If you own a strata lot, it can be intimidating thinking about what happens if you don’t have the money to pay your strata fees. Strata fees are important because they benefit the entire strata community. It’s important to remember that there are options available to help you manage your finances and keep your property. Let’s discuss what happens if you’re in financial distress, and what you can do to turn it around.
What happens if I can’t pay strata fees?
If you are in financial distress and can’t pay the strata fees, you may be issued a default notice by your strata manager. A default notice usually gives you 14 days to pay the arrears or negotiate a payment plan. If this fails, they can take further action against you, such as referring the matter to an administrative appeals tribunal for civil action.
Every strata manager is different, so there may be a series of warning notices or other actions taken before things get more serious. However, the matter can’t be referred for civil action unless the owner has received 21 days notice of the intended action.
In the interim period, while your strata fees are overdue, you become ‘non-financial’ and may lose certain privileges. Most commonly, non-financial members are unable to vote at General meetings or hold positions on the committee.
In addition, overdue strata fees will likely attract high interest charges, and you’ll be liable to pay those in the long run, as it’s extremely uncommon for anybody to get away with not paying.
Can non-payment send me bankrupt?
If you can’t pay your strata fees, then the Owners Corporation may apply to place you into bankruptcy. This course of action is generally only for debts over $5,000, but it is naturally a serious concern if you’re in financial distress.
Would I lose my property?
If you owe strata fees of more than $5,000 and the Owners Corporation applies to place you in bankruptcy, losing your home is a real possibility. In very simple terms, the Bankruptcy Trustee may sell the lot owner’s property on their behalf. While you, as the owner, would receive most of the proceeds of the sale, all of your outstanding debts would be paid first. So, depending on what you owe, you could find yourself in the horrible position of not having enough leftover money to pay out the full mortgage. Needless to say, this is a position everybody wants to avoid.
Tips if you can’t pay your strata fees
Like any debt you may incur, there are always options available to you before it gets to the point of bankruptcy and losing your home. So, if you find yourself under financial stress as a strata owner, here are some tips to help manage the situation.
Speak to your strata manager
The first thing you should do is speak to your strata manager, committee or Owners Corporation. A strata manager is the person who manages the strata scheme, and they can give you advice on how to pay your fees. They may also be able to help you find ways of negotiating a payment plan. Basically, you need to be aware that the problem isn’t going away, so if you can arrange payment options with the strata manager, you’ll be in a much better position.
Seek financial advice
In conjunction with negotiating a payment plan with your strata manager, you should ideally seek financial advice. If you can’t pay your strata fees, it’s likely that some of your other financial obligations may also be a concern.
Speaking to a financial adviser can help you come up with a plan of attack. Some options include consolidating debts into a low-interest loan that’s more manageable. They can also assist with budgeting, and may even help to negotiate payment plans with other creditors rather than looking at the last resort, which would be voluntary bankruptcy.
Looking for expert strata management assistance?
Non-payment of strata fees is an unpleasant issue not just for lot owners, but for the committee or strata manager who needs to pursue them. If your Owners Corporation needs assistance dealing with unpaid strata fees, as well as support with the day-to-day running of the property, More Than Strata is here to help. Contact us today and find out how we can make strata management so much easier.
