What Happens If You Don’t Pay Your Strata Fees in NSW?

Strata levies aren't optional. They fund the building's insurance, maintenance, and long-term repairs — and every lot owner is legally required to pay them. But what actually happens when someone doesn't?

The short answer: it starts with a reminder letter and can end with a court judgment enforceable against your property, or in extreme cases, a court-ordered sale. Here's how the process works in NSW, and what it means for every other owner in the building.

Why Strata Levies Are Legally Enforceable

Under the Strata Schemes Management Act 2015 (NSW), every lot owner must contribute to the administrative fund and the capital works fund (s 83). These contributions are set at the Annual General Meeting and are typically invoiced quarterly.

Levies aren't a suggestion or a service fee you can opt out of. They're a statutory obligation tied to property ownership. The owners corporation has strong legal powers to recover unpaid levies — stronger, in fact, than most unsecured creditors.

The Recovery Process: Step by Step

Step 1: Reminder Notice

Most strata managers send a reminder notice shortly after a levy payment is missed — usually 14 to 30 days after the due date. This is an administrative step, not a legal one.

At this stage, there are typically no penalties. It's a prompt to pay.

Step 2: Interest on Overdue Amounts

If the levy remains unpaid for more than one month, the owners corporation can charge interest on the outstanding amount. Under Section 85(1) of the Act, the default rate is 10% per annum simple interest. The regulations may prescribe a different rate, but this is the current default.

The owners corporation doesn't need to go to court to charge interest. It accrues automatically on any amount that's overdue by more than one month, unless the owners corporation passes a resolution to waive interest (s 85(3)).

Step 3: Formal Recovery Notice

If reminders don't work, the owners corporation (usually through the strata manager or a solicitor) will issue a formal notice demanding payment. This notice typically:

• Sets out the exact amount owed, including any accrued interest
• Gives a deadline (at least 30 days under the current rules)
• Warns that further action will follow if the debt isn't paid

This is the last step before the matter escalates to legal proceedings.

Step 4: Debt Recovery via NCAT or Local Court

If the owner still doesn't pay, the owners corporation can pursue recovery through:

• NCAT (NSW Civil and Administrative Tribunal) — the Tribunal can order payment of unpaid contributions, interest, and the owners corporation's reasonable recovery expenses (s 86(1))
• Local Court — the owners corporation can also recover unpaid contributions as a debt in a court of competent jurisdiction, without needing a Tribunal order first (s 86(2))

In either case, the owners corporation can recover:

• The unpaid levies
• Interest on the overdue amount
• Reasonable expenses incurred in the recovery process

This is where it gets expensive for the defaulting owner. Recovery costs are added to the debt, meaning you're paying for the lawyers chasing you.

Step 5: Enforcing the Judgment Against the Property

Once a court judgment or Tribunal order is obtained, the owners corporation can enforce it like any other debt judgment. This may include:

• Registering the judgment as a debt against the property at NSW Land Registry Services
• The debt effectively attaches to the property and must be cleared before sale
• Under Section 84, both the original owner and any subsequent owner may be jointly and severally liable for unpaid contributions

This makes unpaid levies very difficult to escape. The debt follows the property, and a prospective buyer's solicitor will discover it during conveyancing searches.

Step 6: Court-Ordered Sale (Extreme Cases)

In the most extreme cases, where the debt is substantial and all other avenues have been exhausted, the owners corporation can apply to the Supreme Court for an order to sell the lot to recover unpaid levies.

This is very rare in practice. Courts are reluctant to order the sale of someone's home. But it is legally available, and it has happened — particularly with investment properties or commercial lots where the owner is unresponsive and the arrears are significant.

What It Costs the Owner Who Doesn't Pay

The financial consequences compound quickly:

A $3,000 unpaid levy can easily become $8,000–$15,000 once interest, administrative fees, and legal costs are added.

What It Means for Other Owners

This is the part that most people don't think about: when one owner doesn't pay, everyone else suffers.

Strata levies fund essential services — insurance premiums, cleaning, gardening, lift maintenance, building management. When an owner falls behind, the scheme has less money to cover these costs. The owners corporation has a few options, none of them great:

• Defer maintenance — push back repairs and services, which leads to building deterioration
• Draw from capital works fund — raid the long-term savings to cover short-term shortfalls
• Raise levies for everyone else — increase contributions to compensate for the shortfall

In buildings with a small number of lots, a single owner's arrears can have a significant impact. A 6-unit building where one owner owes $10,000 means the other five owners are effectively subsidising that owner's share.

This is also why levy arrears are a red flag for buyers. If a strata report shows significant outstanding levies, it indicates either financial stress in the scheme or poor governance in pursuing debts — both worth investigating.

Can You Negotiate or Get an Extension?

Yes. If you're struggling to pay:

1. Contact the strata manager early — before the debt escalates. Many schemes will agree to a payment plan rather than pursue legal action, which costs everyone money.
2. Propose a payment plan — under Section 85(5)–(7), the owners corporation can formally agree to a payment plan for overdue contributions. This isn't guaranteed, but it's a recognised mechanism in the Act.
3. Apply for hardship consideration — while there's no formal hardship provision in the Act, committees are made up of fellow owners who may be sympathetic if you communicate openly.
4. Attend the next committee meeting — put your case directly. Written requests can be ignored; attending in person is harder to dismiss.

What you should not do:

• Ignore the notices and hope it goes away (it won't)
• Withhold payment as a protest against a decision you disagree with (the levy obligation exists regardless of disputes)
• Assume your mortgage lender will cover it (they won't, and they'll be very unhappy if a judgment is registered ahead of their mortgage)

How Buyers Can Check for Levy Arrears

If you're buying a strata property, levy arrears in the scheme are a risk factor. Here's how to check:

• Section 184 certificate — this must disclose any contributions owing by the lot you're purchasing. The owners corporation must provide it within 14 days of a written request. Always request one before exchange.
• Strata report — a professional strata inspection report will review the scheme's financial statements and flag any material arrears across the building.
• Financial statements — the balance sheet should show "levies receivable" or "debtors." A high number relative to total levies suggests collection problems.
• Meeting minutes — look for references to debt recovery, legal action against owners, or discussions about levy arrears. These are warning signs.

If total arrears are more than 10–15% of the scheme's annual budget, that's a significant concern. It suggests either widespread financial stress or a committee that isn't actively pursuing debts.

The Legal Framework: Key Sections

For reference, here are the key provisions in the Strata Schemes Management Act 2015 (NSW):

• Section 83 — levying of contributions by the owners corporation
• Section 84 — liability of persons other than owners (joint and several liability for subsequent owners)
• Section 85 — interest on unpaid contributions (default 10% p.a.), discounts, and payment plans
• Section 86 — recovery of unpaid contributions and interest (via NCAT or court)
• Section 184 — strata information certificates (must disclose outstanding contributions)

Frequently Asked Questions

Can a strata scheme force you to sell your apartment for unpaid levies?

In theory, yes. The owners corporation can apply to the Supreme Court for an order to sell a lot to recover unpaid contributions. In practice, this is extremely rare and courts are reluctant to order it, particularly for someone's primary residence. It's more likely to happen with investment properties or commercial lots where the owner is unresponsive and arrears are substantial.

What is the interest rate on unpaid strata levies in NSW?

The default interest rate is 10% per annum simple interest, as set by Section 85(1) of the Strata Schemes Management Act 2015. The regulations may prescribe a different rate. Interest accrues automatically once a contribution is more than one month overdue.

Do unpaid strata levies transfer to a new owner when the property is sold?

Under Section 84, both the original owner and the new owner may be jointly and severally liable for unpaid contributions. A court judgment for unpaid levies can also be enforced against the property. Buyers should always request a Section 184 certificate to check for outstanding contributions before purchasing.

Can you refuse to pay strata levies because you disagree with a decision?

No. The obligation to pay strata levies exists regardless of whether you agree with how the money is being spent. If you have a dispute about spending decisions, the correct process is to raise it at a general meeting, apply for mediation through NSW Fair Trading, or take the matter to NCAT. Withholding levy payments is not a valid form of protest and will result in debt recovery action against you.