New Laws

Several amendments have been made to the Body Corporate and Community Management Act 1997 (BCCMA), by implementation of the Justice and Other Legislation (COVID-19 Emergency Response) Amendment Act 2020, to assist bodies corporate dealing with financial issues arising from COVID-19. These changes came into effect on 25 May 2020 and will remain in effect until 31 December 2020.

During this time, it may be the case that some lot owners have difficulty paying body corporate levies. These levies are determined based on the budget adopted at the annual general meeting (AGM), so the body corporate can select the rate of the levies and when they are due for payment.

Importantly, under the amendments, committees can choose to extend the due date for payment of levies that have already been set at the AGM. Extensions of due dates can occur for either:

  • a particular owner if the committee is reasonably satisfied that the owner is suffering financial hardship due to the COVID-19 emergency; or
  • all owners.

Budgets

Bodies corporate can also adopt a reduced sinking fund budget for its current financial year by ordinary resolution. However, the budget must still allow the body corporate to raise a suitable amount of capital to accommodate necessary and reasonable spending from the sinking fund in its current financial year. Notably, the sinking fund budget does not need to include all or part of an amount required for anticipated major expenditure in future years.

If a body corporate has already had its AGM, it can decide via ordinary resolution to alter an existing sinking fund budget for its current financial year – either removing or reducing part (or all) of the anticipated amount required for future-year major expenditure. Any contribution instalments no longer needed due to the adjusted budget must be refunded.

Penalties, discounts and recovery costs

In relation to levies, the body corporate cannot charge penalty interest on unpaid levies during the period 25 May 2020-31 December 2020. For levies that were overdue before 25 May 2020, the body corporate can decide by ordinary resolution to revoke a previous decision to either:

  • impose penalties on levies paid after the due date; or
  • apply a discount to levies paid on or before the due date.

In special circumstances, committees can still decide to take these actions for owners who are late in paying their levies:

  • waive all or part of penalty interest;
  • waive all or part of debt recovery costs; or
  • apply discounts.

The usual obligation to commence debt recovery proceedings on debts that have been outstanding for 2 years has been suspended until 31 December 2020.

Borrowing money

During this period, the body corporate can, by ordinary resolution, borrow up to an amount equal to $500 multiplied by the number of lots in the scheme. However, there are different borrowing limits applicable for those schemes regulated by the Small Schemes Module. Under this scheme, a decision to borrow money can be decided by ordinary resolution at a general meeting unless the amount to be borrowed is more than $3,000 (in total). If it is more, a resolution without dissent is needed.

This publication is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to. Readers should take legal advice before applying the information contained in this update to specific issues or transactions. For more information or specific advice on your circumstances please contact tracey@robinsonnielsen.com.au.