# Chasing down arrears owed to OMC



## gebbel (16 Jul 2015)

As the Director of a small management company that was almost crippled with unpaid service charges 3 years ago, we have made great progress collecting monies owed without punitive measures. However we have 2 owners who have refused to engage and I want to elevate this but don't know how. What I would like to see happen is to hit them with, say a 10% per annum penalty charge on their outstanding debt. And as a final measure if all else fails....sell their debt to debt collectors and let them do the chasing. These are just ideas with no research on either.

Obviously a meeting would need to be called and a vote taken on how to pursue these arrears. What is the best way for a small OMC with 16 units to isolate these people?


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## gebbel (20 Jul 2015)

Thanks to the poster who gave me [broken link removed] and this site has given me the answers I need. Search for 'debt' on the site.


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## gebbel (20 Jul 2015)

The strategy now is to see if the lease specifies whether or not interest can be applied to overdue accounts and at what rate. If this doesn't work then we will be forced to go the legal route via debt collection.


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## Threadser (20 Jul 2015)

I am a director of an OMC. A decision was taken at this years AGM to introduce clamping in the estate. It has been very effective and debtors who had avoided paying fees for years have now paid up. We have found it a very efficient way of collecting monies owed and works out a lot cheaper than hiring debt collection firms or going down the legal route.


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## gebbel (20 Jul 2015)

Threadser said:


> I am a director of an OMC. A decision was taken at this years AGM to introduce clamping in the estate. It has been very effective and debtors who had avoided paying fees for years have now paid up. We have found it a very efficient way of collecting monies owed and works out a lot cheaper than hiring debt collection firms or going down the legal route.


 
Interesting. Can I ask what percentage of owners at the AGM had to vote yes for this to be passed? And what if the unit is rented out....do you clamp their tenant? I would also be interested in knowing more about the fees of the clamping company...do they just get a percentage of the fine they issue...cheers.


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## Threadser (20 Jul 2015)

The vote was passed unanimously at the AGM. We do clamp tenants if the unit is rented out but there is leeway given for debtors to set up payment plans. Clamping fees are paid directly to the clamping company. Every paid up owner is given a 2 passes (one for visitors). In total 9 cars have been clamped and we have significantly improved the finances of the company. Very sorry we didn't do this years ago. For far too long there were no consequences for the non payers!


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## gebbel (21 Jul 2015)

Thanks for that. We are are 16 units contained within a larger estate of 32 semi-D's. So I'm not sure this option would work for us as non-paying memebers could park away from the managed areas, thus antagonising the others. I'm going to go for the interest surcharge route, followed by a sale of the debt through legal means.


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## lantus (21 Jul 2015)

what about removing sat dishes? removing access if at all possible? Interrogate the lease and consider everything.
You would be better to just proceed with debt recovery rather than sell the debt. A good solicitor is money well spent. See apartment owners network for a good name that has done seminars on same subject.


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## mtp (21 Jul 2015)

gebbel said:


> The strategy now is to see if the lease specifies whether or not interest can be applied to overdue accounts and at what rate. If this doesn't work then we will be forced to go the legal route via debt collection.


u need to check who collect the serevice charge in the lease. If they are not collected by man co then man co cannot use lease but the MUD Act.


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## 10amwalker (22 Jul 2015)

Gebbel- I would not recommend selling the debt.. I would suggest you engage a solicitor who will go after the debt.
A communication to all the members advising what the Board are going to implement is a good plan too.


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## gebbel (22 Jul 2015)

10amwalker said:


> Gebbel- I would not recommend selling the debt.. I would suggest you engage a solicitor who will go after the debt.
> A communication to all the members advising what the Board are going to implement is a good plan too.



I have read that another strategy could be to try and remove the non-paying unit from the block insurance policy. This in turn would violate the terms of any mortgage agreement, and would have the banks also on their backs. Can anyone comment on this? Thanks.


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## lantus (25 Jul 2015)

gebbel said:


> I have read that another strategy could be to try and remove the non-paying unit from the block insurance policy. This in turn would violate the terms of any mortgage agreement, and would have the banks also on their backs. Can anyone comment on this? Thanks.



You don't specify individual members on the block policy so you cannot 'remove' them as such. What people normally mean is that the OMC will not process any claim where a member is in arrears with service fee payments. This, while a good approach is not a sound way to get fees as the probability of a large fire or flood is pretty rare.

While all unit owners are required to have block insurance in place the reality is that most banks wont really pursue this and telling them is not feasible due to data protection. In the end the owner is liable so the bank will get their money back as the owner must pay the mortgage irrespective as to whether they have a property or not.

The sensible choice is debt recovery. Getting a solicitors letter is the only way real non payers will sit up and take notice. Again unless you can use the lease to exercise control of critical services like access etc then there is nothing directly or indirectly you can do.

Selling the debt only transfers it to another third party who will knock on the door on your behalf. They have no legal right to collect unless they go down the route of debt recovery which will be a cost they will pass onto the OMC. Don't bother, just get the debt judgement against the owner. Make sure your lease allows for recovery of all legal fees as well. Most do.


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## gebbel (30 Jul 2015)

Pai496 said:


> Finally, most leases provide for the addition of interest and fees to outstanding arrears. You will be entitled to the fees which have been incurred on legal letters, debt collection agencies etc, *but if challenged you will not get the interest*.


 
Thanks for that. It all made sense except for the part in bold. Can you explain please?


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