Body Corp and Debt Collectors

Hi All,

I bought a property about six months ago, the body corporate sent a welcome pack to my PPOR address, but unfortunately this pack was overlooked by myself. This week I have a second correspondence, but from a debt collector asking for payment, with an additional $250 debt collection fee.

I am a very annoyed that the body corporate did not send a polite letter reminding me of any outstanding amount, as they did know my PPOR address. Of course, any outstanding payment to the body corporate was overlooked, and I would have paid immediately.

So,
Can I sue the body corporate for $250 through a small claims court for unreasonable behaviour ?
If I win/loose will it affect my credit rating with banks (refinancing and associated searches)
If I win, will the body corporate increase my due amounts (ie higher then equivalent property in same block)

What are peoples thoughts, please.
Thanks All.

 

I am a lot owner with multiple body corporates. All of our correspondence including fee invoices are sent my email. If you haven’t already done this, I would set this up immediately with your body corporate.

The $250 fee for missing your first payment, especially for a newbie, does sound a bit harsh.

Have you read the welcome pack? Is it all explained in the pack?

I also think that going straight to small claims court is a bit aggressive. It is in the interest of both parties that you have a cordial working relationship.

If I was in your shoes, I would write a very polite and professional email outlining to the body corporate what happened, apologise for your oversight, promise it won’t happen again, stress how you paid immediately once you were advised of your oversight and request that they consider withdrawing their $250 fee.

I feel this is a better approach than “going in all guns blazing”, given it was your oversight.

 

It's not a $250 fee for missing a payment.
It's a charge by the debt collector.

I would say the BC is sick of people 'overlooking' payments, and they have a policy of straight to debt collection. They may need to do this to meet their own cash flow requirements.

 

It is still a $250 fee for missing a payment. You are correct, the fee is being charged by a debt collector, not the body corporate.

I stand by everything else in my post above. It will probably be harder to get the fee waived but, one never knows, with a nice email, the body corporate might handle the $250 fee.

Agree.

Our body corporates offer a sizeable discount if lot owners pay on time which we always accept. I feel this is a far better approach that sending late payers straight to debt collection agencies.

Maybe the OP should get onto the committee and introduce some changes to assist with its operations.

 

Have you received any other correspondence in the 6 months that you have owned the property? There would have been 2-3 sets of rates, water, levies etc in that period.

 

If they sent you the payment advice to the right address (not that clear but you infer this above) then it is on you. You have little choice as the policy of the BC is to engage the debt collector and if you don't pay you will be unfinancial and unable to vote.

What has likely happened is that the BC has assigned the collection responsibilities to the strata manager who may have initiated this. To have the charge paid by the strata you are basically asking the other owners to subsidise you so you need a convincing argument.... Hard if the fee notice was overlooked.

 

Unreasonable acts are not grounds you can sue on.

 

I would pay the BC the original amount and ignore the debt collector. When the debt collector calls next, just say that you have paid the outstanding amount and you have a receipt.

Note: Pay the original invoice from the BC, and not via the debt collector.

 

There is still additional legal fees that are added on to late payments by the strata and incurred as costs .
Why should other unit holders bear this cost.
Its usually included in the financials sent out prior to the AGM , its all written out which unit holders have late payments and still have monies due.
And as such are unable to vote at the AGM.

 

I doubt the $250 fits in this category.

 

Maybe about $10-$20 in "legal fees" every time a late payment notice is sent.
Seems wrong that they would go straight to a debt collector without sending out a couple of late payment notices, either by email or snail mail

 

It is a overdue payment, the strata manager is following good practice to get the money in so that the other owners are not inconvienced by your unwillingness to pay your levies. Once they can get a judgement against the owner for the outstanding levies, they can then put measures in place to garnishee wages, bank accounts etc. They have to start somewhere.

 

They can go to a debt collector or do whatever they want. It doesn't mean the debtor is required to pay anything for those things though.

 

Most companies will threaten to call in an external agency or the insurance company, first ,this will usually get the payment required.
We have seen at least 2 - 3 late notices payments on the financials for unit holders that get behind in payments , then its forwarded on to an external agency.

 

First things first - pay the BC levy immediately, even if you decide not to pay the $250 fee. That is a separate argument.

But learn the lesson, and always keep a close eye on any new purchase. Also take note of how often charges are levied (quarterly? Half yearly?) and ensure you receive the invoice at the appropriate time.

With one of our purchases, we noted that we did not receive rate notices for over a year (rates levied annually). I phoned the area council who had no knowledge of our purchase. It turns out our solicitor notified the wrong council (we were close to a border). Council sent invoice, we paid. Since we approached them, they waived any late fees, even gave us a “pay on time” discount fee if we paid the invoice within a month.
Marg

 

Lots of replies, did not expect this many replies, but thank you all.

Lots of points raised, but to answer a few...
It was my error to overlook reading the welcome pack.
A warning letter would have raised my awareness to any outstanding payments, I did not pay it, as it was overlooked by myself, there is ample 'funds' in the line of credit account to pay bills.
A polite reminder would have spurred me into action, I was not intentionally with-holding payment for any reason.

Regarding Council Rates, yes the council got my email address (not sure how) and sent a bill through, and a reminder too. So that was paid ok for the property.

Regarding "unreasonable actions" I thought there was something like an Unfair Contracts Act, or Onerous Conditions Act whereby (for example) if the penalty (debt collection fee) is out of proportion to the debt outstanding (which it is in this case), then it was deemed by the law to be unfair and thus not enforcable.

I think that if the debt has been passed to a debt collector, the BC 'sells' the debt for less than face value, with the profit for the debt collector being the difference between was is collected, and to them the purchase price. Fees on top are just profiteering.

 

I'm not sure a BC could sell the debt for less than face value - why would they?
They are entitled to the full amount, and have budgeted for the full amount.

Have a read of this one - $150,000 costs for a $5,000 debt
Body corporate debt recovery - Boss Lawyers

 

You're probably mixing up different legal concepts. Regardless, if you have an issue with the fee, the correct thing to do would be to not pay it - not pay it and then make a claim for it back....

Let me guess, you've already paid the fee?

 

Interesting article

Quote:

The starting point is section 145 of the Body Corporate and Community Management (Standard Module) Regulation 2008 (Qld). This provision provides that if a contribution or instalment is not paid on time, the body corporate may recover those amounts as if they were an ordinary debt including any costs (recovery costs) reasonably incurred by the body corporate in recovering that amount.

 

In order to stop potential interest accruing (at semi extortionate percentage rates), and also avoid other 'debt collection charges', yes I have paid the outstanding in full. The $150k collection charges on a $5k debt is a real horror story.