Owners Not Paying Body Corporate

[FeverPitch]

Hi

I'm in a block of town houses. When an owner isn't paying his body corporate fees what is the formal process?

Is there a specific letter (template) giving 10 working days notice ? 90 days' notice ?

How does it work and what can we do to move forward. Six months in arrears and counting.

Are there any websites offering help, like tenancy ones?

thanks Fever

[artemis]

This site has a summary, including disputes process and links to act and regs.

https://www.tenancy.govt.nz/uta/

Another useful site.

https://hobanz.org.nz/

There is a new unit titles ebook here:

http://www.prop101.co.nz/

[Glenn]

The process is to take an action through the tenancy tribunal.
The application fee is $850 which is added to the order.
From what I understand very few applications are made.
Obviously if the offender does not respond to the threat of taking the action then you have a classical outstanding court order.
Once you have a tribunal order I guess one just enforces lit like a normal tenancy debt.
If they are on a benefit just do a simple attachment order.
If they are working then you do the standard Order for examination and get an attachment against their wages.
Failing that do a distress warrant and seize some possessions like a car or computer.
Fairly drastic action to take against your neighbor who you might need to say hello to each day.

[absoluteproperty]

Hi FeverPitch,

Take a moment and look through your Body Corporate rules. Is there a section which covers non-payment of levies? if not, this is something which must be done. The only way to accomplish this is to have the rules amended, which must be done at an AGM, EGM or by postal vote. This must first be raised within a Body Corporate meeting (if you are not a member of the committee, you can write and it will be included as "external communications" during the matters arising within the meeting.

I can recommend drafting a rule which stipulates late payment penalties. There are maximum penalties payable, which are stipulated in the unit titles act. I recommend having the maximum penalty imposed as a default - non-payers are the same as a renter that does not pay, they are simply a pain and extra work for no extra money.

If you already have this rule in place, it is time to impose it. Your Body Coroporate manager must send written letters of breach of the BCC rules to the default contact method. A case lodged in the tenancy tribunal, with the stipulation that part of the case being that all costs of the case be met by the non-payer.

Even if they do not show or respond to contacts, penalties can be imposed against the property so that in such a time when the property will be sold to another owner, part of the discharge notices which go to the lawyer will demonstrate outstanding body corporate fees (plus penalties) which must be paid either by the seller, or by the new buyer on the settlement date. Once the owner realises this will damage his/her ability to sell, as well potentially his credit rating, I am sure amounts will be paid promptly.

[FeverPitch]

Hi There thank you for your informative replies.
There's a bit of reading to do over the weekend.

We are in a block of six properties and two owners have a debt of about $3000 each with our insurance due for re-newal soon.

One of these owners is The Chairman of the body corp ! who is poor with communication and makes excuses.

Our body corporate secretary (from a recognized company) only brought these matters to my attention yesterday. I'm a "member of the committe" so she's kept me in the loop.

She's sent emails for months. I said don't you think its time to follow the formal process. She replied that would take for ever. So as of yesterday she has sent the owner a formal letter saying if you don't pay by Friday she will inform the Bailiffs !

This doesn't sound right to me ... a formal process is there for a reason. Can she just get the bailiffs in next week and seize property.

I'm pretty sure there isn't anything in the body corporate rules about late payment and certainly worth implementing in our next AGM in July.

thanks Fever

[artemis]

I suppose she could try, but might run into trouble with that approach. Or she might be meaning send the bailiff to serve formal notice.

Either way seems odd. She must know there is a proper process. Does she actually know what she is doing (sounds not).

Possibility may be call a special meeting with this issue as the agenda item, document what has happened so far, and make a resolution for the next step. Also suggest you sound ideal to be the BC chair!

Also, the end result of the process - if no resolution - is for the BC to actually sell up the unit.

Do the owners live in the units? If so can you knock on the door and have a quiet word. Email might not be the best approach.

FYI there are changes coming to the UTA (almost certainly) to change the fee structure for Tenancy Tribunal applications (cheaper) and to introduce an even cheaper / quicker mediation option.

[Ivan McIntosh]

You can't send bailiffs for a non-judgment debt. She thinks bailiffs just wander around seizing property on someone's say so?

Ultimately, as Glenn said, the Tenancy Tribunal is the way to go, and the application fees are the reason why so few do so...because who pays the application fee and the costs of whoever does the tribunal hearing? The other property owners....who are seldom flush with cash for that kind of expense. Once there is a judgment debt from the Tribunal you can get bailiffs involved; but if those are rented properties there may not be much to seize.

You can, in the end via charging orders and writs of sale, sell up their property, so it's not hopeless assuming there is some equity.

[HPM]

Here is a legal point in your favour. Under the UTA (clause 4.7.2(1))a body corp member, that has not paid their levies, is not allowed to vote for any resolutions, whether at a General Meeting or a "Resolution to be decided without a General Meeting". This means you can put forward a resolution to change the rules and the non payers can't vote against it. You only need a quorom of 2 owners.

I highly recommend that you buy ($49 + GST) the book "Unit Titles Manual - 2nd Edition" which is available on the Thomson Reuters website. It is a fantastic guide for anybody that is involved with a Body Corporate.

Jeremy Barker
Hamilton Property Management

[Ivan McIntosh]

As well as being a good way to get the Act's maximum penalties in - and I really do sympathise with owners dealing with recalcitrant payers - that's a wonderful method of abusing majority control that is quite widely used.

Example: Pass ridiculous self-interested AGM resolutions giving you and your buddies a management contract to be the body corp secretary and manage the property, use the common areas of the property for your own personal benefit for next to nothing, and simply refuse to provide any details of expenditures or usage to other owners. When the minority peons refuse to pay their inflated body corp bills in protest, you have a cast iron excuse to block them from voting in any meetings.

Sadly I've seen professional as well as amateur body corp managers abuse this power to change the rules to enrich themselves in blatantly self-interested fashion; most often a small complex with two or three domineering owners that begin to feel self-entitled because they are the ones present on the ground dealing with BC problems, and over time they go a lot further than fairness would dictate. The worst was a commercial building where one owner was transparently abusing their majority control of the BC to force other owners to firesale to him at a rock bottom price, by mechanisms such as requiring body corporate consent to leases and refusing or delaying consent so long any deals would fall over, granting themselves a huge management fee and pursuing other owners for the resulting increased BC fees and refusing to allow them to attend meetings or get any information when they hadn't paid his extortion.

That's all bye-the-bye, however. What Jeremy said is indeed very helpful, and I would also recommend the Unit Titles Manual