A body corporate debt is an amount owed by a lot owner to the body corporate. Knowing what counts as a debt, the consequences of non-payment and the available recovery options can help owners and committees act early.
What is a body corporate debt?
For a Queensland community titles scheme, the Body Corporate and Community Management Act 1997 (BCCM Act) and the applicable regulation module set out how contributions and body corporate debts are managed.
A body corporate debt can include:
- a contribution or an instalment of a contribution
- a penalty for late payment
- another amount associated with ownership of a lot, where that amount arises under the applicable legislation or scheme arrangements.
The body corporate must give written notice of the amount owed, the due date, any applicable discount and any penalty for late payment at least 30 days before payment is due.
You can read more about contributions in our guide to understanding your body corporate levies.
What amounts can count as a body corporate debt?
Regular, special and interim contributions can become body corporate debts when they are not paid by the due date. The body corporate may also recover a late payment penalty and reasonable recovery costs where the legislation allows.
The treatment of another amount associated with ownership can depend on the regulation module and the scheme’s arrangements. Owners should check the relevant notice and supporting documents before assuming an amount is payable.
What happens when an owner does not pay?
An owner who owes a body corporate debt is generally considered unfinancial. The consequences depend on the regulation module applying to the scheme.
For many schemes, the voter for a lot that owes a body corporate debt cannot vote on most general meeting motions or on the election of committee members.
An owner who owes money to the body corporate is also not eligible to be a voting committee member. In the circumstances set out in the applicable module, an owner who owes money cannot nominate a person for committee membership.
These restrictions can affect an owner’s participation in body corporate decisions, so keeping contributions up to date is important.
Can a body corporate charge interest or offer levy discounts?
A body corporate may decide by ordinary resolution to apply a penalty for contributions that are not paid by the due date. The penalty is simple interest at a stated rate of no more than 2.5% for each month the contribution is overdue.
A body corporate may also offer a discount for early payment. The discount must be no more than 20% of the amount payable and must be included in the contribution notice.
For more information, see what are levies.
How can an owner dispute a body corporate debt?
An owner can first try to resolve the issue directly with the body corporate, preferably in writing. Self-resolution is required before applying for formal dispute resolution in most cases.
For a BCCM Act scheme, the owner or body corporate can apply for conciliation about a disputed debt. Debt recovery action already started in QCAT or a court prevents the dispute from being conciliated.
You can also read our guide to resolving disputes in a body corporate community.
How should a body corporate recover unpaid contributions?
If a contribution is unpaid, the body corporate can start debt recovery action. It may lodge a debt dispute claim with QCAT or pursue the matter through the courts, depending on the circumstances. Reasonable recovery costs may also be claimed.
Recovery can be slow and difficult, so bodies corporate should act promptly before an unpaid debt grows. Timely action can help manage costs and support harmony in the community.
If your body corporate has questions about debt recovery, contact StrataCare at reception@stratacare.com.au.
