Last November the government amended an Act in Parliament that makes it easier than before for a Strata Corporation to sell an owner’s strata unit to recoup arrears of maintenance fees. This recent amendment goes as far as allowing a Strata Corporation to cancel an owner’s Certificate of Title with or without his or her consent. Here is what you need to know about how you could lose ownership of your strata unit for a debt of a few dollars.
By law, a Strata Corporation is entitled to collect a monthly fee from owners for: property maintenance; general insurance; security; and in some instances water and elevator charges. Some fees are as low as $2,000 per month others may run as high as $20,000 monthly. There are over 1900 strata corporations island wide and most of their owners are in arrears of their monthly payments. In former years there was very little that Strata Corporations could do to enforce the collection of these fees. All that changed with the amendments in 2009 and 2013 of the Registration (Strata Title) Act. Now, the process which gives Strata Corporations the authority to sell a property is even less cumbersome than before 2013.
A Strata Corporation may issue to owners, in arrears of 30 days and more, a warning letter requesting that the arrears be cleared within 30 days. If at the end of the 30 days the amount is not paid, an application may be made to the Commission of Strata for a Power of Sale Certificate. Once the Corporation receives the Certificate, it may proceed, through its Executive Committee, to initiate the procedure to sell the property. If sold, the proceeds are used to clear the arrears of maintenance fees and all legal and miscellaneous costs that the process incurred. The balance is divided between the mortgagee (if any) and the former owner.
Why Risk Your Investment?
Why would an owner risk losing his or her apartment for non-payment of, what sometimes is a few dollars? Some owners are unaware of the full extent of the law, so they gamble that the Strata will not exercise its powers to collect. Others are fully aware of their obligations as owners, but would rather resist all pressure to pay until the property is on the “auction block”. Owners’ ignorance and procrastination can be costly. It’s not uncommon for legal fees, charges for property valuations, newspaper advertisements and interest costs to exceed $150,000. These sums are charged to the owner whether or not the property is sold.
Here are some easy methods to avoid falling behind with your maintenance payment. Send your Strata Corporation 12 post dated cheques, one for each month of the year, so you don’t have to worry about late payments. Set a reminder on your cellular phone for three days before the start of the month so you may deposit your payment on time. Pay your fee in one lump sum at the start of the year. Finally if you have difficulty in meeting a payment one month, inform the Executive and ask for extra time. Most Committees are willing to make allowances for such eventualities. It makes no sense to jeopardize your real estate investment for a debt of a few dollars.
About the Author
Sydney Davis is the Managing Director of Sydney Davis and Associates. He is a member of the Realtors Association of Jamaica and licensed by the Real Estate Board of Jamaica as a dealer, and property manager. His office is located at 80 Constant Spring Road, Kingston 10, Jamaica.