At our Owners Corporation workshop on Wednesday 20 March 2013, Principal Lawyer and Head of our Owners Corporation practice, Anton Block, discussed the Personal Property Securities Register and other strategies which may assist Owners Corporations to recover debt.
Below are the notes that he provided at the workshop:
Pursuant to section 28(1) of the Owners Corporation Act 2006, lot owners are liable to pay any outstanding fees, charges, contributions or amounts owing to the owners corporation in respect of that lot. This can extend to special levies that are charged by the owners corporation to its lot owners.
When a lot owner fails to pay the monies due, the owners corporation may recover those monies in any court of competent jurisdiction as a debt due to the owners corporation.
This requires the owners corporation to issue proceedings against the lot owner which costs money, takes time and sometimes can be difficult to execute. This is particularly the case when the lot owner is overseas.
In those circumstances, VCAT does not have jurisdiction. The proceeding must be issued in the Magistrates or County Court — depending on the amount of the claim (the upper limit of the Magistrates Court jurisdiction is $100,000). However, it is also necessary to serve the issued complaint or writ on the recalcitrant lot owner before the proceeding can be progressed.
Overseas lot owners can be difficult to track down and serve with the issued complaint or writ.
The options that form part of the ‘armoury’
- Obtain order for Substituted Service and Judgement for the Debt;
- Obtain a Garnishee Order (i.e. an order against a person or company who owes money to the lot owner to pay that money to the owners corporation);
- Require lot owners to provide and maintain a Bank Guarantee;
- Serve a Creditor’s Statutory Demand (pursuant to section 459E Corporations Act 2001);
- Obtain Security for future lot fees and levies which is enforceable against third parties (such as tenants and property managers). This is done using the Personal Property Security Act 2009.
Note: This update is a guide only and is not intended to constitute legal advice.