Following updates to the Strata Schemes Management Act 2015 and associated regulations, the process for managing levy collection payment plans has changed significantly.

To help strata managers and committees stay compliant, avoid procedural mistakes, and handle owner queries effectively, we have answered the most common questions regarding the statutory payment plan rules below.

Why Were These Payment Plan Rules Introduced?

The NSW Government introduced stricter payment plan regulations to address growing financial distress among scheme owners and reduce levy-related insolvencies.

Nationally, unpaid strata levies represent the second leading cause of personal bankruptcy, surpassed only by debt owed to the Australian Taxation Office (ATO). By standardising the payment plan process, the legislation aims to give lot owners a structured pathway to resolve levy arrears before legal action or bankruptcy proceedings commence.

Common Payment Plan Q & A’s

1. Does the committee have to deal with a request for a payment plan?

Yes. The committee must meet and vote at a minuted meeting, or pass a resolution to make a decision, on a payment plan request received from a lot owner within 28 days of receiving a completed request form.

• Consequences of inaction: Failure to deal with a request for a payment plan could provide a lot owner with a defence to legal action to recover overdue levies and make recovery of unpaid levies more difficult for an owners corporation.
• Written response requirement: The owners corporation must give the lot owner a written response to the request within 28 days and, if the request is refused, the response must include the reasons for the refusal, including an explanation of how the reasons apply in the specific case (see point 2 below).
• Right of appeal: A lot owner can appeal to NCAT any refusal to approve a payment plan or a failure to deal with a request

2. Can the committee refuse a payment plan because a lot owner has defaulted previously?

No. The regulations set very specific reasons for refusal of a payment plan and they do not include a previous default. The reasons an owners corporation or strata committee can reject a payment plan are set out below:

(a) If entering into the proposed payment plan would cause insufficient funds to be in:

          (i) The capital works fund, or

          (ii) The administrative fund.

(b) Insufficient funds has a specific definition – for a fund it means:

(i) The fund would be in deficit, or

(ii) There would be insufficient funds in the fund to comply with an undertaking accepted by the Secretary under the Act, section 188T(3), or a compliance notice given by the Secretary under the Act, section 188X(1), or an order made under the Act or another Act, or

(iii) For the capital works fund there would be insufficient funds to enable the owners corporation to comply with its duty under the Act to maintain and repair common property, or

(iv) For the administrative fund there would be insufficient funds to pay expenses.

3. Can the committee enquire about why the lot owner requires a payment plan?

No. The owners corporation can only consider those points raised above. They cannot make a judgment call on whether or not a particular owner is more or less deserving of a payment plan, they can simply consider whether or not the owners corporation can afford to carry the debt for the time the payment plan is in existence.

The regulations state:

17K (2) The owners corporation must not ask the owner to give information or evidence in support of a request other than the information set out in the prescribed form.

4. Can future levies be included in the payment plan or can failure to pay them mean that the payment plan is at an end?

No. At this time future levies can’t be included in the payment plan. The payment plan request form prepared by Department of Fair Trading specifically says:

“This payment plan request only applies to your overdue contributions. You must continue paying all new contribution notices when they are due. You should consider this when proposing a payment plan. If you fall into arrears with any new contributions, you may request another payment plan to cover those contributions.”

Provided the lot owner is complying with the terms of the written payment plan the owners corporation cannot do anything further to recover the levies the subject of that plan.

The owners corporation CAN issue a new statutory demand for the levies not included in the payment plan and the lot owner can ask for a payment plan for those levies and the owners corporation must deal with that request in the same way as all other requests. This means that one lot owner could have multiple payment plans.

5. Can the owners corporation charge the lot owner for the costs of calling the committee meeting and setting up the payment plan?

No. The regulations specifically state at cl 18A:

“An owners corporation must not require an owner to pay a fee or other charge relating to the following:

a. Making a request to enter into a payment plan,

b. Entering into a payment plan,

c. Participating in a payment plan”

All costs associated with payment plans must be borne by the owners corporation.

6. Are there specific things that must be included in a payment plan?

Yes. The regulations set out in Regulation 18 specific items that must be included in a written payment plan. They are:

18 Payment plans for unpaid contributions: section 85(6) of Act

(1) A payment plan for the payment of overdue contributions is to be in writing and is to contain the following:

          (a) the name of the lot owner and the title details of the lot,

          (b) the address for service of the lot owner,

          (c) the amount of the overdue contributions,

(d) the amount of any interest payable for the overdue contributions and the way in which it is calculated,

(e) the schedule of payments for the amounts owing and the period for which the plan applies,

          (f) the manner in which the payments are to be made,

(g) contact details for a member of the strata committee or a strata managing agent who is to be responsible for any matters arising in relation to the payment plan,

(h) a statement that a further plan may be agreed to by the owners           corporation by resolution,

          (i) the date the payment plan was agreed to.

7. Does an owners corporation have to waive interest?

No. There is no provision in the regulations for an owners corporation to waive interest. Whilst the payment plan request form allows the lot owner to request this, interest can still only be waived by a vote at a general meeting or strata committee meeting.

Simplify Payment Plans and Levy Recovery

Navigating statutory payment plan timelines, drafted agreements, and compliance checks adds a significant administrative burden to your day-to-day management responsibilities. A single procedural misstep can delay levy collection or invalidate recovery action altogether.

Let us handle the administrative and legal heavy lifting for you. Our specialist team offers a dedicated managed payment plan service, alongside our full-service strata debt collection options:

• End-to-End Payment Plan Management: We draft compliant payment plan agreements, liaise with owners within strict statutory timelines, monitor compliance, and ensure committee decisions meet all statutory requirements.
• Seamless Levy Recovery Services: When payment plans are refused, defaulted on, or unviable, our specialist strata legal team handles the entire recovery process efficiently to safeguard your scheme’s cash flow.

Protect your strata schemes and save your team valuable administrative hours.

Contact our specialist levy debt collection team today to learn how we can manage your payment plans and levy collections.