THE GOVERNMENT’S SOLUTION TO THE LOT ENTITLEMENT ISSUE – BACK TO THE 70’s
By Ros Janes, Director, Success Law Pty Ltd

The Minister for Tourism and Fair Trading, Peter Lawlor’s announcement on 19 February 2009 will send shock waves throughout the strata title and community title industry.  Far from being the solution to the current perceived problem it is likely to cause more uncertainty.

Bridget Carter | June 13, 2009
Article from:  The Australian

DEBT collectors are reporting an increase in defaults on apartment strata levies by absent landlords, leaving struggling first-home owners exposed to carrying alone the burden of costly building upgrades.

A call by debt collection agencies for reforms to the cost-recovery process for bodies corporate comes as apartment owners at a Brisbane building are locked in a legal fight with a resident, who had racked up a debt of more than $50,000 since 2004.

Residents say the non-fee-paying owner now wants to renovate at least one of the two apartments he owns, despite his previous reluctance to contribute to the kitty for the building's upkeep.

Members of the body corporate are unable to evict the owner from the building because he continues to pay his strata fees "on the court steps" once legal action to evict has been taken.

Lawyers say the case acts as a warning for the hundreds of first-home buyers pouring into the Sydney property market on the back of the boosted government grants, a large majority of whom are buying units for less than $500,000.

Sydney lawyer John Morrissey said many of these first-home buyers had purchased units in older-style buildings with landlords who were not residents.

"There's a lot of pressure on first-home buyers to secure a property, particularly in inner Sydney, under $500,000," Mr Morrissey said.

The absent landlords have not wanted to make the contributions to bring the properties up to speed.

Councils were currently visiting Sydney unit blocks checking that they meet fire regulations.

There was often not enough money in the bodies corporate sinking funds to ensure these regulations were met.

"Unless young people are aware of it, they could be burdened with a special levy of between $5000 and $25,000 per unit," Mr Morrissey said.

From next month, the NSW Strata Schemes Management Act will require bodies corporate to publish a 10-year plan for their sinking funds, so owners will know when they will be up to pay for work such as painting, replacing fences and overhauling lifts.

In the Brisbane case, one of the owners in the 51-unit 1970s building on Leichhardt Street said that since 2004, the problem owner had not paid his strata fees or levies on time.

In two previous actions against him, one of the building's apartment owners, who did not want to be named for fear of retribution, said the problem owner ended up paying, with $20,000 of the $50,000 owed comprising legal fees.

"We have had two actions against him previously where he has paid on the steps of the court," they said.

"Because he is an ongoing serial pest, we should have some entitlement to say you are no longer entitled to be here."

Sydney lawyer Colin Grace said the rate of his debt-recovery cases in NSW where people were not paying strata fees had spiked by about 15 per cent in the past six months.

Recent judgments meant bodies corporate could recover reasonable costs incurred from legal fees, but not indemnity costs. It was a similar situation elsewhere in Australia.

"The law needs to be made clear where a body corporate suffers any losses because of a non-paying lot owner because it (the law) is currently unfair," Mr Grace said.

Managing director of Collect Success in Brisbane, Liat Walker, said there had been a recent increase in unpaid levies on strata apartments, particularly in Queensland.

She said in some cases, if a building had a problem with one of the owners not paying fees, it could mean that maintenance could not be carried out on the property and insurance premiums could not be paid.

Most of those who did not pay were Australian investors who did not live in the building.

"Because of the downturn, some are not getting rent on the building and the strata fees are one of the last bills left to pay," she said.

"It is an Australia-wide problem (but) in Queensland, we have a climate lending itself to property investment."

Monday 23 February 2009

THE 2009 VICTORIAN BUSHFIRES AND COLLECTION PRACTICES

The Institute of Mercantile Agents Limited (IMA) released a member’s advice this month to address the issue of the Victorian bushfires and the recommendations that the Institute have made in relation to conduct by commercial agents to people affected by the bushfires. Executive Director of the IMA, Alan Harries stated the following.

“A number of financiers have already instructed agents to cease all collection activities until further notice in the affected postcodes.  This is an appropriate response to the situation and if it has not occurred to all your clients you might like to suggest, they adopt a similar embargo. 
 
Agents should be mindful the persons they encounter in the course of their work may have been directly affected by the fires in terms of human and material losses and should be discreetly accorded latitude and support in such circumstances.  In preparation, review the available hardship policies of your instructing clients and be ready to offer such assistance to those affected by this unfolding catastrophe.”

Collect Success has fully briefed all personnel on the recommendations outlined by the IMA and have implemented the process as standard to review matters that have been deemed as ‘affected postcodes’ for discussion with our instructing clients.

Monday 27 January 2009

A CURRENT AFFAIR – 6 JANUARY 2009

Privacy and ethical practices in the area of debt recovery has been raised in recent weeks in the Australian media. A story was broadcasted by A Current Affair exposing a case which questions the principles and tactics used in one of Australia’s Debt Collection Agencies.

The complainant alleged that a particular collection agent, who had been engaged to collect a debt, breached and disrespected his privacy rights in the most inappropriate forum - his workplace.  

The collector in question allegedly contacted the debtor by phone to discuss payment and threatened to go to the debtor’s workplace. He also claimed that he begged for the collector not to do so as his workplace was extremely busy with customers and that he would call the collector back on his lunch hour. His request was apparently ignored with a confrontational visit ensued. The debtor’s private information and debt details were shouted at the debtor by the collector in front of the debtor’s customers. A Current Affair then investigated these claims and televised the story.

‘Collect Success believes that this practice is unnecessary and is in breach of the Privacy Act and ACCC Debt Collection Guidelines. This sort of practice is greatly detrimental to the debt collection industry as a whole. Agents must be able to settle outstanding debts in an efficient, safe and professional manner’ said Liat Walker, Director of Collect Success.

‘Collect Success collection officers abide and adhere to the ACCC’s Debt Collection Guidelines and Privacy Act. By engaging a reputable Collection Agency you ensure that your debts are being recovered legally and without undue stress to all concerned parties.’ Liat Walker

Tuesday 16 December 2008

FACEBOOK USED TO TRACK DOWN DEBTORS...

A Canberra lawyer who won the right to serve legal documents on two defendants via Facebook says courts around the country will follow his lead.

In what he believes is a world first, lawyer Mark McCormack tracked down a couple who had defaulted on a six-figure loan using the internet and served them with a default judgement.

Mr McCormack says the ACT Supreme Court allowed him to serve the couple via Facebook as well as leaving the actual court papers at their last known address and sending emails.

Earlier this year, lawyers acting for the Bulldogs NRL club served player Sonny Bill Williams with a subpoena via SMS text message.

Williams was in Europe after defecting to French rugby club Toulon.

Mr McCormack, himself a keen Facebook user, says using the popular social networking site to contact people who flee is the logical "next step".

"I think the courts will continue to adopt it on a case by case basis," he said.

"They will (just) need to assure themselves that it is reasonably likely to bring (the court's decision) to the attention of the parties concerned."

Mr McCormack said his legal firm, Meyer Vandenberg Lawyers, hadn't been able to find any other examples of Facebook being used to serve a court judgement.

The lawyer is acting for a lending institution which loaned the Canberra couple more than $100,000.

When they defaulted and couldn't be found at their listed residence, he had to get creative.

The lawyer obtained a default judgement in the couple's absence and was able to convince the court to serve it via Facebook.

The fact the defaulters' Facebook accounts included their names, dates of birth and listed each other as "friends", was enough to persuade the court it had the right people in its sights.

Source: 16/12/2008 News NineMSN: http://www.news.ninemsn.com.au/article.aspx?id=697610