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The Devil is in the Detail – Owners Corporation Debt Recovery

A common, but often fatal (and easily avoidable) mistake for Owners Corporations undertaking debt recovery is the form of their fee notices and final fee notices issued to lot owners.

Whilst on face value it may seem like a trivial matter, ensuring that fee notices are in the approved form is a crucial requirement for managers and of committees of Owners Corporations to fulfil, given that non-compliance can result in difficulty in recovering money owed by lot owners.

The Debt Recovery Process

Given that Owners Corporations are funded by lot owners, the way funds are raised is by the issuing of a fee notice to lot owners for various fees and charges, proportionate to their lot liability.

If a lot owner does not pay in response to a fee notice within 28 days, a final fee notice can then be issued.

If payment is not made in response to a final fee notice, then (and only at this stage) is an Owners Corporations entitled to issue proceeding against a lot owner in VCAT for recovery of fees and charges the subject of the final fee notice.

The Requirements

Section 31 of the Owners Corporations Act 2006 (Vic) (Act) requires that Owners Corporations must give notice to a lot owner in the approved form of any fees and charges due and payable by the lot owners to the Owners Corporations.

Further, section 32 of the Act requires that if the money owing is not paid within 28 days after the date of the fee notice, the Owners Corporation may send a final notice in the approved form to the lot owner.

Consumer Affairs is responsible for the approved form of both fee notices and final fee notices, which can be accessed via the following link:

https://www.consumer.vic.gov.au/housing/owners-corporations/finance-insurance-and-record-keeping/fees

Common mistakes made by managers and committees in preparing fee notices and final fee notices include:

  • failure to cite relevant legislation, regulation and rules;
  • failure to include all of the prescribed headings and wording verbatim;
  • failure to include the applicable interest rate and the daily amount of interest charged on arrears; and
  • omitting the “important information on fees and charges” page of the notice.

The prescribed form itself provides that no information in the form can be changed, added or deleted, save for additional details such as other reference numbers and information needed as part of an internal administration system (eg owner reference number); the manager’s name, ABN, registration number and contact details; or website and email details.

The Implications

If a fee notice or final fee notice is not in the approved form, VCAT may (as it has in the past on many occasions) decide against Owners Corporations in debt recovery proceedings, which in turn results in further lost funds of an Owners Corporation. This is a risk that can be easily avoided.

How We Can Help

In light of the above, it is important that managers and Owners Corporations have detailed regard to the approved forms for fee notices and final fees notices.

Aitken Partners’ Owners Corporation Law Team is experienced in assisting managers and Owners Corporation committees to ensure that their fee notices and final fee notices are compliant with the approved form to achieve the best possible outcomes in debt recovery proceedings.

If you need legal assistance with such matters, please contact any of our experienced Owners Corporation Team: