Chasing a neighbour for money is nobody's idea of fun, which is exactly why arrears are the job self-managed committees most often let slide. But unpaid levies aren't really a debt to you — they're a debt to every other owner, who is effectively covering the shortfall through the scheme's cash flow. Letting one lot run months behind isn't kindness; it's quietly unfair to everyone who paid on time. The good news is that recovering arrears well isn't about being aggressive — it's about being consistent: the same clear, escalating process applied to everyone, every time, documented as you go. This guide sets out that process, explains when interest can be charged, and shows the steps that come before anything formal.
Why chasing arrears is a duty, not a choice
- The money belongs to all the owners. Every dollar in arrears is a dollar the paying owners have effectively fronted. A committee that doesn't pursue arrears is failing the owners who did the right thing.
- Arrears age badly. A levy one month overdue is an easy conversation. The same lot twelve months behind is a large debt, a strained relationship, and a much harder recovery.
- Cash flow depends on it. Insurance premiums and contractors don't wait because two lots haven't paid. Persistent arrears force the scheme to dip into reserves or defer work.
- Consistency protects the committee. Apply the same process to everyone and no owner can claim they were singled out. Chase some and not others, and you've created a fairness problem of your own.
The escalating process
The principle is a predictable ladder — each step firmer than the last, with a clear timeframe, applied identically to every lot in arrears:
Step 1: The friendly reminder
A short, courteous reminder a few days after the due date. Assume it's an oversight — because usually it is. State the amount, the due date it missed, how to pay, and a request to pay promptly or get in touch if there's a problem.
Step 2: The formal reminder
If it's still unpaid after a couple of weeks, a firmer written notice: the outstanding amount, that it's now overdue, any interest that applies (see below), and a clear date by which payment is expected. This is where you note that continued non-payment may lead to recovery action.
Step 3: Offer a payment arrangement
Before escalating to anything formal, offer a way out. An owner in genuine hardship who agrees a realistic payment plan is a far better outcome than a tribunal claim. Put any arrangement in writing, and be consistent about what you'll offer.
Step 4: Final notice before recovery
A final letter making clear that formal recovery will begin if payment (or an agreed arrangement) isn't in place by a stated date. In some states a notice of this kind, in a prescribed form, is a required precondition before you can commence proceedings.
Step 5: Formal debt recovery
Only after the ladder is exhausted: recovery through your state's tribunal or the courts. Scheme funds spent recovering a debt — and, in many cases, the recovery costs themselves — can often be added to what the owner owes. This is the step to take advice on before starting.
When can you charge interest?
Most Australian jurisdictions allow a scheme to charge interest on overdue levies — but almost always only if it's been properly authorised (usually by a resolution of the owners), and typically only once the levy is a set period overdue. The rate and mechanics differ:
New South Wales — Strata Schemes Management Act 2015
In NSW, an overdue contribution generally bears interest at 10% per annum (simple) if it remains unpaid for more than one month — unless the owners corporation has resolved to charge interest at a lower rate or not to charge it at all. The owners corporation can also recover unpaid contributions, together with interest and reasonable recovery costs, as a debt.
General information only — not legal advice.
Queensland — Body Corporate and Community Management Act 1997
In Queensland, a body corporate may — if it decides to by resolution — charge a penalty for late payment of up to 2.5% per month (simple) on outstanding contributions. Bodies corporate are also generally expected to start recovery action for long-outstanding amounts within set timeframes, so debts can't be left to drift indefinitely.
General information only — not legal advice.
Western Australia — Strata Titles Act 1985
In WA, a strata company may charge interest on overdue contributions where this has been authorised, subject to the cap set under the Act and regulations. Unpaid contributions, together with any authorised interest and recovery costs, can be recovered as a debt.
General information only — not legal advice.
Victoria — Owners Corporations Act 2006
In Victoria, an owners corporation may require penalty interest on fees not paid by the due date — at the rate fixed under the Penalty Interest Rates Act unless the owners corporation has fixed a lower rate. Victoria also has a prescribed fee-recovery process, including a required final fee notice, that must be followed before the owners corporation takes proceedings to recover the debt.
General information only — not legal advice.
South Australia, Tasmania, the ACT and the Northern Territory similarly allow interest and debt recovery on overdue contributions, with their own rates, notice requirements and timeframes. Confirm what your scheme has actually resolved, and what your state requires, before charging interest or starting recovery.
Fairness is mostly about consistency
The single most important thing is that the process is the same for everyone:
- Apply the ladder to every lot in arrears, on the same timeline, regardless of who they are.
- Charge interest only if it's been properly resolved — and then charge it to everyone it applies to, not selectively.
- Document every step — the date each reminder went out, the amount, and any response. A clean record is what makes a recovery claim straightforward and rebuts any claim of unfair treatment.
- Keep it factual and unemotional. The notices are about a debt owed to the scheme, not a personal dispute. Firm and consistent beats angry every time.
Common mistakes
1. Letting arrears drift because chasing feels awkward
The most common — and most expensive — mistake. A month's arrears is easy; a year's is a court claim. Start the ladder early and on time.
2. Chasing some owners but not others
Selective enforcement is both unfair and a liability. If you run the process, run it for everyone equally.
3. Charging interest that was never resolved
Interest generally can't be charged unless the owners have authorised it. Applying it without that basis is itself a problem.
4. Skipping straight to recovery
Jumping to formal action without the reminder ladder — and, where required, the prescribed final notice — can leave a recovery claim on shaky ground and burns a relationship that a payment plan might have saved.
Frequently asked questions
Can we charge interest on overdue levies?
Usually yes, but only if it's been properly authorised (typically by a resolution of the owners) and the levy is overdue by the required period. The rate and rules vary by state — see the callouts above.
Do we have to chase arrears, or can we let a small debt go?
The committee has a duty to the owners as a whole to recover money owed to the scheme. Writing off a debt or turning a blind eye isn't generally the committee's to decide informally — and it's unfair to the owners who paid.
What if an owner genuinely can't pay right now?
Offer a written payment arrangement before escalating. A realistic plan that gets the debt paid over time is almost always a better outcome than formal recovery — just keep the terms consistent with what you'd offer anyone.
Can we recover the cost of chasing the debt?
In many jurisdictions the reasonable costs of recovery, along with authorised interest, can be added to the amount the owner owes. Take advice on what's recoverable in your state before you commence formal proceedings.
This guide is general information for self-managed strata schemes in Australia. It is not legal advice. Interest rates, notice requirements and recovery procedures differ between states — always check the strata legislation that applies to your scheme, confirm what your owners have resolved, and seek advice before commencing debt recovery.