Much has been said about the strata levy recovery changes which started 27 October 2025, but confusion remains. Several key provisions, including those on payment plans and recovery costs, are not yet in force, causing mixed messages across the industry.
1. Do OC’s have to offer a payment plan before starting recovery proceedings?
No. While the government has announced new laws that will require Owners Corporations to offer payment plans before suing for recovery costs and interest, that particular provision, section 86(2AA), has not yet commenced. Until it does, OCs can continue to pursue unpaid levies under section 86(2A), using the same recovery process currently in place.
2. Does the OC need approval to add recovery charges to a lot ledger?
No. Although new laws have been announced, the requirement for Owners Corporations to offer payment plans before suing for interest and recovery costs (section 86(2AA)) has not yet commenced. When it does, it will only require Tribunal or court approval before commencing legal action for those costs, not before recording them on a lot ledger. Both the Tribunal and Federal Court have confirmed that an OC must have an existing debt before it can initiate recovery proceedings.
3. When section 86(2AA) starts, will OCs need to offer a payment plan or get approval before suing?
No, not for combined claims. When suing for unpaid contributions together with their related interest and recovery costs, section 86(2A) will still apply. The new section 86(2AA) is expected to cover situations where an OC sues only for interest or costs, not when they’re tied to unpaid levies.
4. Is “ insufficient funds” the only valid reason to refuse a payment plan?
No. Regulation 17J says it’s reasonable to refuse if accepting a plan would leave the OC short of funds, but that’s just one example. OCs may also decline a plan for other legitimate reasons, such as repeat non-payment or unfair terms.
5. Can Strata Managers charge OCs a fee for administering a payment plan?
Yes, a Strata Manager may charge the Owners Corporation under their management agreement for administering a payment plan. However, that cost cannot be passed on to the owner under Regulation 18A, which now prohibits charging owners any payment plan-related fees.
In Short
Section 86(2AA) isn’t yet in force, so standard levy recovery under 86(2A) still applies. No approval is needed to record recovery costs, and “ insufficient funds” isn’t the only reason to refuse a plan. Regulation 18A now bans charging owners payment plan fees—though managers may still charge the OC.
