When a tenant defaults on paying their rent, we give them notice that within 20 business days they will be blacklisted with a credit bureau that is linked to ITC.  

According to the credit bureau the same process may be applied to defaulting owners who do not pay their levies, however I want to verify that this is a legal course of action as I have never had cause to do so before.

 

Graham’s Answer:
No, in my view a body corporate cannot blacklist an owner in arrears by reporting that owner to a credit bureau.

A credit bureau exists to compile and maintain data and issue reports concerning “consumers”. A sectional title body corporate is not a “credit provider” and owners of units are not “consumers” for the purposes of the National Credit Act. The liability to pay levies arises not from credit agreements but from statutory provisions in the Sectional Titles Act.

 

Owner debited with arrear levies & claims dispute

Member question:
An owner had his levy account debited with arrear electricity charges about seven months ago. There was no objection.

We found additional electricity charges two months ago and debited his account accordingly. All calculations were sent to him. He has now claimed a “dispute” on all these charges.

Does this entitle him not to pay and can he vote at the AGM?

Graham’s response:

If the owner thinks he has grounds to dispute the body corporate’s claim, he cannot just say that he disputes the claim and leave it at that.

 

If he really disputes your calculations, he must explain where he thinks they are wrong and, if you don’t agree with him, he must declare a dispute under PMR 71.

The owner is only entitled not to pay if it is found by the arbitrator that the charges were not properly debited to his account. In the interim, while the dispute remains unresolved, the body corporate must charge interest and, if the owner does not declare a dispute, take action to recover the charges.

 

From the time he declares a dispute, you must consider that the charges and any interest accruing are “subject to dispute” – meaning that if it is found that he is not obliged to pay them, the bod corporate will have to reverse all the incorrect charges.

In my view the voting disqualification that applies in respect of ordinary resolutions when owners are in arrears does not apply when the alleged arrears are the subject of a dispute declared under PMR 71, because the fact that a dispute has been declared means there is no certainty that the owner is in arrears.

Article reference: Paddocks Press: Volume 9, Issue 7, Page 6.