New lot owners are often confused by the settlement process between buyer and seller and what happens with levies and lot ledger balances. The BCCM regulations state S79 (Small Schemes Module) and S145 (Standard Module) that –
A liability to pay a body corporate debt in relation to a lot is enforceable jointly and severally against … a person who becomes an owner of the lot before the debt is paid.
When there is an outstanding debt against the lot on date of settlement, this is usually handled in the following way – A cheque (usually a bank cheque from settlement proceeds) is sent by one of the settlement lawyers (usually the buyer’s lawyer) to the Body Corporate. The lawyers will have adjusted the settlement price between the buyer and the seller to take account of the debt. The reason why the buyer’s lawyer takes responsibility is because if any issue arises regarding non-payment, it is the buyer that is most interested in seeing the issue resolved since the Body Corporate is continuing to issue outstanding debt notices to the new lot owner. Another reason is that a BCCM form 8 must be submitted to the Body Corporate advising of the new lot ownership and this is usually submitted by the buyer’s lawyer with cheque attached (if applicable).
Body Corporate Treasurers and Body Corporate Managers are not responsible in any way for payments at the time of settlement. Lot ledger levies and debts will be issued and re-issued to whoever is the current lot owner. Penalties (if in place) will accrue if debts remain unpaid.
