What Happens When an Owner Falls Into Levy Arrears

Every levy that goes unpaid is a levy the rest of the scheme effectively has to carry. A clear, consistently applied arrears process protects the body corporate's cash flow and is fairer to owners who pay on time.

Why Consistency Matters Most

The single biggest risk in arrears management isn't a slow-paying owner – it's inconsistent enforcement. If some owners are chased immediately and others are given informal leeway, the body corporate opens itself to claims of unfair treatment, and collections become far harder to defend if challenged.

The Typical Arrears Process

Missed Payment Flagged

The managing agent identifies the missed or short payment as soon as the levy run is reconciled.

First Reminder

A polite, automated reminder is sent, often before the account is technically in default, to catch simple oversights early.

Formal Letter of Demand

If the arrears persist past an agreed threshold (commonly 30–60 days), a formal letter of demand is issued, noting interest and potential legal costs.

Payment Arrangement Offered

Owners facing genuine hardship are typically offered a structured payment plan rather than moving straight to legal action.

Handover for Legal Collection

Persistent non-payment is handed to attorneys or a registered debt collector, with associated costs generally recoverable from the defaulting owner.

Judgment and Enforcement

Where necessary, the body corporate may obtain judgment and pursue enforcement, including garnishee orders or, in extreme cases, attachment of the property.

The Consequence of Non-Payment: Suspended Voting Rights

Beyond the financial process, an owner in arrears typically loses their voting rights at general meetings until the debt (or an acceptable arrangement) is resolved – a mechanism that protects the integrity of AGM decisions from owners who aren't contributing to the scheme's finances.

Balancing Firmness and Fairness

A Good Arrears Policy Should

Apply the same timeline and escalation steps to every owner without exception
Clearly disclose interest rates and recoverable collection costs upfront
Offer a genuine, documented payment arrangement option before legal handover
Keep trustees informed of the arrears book at every meeting, not just at year-end

Protecting the Scheme's Cash Flow, Fairly

A body corporate that enforces its arrears policy consistently protects both its cash flow and its credibility – and, ultimately, is fairer to every owner who pays their levies on time.

Struggling With Levy Arrears?

PPSP runs a structured, consistent collections process – from first reminder through to legal handover – to protect your scheme's finances.

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