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Dealing with debtors in difficult times

All of us are coming to grips with our new financial circumstances and the uncertainty of what lies ahead. The government and the banks are doing what they can to help ease the burden, but, for many of us, that’s not enough. A significant recurring payment for almost a million Queenslanders is their body corporate levies. Many of those owners will be coming to you in the coming months seeking relief.

Can the body corporate cancel levies?

The body corporate is required to adopt budgets each year and to raise contributions from owners to meet budgeted expenses. On that basis, cancelling levies altogether will contravene the requirements of the legislation.

However, the body corporate could, depending on its circumstances, consider one of the following alternatives:

  1. Allow discounts and waive penalties for late payment of existing contributions (to give owners some flexibility to pay late). The committee can approve that arrangement if it is satisfied there are special reasons – our view is that the economic consequences of the current pandemic satisfy that requirement;
  2. Critically review and consider the amounts necessary for the administrative and sinking fund for its current financial year. There may be scope to modify those budgets and immediately reduce the upcoming contributions, provided, of course, there are legitimate reasons to do that. For example, the body corporate could temporarily decommission common facilities that would otherwise have high operating and maintenance costs, such as a swimming pool, or it could defer scheduled capital works or recurring maintenance to occur at a later date. An extraordinary general meeting would be required to approve (by ordinary resolution) any amendment to the budget and the contributions.

Can the body corporate use sinking funds to pay its administrative expenses?

As tempting as it may be to utilise existing sinking funds to pay the ongoing administrative expenses of the body corporate, the legislation does not allow sinking funds to be used for administrative purposes.

Can the body corporate enter into a repayment arrangement with owners?

Although bodies corporate are obliged to promptly commence proceedings against owners who have had a body corporate debt outstanding for 2 years, there’s nothing preventing a body corporate, in the meantime, from making repayment arrangements with owners who are in difficult financial circumstances. The committee can approve those arrangements.

We have introduced a low fixed-fee service to negotiate, document and monitor those arrangements on behalf of the body corporate. We’re in this together and we’re here to help.

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