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Arrear Levies insurance - what's covered

Statistically, more than 10% of units are in arrears with their levy contributions, jeopardising the continuity of the budgeted daily operations and planned maintenance activities. Therefore, it's essential that a back-up plan is in place to uphold the integrity of the community scheme's cash flow.

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This doesn't mean that defaulting members are relieved of their liability to the body corporate for the arrear contributions as well as all reasonable legal costs and disbursements incurred by the body corporate in collecting the arrear contributions.

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Although not prescribed by legislation, it is considered prudent to take out Arrear Levies insurance that covers - â€‹

  • all legally recoverable levies and special levies;

  • accumulated unpaid amounts up to 3 years old before the policy's starting date;

  • electricity and water charges;

  • debt collection costs incurred up to the claim date;

  • all accrued interest up to the claim date.

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What's NOT covered

  • Disputed claims

  • Penalties and fines

  • Liquidated or sequestrated debtors​

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What the law says about arrear levy contributions

STSM Regulation 25(4)(a)(iii) states that a member is liable for and must pay to the body corporate all reasonable legal costs and disbursements, as taxed or agreed by the member, incurred by the body corporate in the collection of arrear contributions or any other arrear amounts due and owing by such member to the body corporate, or in enforcing compliance with these rules, the conduct rules or the Act.

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