Help, a body corporate owner is not paying their instalment
When one or more owners do not pay their body corporate instalments on time, it can be frustrating, time consuming, and sometimes even financially troubling for a body corporate. The discussion below is relevant for Queensland legislation.
Address for Service
It is the owner’s responsibility to provide the body corporate with a valid address for service at all times.
Timely payment discounts
It can be useful to encourage owners to pay on time by setting a payment discount for on-time payment of instalments. An ordinary resolution of the body corporate can set a discount of up to 20% for timely payment of instalments. The upside of doing this is that hopefullly more instalments come in on time. The down side can be that there can arise disputes over whether the payment was received in time to receive the discount or if there are extenuating circumstances. Accurate bookeeping is essential particularly with regard to annotating the dates cheques are received.
Late payment penalties
The Act also allows for the body corporate to pass a ordinary resolution setting penalty interest which is applicable to late payments. The penalty must consist of simple interest at a stated rate (of not more than 2.5%) for each month the contribution or instalment is in arrears. The upsides and downsides are the same as those for timely payment discounts. The additional task of calculating interest payments for each overdue instalment should not be overlooked.
If the amount of a contribution or contribution instalment has been outstanding for 2 years, the body corporate must, within 2 months from the end of the 2 year period, start proceedings to recover the amount. Any costs (recovery costs) reasonably incurred by the body corporate in recovering the amount may also be recovered from the recalcitrant owner. Action can be commenced earlier, but body corporates need to be careful that they apply a reasonable approach. In this BCCM adjudication case, the body corporate recovery costs were not allowed as they had failed to attempt to contact the owner prior to engaging a debt recovery agency.
Two lot regulation
Penalties and discounts are not applicable for bodies corporate operating under the two lot regulations. However in the case of the two lot regulation, as soon as a payment falls overdue, proceedings can immediately commence to recover the debt.
Communication can go astray
Sometimes the reason for non payment of an instalment is due to a communication breakdown. Read another BCCM adjudication case where an owner failed to receive an instalment notice in the post and how the issue escalated badly.