or money order against a lot owner.  The most obvious being an enforcement warrant for seizure and sale of the real property contained in the lot. This type of enforcement warrant is good for two main reasons – firstly it leverages the equity in the real property to pay the judgment debt; but it also removes and replaces the lot owner in the scheme (with hopefully a lot owner who pays the body corporate levies). However, there are a number of other enforcement options available.

For any Body Corporate Law issues or debt recovery issues please contact the team at Miller Sockhill Lawyers.