Service Charge Arrears and Upcoming AGM

[theo67]

I own apartment in complex of 125 units.Unpaid service charges have always been a problem,and have grown by 18,000 in past year.Now standing at 81,000.All units are occupied and rents are strong.AGM is coming up in July.Is there any advice re questions I should ask or suggestions I could make.I believe service charges on some units have never been paid.The complex is deteriorating and sinking fund stands at just 9,000.

 

[mtp]

I own apartment in complex of 125 units.Unpaid service charges have always been a problem,and have grown by 18,000 in past year.Now standing at 81,000.All units are occupied and rents are strong.AGM is coming up in July.Is there any advice re questions I should ask or suggestions I could make. I believe service charges on some units have never been paid.The complex is deteriorating and sinking fund stands at just 9,000.

S18 of MUD Act regulates this matter.

And it is important particularily in estate where the common areas have not been transferred to the management company ad service charge are being used to 'defray expenses that are or were the responsibility of the builder /developer under the lease' S18 MUD Act.

S18.6 of the MUD Act states that a management company cannot levy a service charge to defray such expenses without the written consent of 75 per cent of the member of the management company concerned, The OMC can then claim those expenses back form the party liable ONCE those written consents of member obtained under S18.9 . The section has a lot to say about how to set service charges
If common areas have been transferred to the man co and S18 of MUD Act complied with in setting of service charge then man co has an enforceable service charge =

If - no common areas transferred the written consent of 75 per cent of members - ALL MEMBERS - required under act for OMC to charge validly s charge to defray his expenses ... i.e. what come first out of use of s charge payment - to pay for builder work or to use that money for cost to have common areas transferred to the man co.


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[lantus]

Its up to the directors to enforce payment. The strategy will depend on the contract lease every unit enters into when they purchase their unit and the layout and services the development provides.

If for example you have secure entrances and electronic gates then the directors could instigate updated security provisions and only provide access to the private common areas the company owns when payment is made on service fees. Restricted parking is another although I am non fan of clamping personally.

Are any other services provided via the OMC? Satellite services, bins etc. Restrict or limit these in accordance with the lease.

With all these things I would lay out a highly transparent and well communicated but highly generic plan on how this will be done which gives no mention of who has or has not paid fee's.

For example if you are going to change door access codes then give say 2.5 months notice to the tenant and the landlord and advise the tenant (who is going to be in some instances the unlucky victim in the landlords scam to avoid payment.) that the access is changing in 2.5 months and all changes have been provided to every contractually compliant landlord without delay. Don't contact us, only your landlord. We are not responsible if your unit owner chooses to refuse you access to the private common ground areas such as the main entrance door or car park, bin stores, allow you TV services etc.

At around 5 weeks I would write to the tenant again and advise that if they have not received their updated codes which were issued X weeks ago to all complaint owners then they are at extreme risk of losing access to the unit they are renting. Contact your unit owner immediately and if you are in any way unsure you will get access then you probably still have time to make alternative arrangements if you need or want to. Not our responsibility etc....

If the directors cannot stomach that then they will need to dig deeper in their pockets to commence legal debt recovery. Only the last 7 years can be recovered so non payment before that is gone if the court route is chosen.

I can recommend a very good solicitor via private message who is an expert on OMCs and debt recovery although if you go on the apartment owners network site and look up their debt recovery talks you will find them yourselves.

I may even suggest engaging a private security guard for at least the first few weeks to keep people out who are tresspassing.