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Serving notices on owners and occupiers under the Strata Titles Act 1985 (WA) – practical tips for strata managers

Proper service is something which can be overlooked at the time a notice under the Strata Titles Act 1985 (WA) is issued. It tends to become the issue months later, when an owner disputes a levy, resists a by-law enforcement application, or challenges a resolution passed at a general meeting, and the first question asked is whether the notice was validly served.

 

Section 216 of the Strata Titles Act 1985 (WA) sets out the ways in which a document required or authorised by the Strata Titles Act 1985 (WA) or the scheme by-laws may be served.

 

The documents commonly served by strata companies and strata managers include:

 

  1. notices of general meetings and of proposed resolutions;
  2. notices of a contravention of the scheme by-laws under section 47; and
  3. notices required or authorised under the scheme by-laws.

 

The importance of compliance with service requirements was illustrated in Konig and The Owners of Tranby on Swan Strata Plan 2232 [2021] WASAT 156. In that case, a strata company sought to authorise works to replace balustrades forming part of the common property by an ordinary resolution passed outside a general meeting. SAT found that owners had been given less than the 14 days’ notice of the proposed resolution required by section 123 and that, the notice period being definitional, there was no ordinary resolution. That case concerned the period of notice rather than the method of service, but the principle is the same. Where the Act prescribes how notice is to be given, non-compliance can have significant consequences.

 

Some core practical tips for strata managers to be aware of are as follows:

 

  1. Identify who is being served. Section 216 deals separately with the strata company, owners, occupiers and other persons such as mortgagees. A method effective for an owner is not necessarily effective for an occupier.
  2. Do not assume that email constitutes service.
  3. Identify the correct address and appropriate method for service. Work from the strata roll where applicable. For example, an owner may be served at the address for service appearing on the roll maintained under section 105. If there is no address for service, the document may be posted to the owner at the address of the lot. Occupiers may be served by post to the lot address.
  4. Save a copy of the roll as at the date of service where the roll is the source of the address for service. Many strata management platforms overwrite owner details when the roll is updated and do not retain a historical record. If service is challenged a year later, the strata company needs to be able to prove the address for service recorded on the roll on the day the notice was sent. Service is considerably easier to establish at the time a notice is issued than after a dispute has arisen.
  5. Ensure any required notice periods are complied with, allowing for delivery time.

 

If you require advice or assistance in relation to the service of notices or any other strata company processes, do not hesitate to contact the team at our Perth office.

This article was first published on 7 August, 2026 and was written by Jonathan O’Connor, Senior Associate in our Perth office.

© Bugden Allen Group Legal Pty Ltd. This is general information only and not legal advice. You should not rely on this information without seeking legal advice tailored to your specific circumstances.

Overdrawn Accounts and Inter Fund Transfers: What Every Queensland Body Corporate Manager Needs to Know post Artique

In summary: Under the Body Corporate and Community Management Act 1997 (Qld), a body corporate must never transfer money between its administrative fund and its sinking fund — no resolution can authorise it. A body corporate bank account that runs into negative territory is not a grey area either: overdrawing is borrowing, and it needs the same resolutions and approvals as any other loan. Both issues can come up in the day-to-day management of Queensland schemes, and both carry real consequences for bodies corporate, and their body corporate managers, who get the mechanics wrong.
Key takeaways
•       Transferring money between the administrative fund   and the sinking fund is expressly prohibited by section 167(7) of the   Standard Module, and equivalent provisions in all other Regulation Modules —   in both directions, and regardless of how many bank accounts the body   corporate holds. •       No body corporate resolution can override that   prohibition, including a resolution without dissent. •       An ’overdrawn’ body corporate account is legally a   borrowing under section 171 of the Standard Module, requiring an ordinary   resolution — or a resolution without dissent once the borrowing exceeds the   relevant per-lot limit. •       Having a term deposit at the same bank does not   change this analysis. What matters is whether the transaction account itself   is overdrawn, not whether the body corporate has other money sitting   elsewhere, including (on the books) in the same ‘fund’. •       Correcting a genuine bookkeeping error is not the   same as a fund transfer. Moving money between budget lines within the same   fund is not a fund transfer either — but it will usually necessitate an   ordinary resolution to amend the budget.
Two scenarios body corporate managers see all the time
Every body corporate manager in Queensland has, at some point, dealt with one of two recurring cash flow problems. The first is the overdrawn account. A body corporate has put sinking fund money on term deposit — sensibly, because it is not needed yet — but cash flow forecasting has not kept pace with actual spending. A payment is presented, there isn’t enough in the transaction account to cover it, and the bank pays it anyway. The account sits in negative territory until either the term deposit is recalled to cover the shortfall, or enough levies come in to bring the balance back into credit. The second is the inter-fund transfer. Here, the bank account itself stays in credit, but the body corporate uses sinking fund money to cover an administrative fund expense (or the other way around), so that one fund’s notional balance goes into deficit while the bank account balance looks fine. Both scenarios feel like minor administrative hiccups. Neither is. Queensland’s strata legislation treats them very differently to each other, and far more strictly than most people expect.
Transferring money between funds is not allowed — full stop
Section 167 of the Standard Module requires administrative fund money and sinking fund money to be paid into the body corporate’s financial institution account(s), and section 167(7) then draws a hard line: ‘Funds must not be transferred between the administrative fund and the sinking fund.’ A few points flow from that wording that all body corporate managers should have front of mind:
  • It doesn’t matter whether the body corporate operates one bank account or several — the prohibition applies regardless of the banking arrangements.
  • It cuts both ways. Moving money from the sinking fund to the administrative fund is prohibited, and so is moving money the other way.
  • No resolution can fix it. A motion approving a transfer — even a resolution without dissent, the highest bar a body corporate can clear — is void, because it is directly contrary to section 167(7).
The underlying design is that administrative fund money and sinking fund money are meant to be quarantined from one another: each fund receives its own money (sections 167(2) and (3)), each fund can only be spent on the purposes specified for it (section 169), and there is no lawful overlap between the two.
What the case law says
The Commissioner for Body Corporate and Community Management’s adjudicators have applied these rules consistently:
  • In Brookwater Home Owners Club [2009] QBCCMCmr 376, it was held that a transfer between funds cannot be ordered at all, because section 167(7) expressly prohibits it.
  • In Pier One Hervey Bay [2018] QBCCMCmr 238, borrowing from one fund to use for another was found to itself be a prohibited transfer — not a technical breach, but the real thing. The remedy identified was for the body corporate to raise a special levy to cover the shortfall and use the proceeds to reimburse the fund the money was taken from.
  • In Royal Pines South Shields [2015] QBCCMCmr 363, it was held that simply paying an expense out of the wrong fund is itself a form of prohibited transfer — it makes no difference whether the liability is met directly from the wrong fund, or money is shuffled between funds first and the expense paid ‘properly’ afterwards.
A genuine bookkeeping correction is different
Not every adjustment between funds is a prohibited transfer. If money was allocated to the wrong fund in the first place — a genuine misallocation — then correcting that entry is not a ‘transfer’ because the money was never properly received into (or paid out of) the correct fund to begin with.
Moving money within a fund is a different question
An intra-fund transfer — for example, reallocating money from one line item in the sinking fund budget to another line item in the same fund — does not breach section 167(7), whether it happens physically between accounts or only in the body corporate’s books. It will, however, usually amount to an amendment of the body corporate’s current budget, which requires approval by ordinary resolution: see Mariners Village 3 [2006] QBCCMCmr 56.
An overdrawn account is a borrowing, not a technicality
There is no provision in the Act, or any of the Regulation Modules which says, in so many words, that ‘a body corporate must not overdraw its bank account’. That does not mean the position is unregulated. What is actually happening when an account goes into negative territory is that the financial institution has advanced money to the body corporate so it could make a payment it otherwise couldn’t afford — in other words, the body corporate has borrowed money, which is squarely regulated by section 171 of the Standard Module. That has real consequences:
  • Borrowing requires an ordinary resolution. A committee has no power to authorise it on its own.
  • Once total borrowing exceeds the relevant threshold — for a scheme under the Standard Module, currently $250 per lot — approval must step up to a resolution without dissent.
  • It makes no difference that the body corporate has a term deposit sitting at the same bank. The term deposit is a different account. What determines whether there has been a borrowing is whether the transaction account is overdrawn — not whether the body corporate has other money elsewhere that could theoretically cover the debt.
A financial institution may only be willing to let an account run into deficit because it knows there’s a term deposit in reserve, but that commercial reality doesn’t change the legal character of the transaction. The body corporate still owes the bank the overdrawn balance, and that debt is still a borrowing that needed approval before it was incurred. The recent decision in Artique [2026] QBCCMCmr 43 reinforces how granular that approval requirement is. That case concerned a multi-drawdown facility taken out by a body corporate under the Accommodation Module. It was held that each individual drawdown needs its own approval, pitched at whatever level the resulting total indebtedness requires (in that case, a special resolution once a drawdown pushed borrowing past the $250-per-lot mark), and that a body corporate cannot validly pre-approve an entire facility limit in one go without reference to how the money will actually be spent.
What a compliant overdraft facility actually requires… post Artique
Applying these principles to a body corporate account that is permitted to run into overdraft, the body corporate needs to have in place — and a properly advised financial institution should be asking for:
  • An ordinary resolution authorising the opening of the overdraft account, obtained before the account is opened.
  • A further ordinary resolution each time the account is actually overdrawn, because each drawdown is treated as a new borrowing — an overdraft facility is, in this respect, no different to a multi-drawdown loan.
  • Before any borrowing (or the running overdrawn balance) exceeds the applicable per-lot limit, the higher-threshold resolution required at that level — a resolution without dissent under the Standard Module.
  • A certified copy of the relevant general meeting minutes, provided before the account is opened or the funds are advanced, as the case requires.
In practice, this is a meaningful amount of process to comply with. Bodies corporate are often already reluctant to approve borrowing of any kind, and the administrative work and cost of calling and running the necessary general meetings — in time to actually meet a cash flow gap — tends to make that reluctance worse, not better. Strictly applied, that friction produces one of two outcomes: schemes with a genuine, ongoing need for an overdraft facility invest the time and expense to do the approvals properly, and everyone else improves their cash flow forecasting so they don’t need the overdraft facility in the first place.
Where the problem usually starts — and where a manager can genuinely help
Overdrawn accounts don’t appear out of nowhere. They can arise because of cash flow advice from a body corporate manager that was on the one hand ignored, or on the other hand was poor, incomplete, or simply never given. It’s incumbent on body corporate managers to give timely and accurate assistance, and for committees to listen to and act on that advice. Some body corporate managers even go the extra mile. In Sanctuary Shores Resort [2000] QBCCMCmr 560, a body corporate manager had a practice of personally lending money to a body corporate it managed whenever that body corporate’s account ran overdrawn, charging interest on the amount advanced. When the body corporate later received penalty interest from a lot owner on unpaid contributions, the manager would net its own interest owed off against that penalty interest received. The body corporate challenged the arrangement, but the adjudicator did not disturb it. More power to that body corporate manager, but the goal should be that borrowing is never needed – that is the mark of a well advised and well run body corporate.
What this means for body corporate managers, in practice
For a body corporate manager advising committees day to day, the practical takeaways are straightforward:
  • Treat cash flow forecasting as a routine part of the job, not an afterthought — it’s the single biggest lever for avoiding an overdrawn account in the first place.
  • Never record, facilitate, or wave through a transfer between the administrative and sinking funds, no matter how the committee frames it or how confident everyone is that ‘it’ll balance out later.’ Section 167(7) doesn’t bend for good intentions, and no resolution can authorise a breach.
  • If an expense has been paid from the wrong fund, or money has genuinely been misallocated, fix it with a proper correcting journal entry — and be able to explain, if asked, why it was a correction and not a transfer.
  • If a committee wants to reallocate money between budget lines within the same fund, get the ordinary resolution to amend the budget before treating the reallocation as settled.
  • Before any account is allowed to run into overdraft — or before recording an account as ‘overdrawn’ at all — make sure the right resolution has actually been passed, at the right threshold, and that certified minutes exist to prove it.
Frequently asked questions
Can a body corporate transfer money from the sinking fund to the administrative fund if everyone agrees?
No. Every Regulation Module prohibits transfers between the administrative fund and the sinking fund in both directions. Even a resolution without dissent cannot authorise it, because the resolution itself would be void.
Is an overdrawn body corporate account illegal in Queensland?
There’s no provision that names ‘overdrawing an account’ as a prohibited act. But an overdrawn balance is legally a borrowing, and borrowing without the required resolution — or beyond the approved limit — is not legal.
Does having a term deposit make it acceptable to run the transaction account into overdraft?
No. The term deposit is held in a separate account. What matters is whether the transaction account itself is overdrawn, regardless of what other money the body corporate holds elsewhere.
Can a committee approve borrowing on its own?
No. Borrowing requires an ordinary resolution of the body corporate at general meeting. A committee has no power to authorise it. Borrowing above the relevant per-lot threshold needs a resolution without dissent or special resolution, depending on the Regulation Module.
Is correcting a bookkeeping error the same as a fund transfer?
No. If money was genuinely misallocated to the wrong fund, a correcting journal entry is not a transfer, because the money was never properly in the correct fund in the first place.
Getting it right
The rules governing body corporate funds and borrowing in Queensland are unforgiving of shortcuts, however well-intentioned. For body corporate managers, that makes accurate record-keeping, proper resolutions, timely and honest cash flow advice to committees the difference between a scheme that runs smoothly and one that ends up in front of an adjudicator. If you have a body corporate account that has run into overdraft, or a committee asking about moving money between funds, get advice before the position becomes entrenched — it is far easier to fix a cash flow problem prospectively than to unwind an unlawful transfer or an improperly authorised borrowing after the fact.

Shutting down discussions between lot owners at general meetings – a breach of the Strata Titles Act 1985 (WA)?

In Lenane and The Owners of Harbour Pines Strata Plan 23297 [2025] WASAT 53, SAT considered an interesting application in which various lot owners alleged that at an extraordinary general meeting (EGM), the conduct of the strata manager as the chairperson of the EGM and the council of the strata company was a breach of the strata company’s duty under section 119 of the Strata Titles Act 1985 (WA) to not act oppressively or unreasonably.

The discussions primarily related to the adoption of the 10 year maintenance plan for the strata company. Among other things, it was alleged that the floor of the EGM was held by a council member with “unhelpful rhetoric”, attempts by certain owners to make statements or ask questions on issues were blocked by the chairperson, and the EGM was conducted “with appalling railroad tactics to just push (the) vote through without any discussion”.

However, while SAT appeared to acknowledge that these allegations may have had some basis, SAT found that they ran counter to the fact that the strata company allowed for a month-long consultation period in respect of the maintenance plan and none of the relevant owners availed themselves of that opportunity. SAT found that the owners attempted a “concerted ambush” of the discussion on the merits of the maintenance plan at the EGM and the chairperson was entitled to act as she did in the circumstances.

The key takeaways for strata managers and councils are as follows:

1) Unreasonably blocking or preventing discussions between owners at general meetings could be seen as conduct which is unfairly prejudicial, oppressive or unreasonable which may be construed as the strata company acting in contravention of its duty under section 119 of the Strata Titles Act 1985 (WA); and

2) Such risk can be minimised by the strata company inviting prior consultation in respect of items listed on the agenda for a general meeting and the strata company reasonably engaging in that consultation process.

In the judgment, SAT also confirmed that the 10 year maintenance plans for strata companies do not, in and of themselves, authorise the levying of contributions on lot owners or authorise the strata company to make expenditure in accordance with the plan. The application was wholly dismissed.

If you need advice or assistance in respect of strata company or general meeting processes, do not hesitate to contact the team at Bugden Allen’s Perth office.

This article was first published on 22 July, 2026 and was written by Jonathan O’Connor, Senior Associate in our Perth office.
© Bugden Allen Group Legal Pty Ltd. This is general information only and not legal advice. You should not rely on this information without seeking legal advice tailored to your specific circumstances.

New AML Laws Are Here: What Our Clients Need to Know

From today, 1 July 2026, Australian lawyers are regulated under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. Here is what that means for you and how your experience working with Bugden Allen will change.

A New Era for Law Firms and Property Transactions

Australia has long been one of the few developed countries where lawyers operated outside formal anti-money laundering (AML) regulation. That changes today. Australian law firms are now regulated under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) and the AML/CTF Rules 2025, which together brought the legal profession into the regime for the first time from 1 July 2026.

For Bugden Allen, a firm whose practice is built around property, owners corporations, bodies corporate, and strata law, this is a significant shift. We have spent considerable time preparing our policies, systems, and people so that we can meet these new obligations while continuing to deliver the service our clients expect.

This post explains what the changes mean practically for you as a client.

Which of Our Services Are Affected?

The AML/CTF Act applies whenever we provide what the legislation calls a “designated service.” For our clients, the most common examples are:

  • Buying, selling, or transferring real property -once a buyer is successful at auction or a private treaty price is agreed, the service becomes regulated.
  • Holding or managing client money as part of a property transaction – for example, holding deposits in trust or disbursing settlement funds.
  • Assisting with the sale, purchase, or restructure of a body corporate or legal arrangement – directly relevant to owners corporations and strata entities.
  • Equity or debt financing relating to a body corporate or legal arrangement.
  • Creating or restructuring a body corporate – including establishing or reconstituting strata schemes.
  • Providing our office address for use as a body corporate’s registered office or principal place of business address.

If we are providing advice, strategy or negotiation support without directly executing, settling or transferring assets -for instance, advising on a strata by-law dispute – this will not ordinarily constitute a designated service. However, if the scope of that work changes and we begin to assist in furthering a transaction, our AML/CTF obligations will apply from that point.

What Will Be Different When You First Engage Us?

The most immediate change you will notice is at the beginning of a new matter. Before we can start substantive legal work on any designated service, we are required by law to complete what is called Initial Customer Due Diligence (ICDD) and Verification of Identity (VOI). This means:

  • We will send you a secure digital request via our identity verification platform, InfoTrack, asking you to verify your identity online. This is a simple, guided process and can be completed remotely on your phone or computer.
  • We will ask you to complete a short Know Your Client (KYC) form covering basic information about who you are, how you are acting in the transaction, and the nature and purpose of our engagement.
  • For bodies corporate, owners corporations, and companies, we will also need to identify the entity itself – its ABN, its governing documents, and the individuals responsible for its governance. Depending on the circumstances, this may also extend to identifying beneficial owners.
  • Our systems will automatically run checks against international sanctions lists and politically exposed persons (PEP) databases as part of this process. This is a regulatory requirement and does not imply any concern about any particular client.

Importantly, we cannot begin substantive work on a matter until this process is complete. We ask for your cooperation in responding to identity verification requests promptly, as delays in completing ICDD will delay our ability to act for you.

Particular Implications for Owners Corporations, Bodies Corporate, and Strata Entities

A significant portion of our clients are owners corporations, bodies corporate, strata committees, and the managers and developers who work with them. These entities present some specific considerations under the new framework.

Entity-level verification

When we act for a body corporate or owners corporation, we are required to verify the existence and governance of the entity itself – not just the individual giving us instructions. Expect us to ask for documents such as your certificate of title, your rules or constitution, and details of the persons authorised to bind the entity.

Beneficial ownership

For non-listed entities, the AML/CTF Act requires us to identify and, in some cases, verify beneficial owners – that is, the individuals who ultimately own or control the entity. For developers and private companies involved in property transactions, this means we may ask questions about shareholding and control structures that go beyond what was previously required.

Multiple transactions, one verification

The good news is that once your identity is verified, that verification remains valid for two years. If we act for your owners corporation on a series of different matters over that period, you will not need to go through the full verification process each time – subject to any change in circumstances.

Property Developers: What to Expect

Developers working with us on land acquisitions, off-the-plan sales, and project finance will encounter the new framework most frequently, as almost every step of a development project will involve a designated service. In practice, this means:

  • ICDD and VOI must be completed before we act on instructions once a buyer and seller have agreed terms – not at the end of a transaction.
  • Where we are managing trust funds or holding deposits as part of a project, this itself constitutes a designated service and triggers our obligations.
  • Transactions involving the creation or restructuring of a body corporate – such as registering a strata scheme or setting up a community association – will require identification of the relevant parties including any beneficial owners, directors, trustees, and settlors.
  • If a development involves complex ownership structures or foreign investment, additional due diligence steps may be required.

We encourage developers who engage us on ongoing projects to reach out early so we can work through the onboarding process ahead of time and minimise any impact on transaction timelines.

Ongoing Monitoring: What Happens After Onboarding?

The AML/CTF obligations do not end at onboarding. We are required to monitor our client relationships on an ongoing basis and to periodically review the information we hold. In practical terms:

  • Most clients will be classified as low risk, which means a review of their information every three years. Medium-risk clients will be reviewed every two years, and high-risk clients annually.
  • If there is a significant change in your circumstances – for example, a change in ownership, a new conveyancing matter, or a change in the individuals authorised to act for your entity – we may need to update your information sooner.
  • From time to time, we may contact you to ask you to refresh or confirm identity information. This is a routine compliance step, not an indication of any concern.

We have built these review cycles into our practice management systems so that prompts happen automatically and do not fall through the cracks.

Why Are These Checks Necessary?

We appreciate that additional paperwork can feel like an imposition, particularly for longstanding clients where there is an established relationship. It is worth explaining why these requirements exist.

Property is globally one of the highest-risk sectors for money laundering. Large sums of money move through property transactions, and the complexity of ownership structures – trusts, companies, and off-the-plan arrangements – can be used to obscure the origins of funds. Australia’s legal profession has been subject to international scrutiny for the absence of formal AML regulation, and these changes bring us in line with comparable jurisdictions including the UK, the EU, and Canada.

For our clients, the practical implication is that the checks we conduct protect the integrity of the transactions we facilitate on your behalf, as well as our own. We are committed to making this process as straightforward as possible.

What We Cannot Do

There are two important constraints that arise from our new obligations that clients should be aware of.

We cannot begin substantive legal work without ICDD completion.

If you ask us to act and we have not yet completed identity verification, any documents we issue to you will be marked “UNVERIFIED CLIENT” until the process is finalised. We cannot settle a transaction, transfer funds, or take certain other steps on your behalf until verification is complete.

We cannot tell you if a report has been made to AUSTRAC.

In rare circumstances, we may be required to submit a Suspicious Matter Report to AUSTRAC. The law prohibits us from alerting you – or anyone else – that such a report has been made or is being considered. This is known as the ‘tipping off’ prohibition. We recognise this is an unusual constraint on our usual duty of open communication with clients, but it is a strict legal obligation.

Looking Ahead

The commencement of AML/CTF regulation for Australian lawyers marks a permanent change to the way legal services are delivered in this country. Over the coming years, clients can expect these processes to become a standard and unremarkable part of engaging a lawyer, just as they already are when opening a bank account or purchasing a financial product.

We will continue to refine our processes as regulatory guidance develops and as we gain practical experience with the new framework. Our goal is to meet our legal obligations in a way that is minimally disruptive for clients and consistent with the service standard you expect from Bugden Allen.

If you have questions about how the new requirements affect your matter or your relationship with the firm, please speak with your usual contact at Bugden Allen.

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This article is for general information purposes only and does not constitute legal advice. Specific AML/CTF obligations vary depending on the nature of the services provided and the client’s circumstances. Please contact Bugden Allen Group Legal for advice specific to your situation.

Bugden Allen Group Legal  |  www.bagl.com.au

Financial Hardship Reform: Protecting Vulnerable Owners or Creating New Risks for Owners Corporations

For years, the conversation around unpaid levies has been framed as a simple debt recovery issue. Owners Corporations levy fees, lot owners fail to pay, and recovery action follows. In practice, that approach has often prioritised enforcement over engagement, with recovery processes becoming entrenched before genuine attempts are made to understand the circumstances of the owner in arrears.

The Victorian Government’s response to the statutory review of the Owners Corporations Act 2006 (Vic) seeks to change that narrative.

Among the most significant reforms proposed are the introduction of a legislative financial hardship framework, restrictions on debt recovery while hardship applications are being assessed, mandatory consideration of payment plans, and limitations on the charging of penalty interest in certain circumstances.

At first glance, these reforms appear difficult to criticise. Few would disagree that genuine financial hardship should be recognised and accommodated. Many Owners Corporations have already adopted pragmatic approaches when dealing with owners experiencing illness, unemployment, family violence, or other significant personal circumstances.

The question is not whether hardship should be recognised. The question is whether the proposed framework appropriately balances the interests of vulnerable owners against the financial realities faced by Owners Corporations themselves.

An Owners Corporation is not a government agency. It does not have access to public funding. It is a collective financial structure in which all obligations are met through contributions from lot owners. Every dollar that is not collected must ultimately be funded by other lot owners.

This is particularly significant in the current environment. Insurance premiums continue to rise. Utility costs have increased dramatically. Building compliance obligations are becoming more extensive. Many Owners Corporations are also confronting substantial rectification costs associated with ageing infrastructure, combustible cladding, water ingress and other building defects. With a growing proportion of Victorians now living in strata environments, both the scale of these pressures and the financial stakes involved are increasing.

Against that backdrop, delayed levy recovery does not simply create an administrative inconvenience. It creates a cash flow problem that can affect an Owners Corporation’s ability to meet its own obligations.

The Expert Panel has clearly recognised concerns regarding aggressive debt recovery practices. However, there remains a legitimate question as to whether the proposed reforms risk shifting financial hardship from one owner to many others.

A prolonged suspension of recovery action may provide relief to an individual owner, but it can also leave an Owners Corporation unable to recover funds required to pay insurance premiums, contractors and maintenance costs. In smaller schemes operating with limited financial buffers and fewer contributors, the impact can be immediate and severe.

Another issue is the potential for inconsistency. Approaches to hardship already vary significantly across the sector, and without clear standards a formal framework may entrench rather than resolve that variability.

The success of any hardship framework will depend heavily on how hardship is defined, assessed and reviewed. If the threshold is too low, Owners Corporations may struggle to recover legitimate debts. If the threshold is too high, the reforms may fail to provide meaningful protection for those they are intended to assist. The framework will also need to account for the practical question as to who is best placed to assess hardship, given that many Owners Corporations lack the expertise and resources to make complex financial or personal assessments.

These design challenges become even more acute when considering who the framework is intended to protect. Questions have been raised as to whether access to payment plans should extend to all lot owners or be limited to owner‑occupiers. On one view, financial hardship is not confined to any one class of ownership, and a uniform framework promotes consistency and fairness. On another, hardship protections should be directed primarily toward owners where there is a genuine risk of displacement from a principal place of residence.

Where a lot is used as an income‑producing investment, deferral of levies may operate less as a social protection and more as a reallocation of financial risk to other owners. Consideration of mechanisms that prioritise the payment of Owners Corporation fees from rental income streams may provide a more balanced response, aligning financial responsibility with the benefits derived from the asset.

That same principle extends to the design of any broader hardship framework. Rather than adopting prescriptive controls, the focus should be on ensuring that relief is structured, proportionate and difficult to exploit. This may, in practice, require limits around duration and repeat access, and a clear expectation that lot owners take responsibility for initiating and substantiating claims of hardship. Measures that preserve accountability, whether through conditional access to facilities or other incentives to engage, are not punitive, but necessary to ensure the system operates fairly across the scheme as a whole.

Ultimately, Corporations operate on a fixed, collective budget. Any regime that defers or reduces contributions must therefore be carefully calibrated. Prioritising support for owner‑occupiers most at risk, confining relief to defined periods, and retaining the ability to refuse arrangements that would materially undermine the scheme’s financial position are all mechanisms that help ensure hardship protections remain workable in practice. Without such guardrails, there is a real risk that well‑intentioned reforms will shift, rather than solve, financial stress.

The Government’s response provides broad support for hardship protections, but many of the practical details remain unclear. Questions surrounding evidentiary requirements, review mechanisms, timeframes and dispute resolution processes will ultimately determine whether the framework succeeds or creates additional conflict.

There is also a broader policy question. If financial hardship protections are to become a central feature of Owners Corporation governance, should government also consider mechanisms to support schemes that experience significant levy shortfalls as a result? At present, there is no clear indication that any external funding or risk-sharing mechanism will be introduced, meaning the financial burden appears likely to remain entirely with fellow lot owners.

The challenge for policymakers is therefore not whether hardship should be recognised. It is how to ensure that hardship protections do not unintentionally undermine the financial sustainability of the communities they are designed to protect.

As consultation continues and legislation is developed, the real test will be whether Victoria can strike a balance between compassion and practicality.

Everyone agrees vulnerable owners deserve protection. The harder question is who ultimately pays for that protection.

This article was first published on June 28, 2026 and was written by Julia Moroz, Partner and Michael Skolarikis, Solicitor in our Melbourne office.

© Bugden Allen Group Legal Pty Ltd. This is general information only and not legal advice. You should not rely on this information without seeking legal advice tailored to your specific circumstances.

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