Overdue Strata Fees at Settlement

Strata levies are meant to be paid quarterly and kept current, but it is not unusual for a seller's strata account to be behind by the time a property settles. Overdue strata fees do not stop a sale from proceeding in most cases, but they do need to be identified, adjusted and accounted for correctly, or they can create a dispute between buyer and seller, or an unpleasant surprise for the new owner if something is missed.

How Strata Levy Adjustments Normally Work

On any settlement involving a strata or community title lot, the outgoing owner is responsible for levies up to the settlement date, and the incoming owner takes over from that date. Your conveyancer requests a levy certificate or owners corporation certificate ahead of settlement, which confirms the current balance, any arrears, and upcoming levy due dates. This figure is then used to calculate an adjustment between the parties at settlement, similar to how council rates and water charges are handled. Because a levy certificate has a limited period of validity, timing the request correctly matters, ordering it too early risks the figures being stale by settlement day, while ordering it too late can leave no time to resolve a discrepancy before funds need to be finalised.

What Happens When the Seller Is in Arrears

If the levy certificate shows the seller is behind on payments, this generally needs to be cleared from the sale proceeds at settlement rather than left as the buyer's problem to chase afterwards. A well-drafted contract of sale requires this, and a conveyancer will build the arrears figure into the settlement statement so the shortfall is paid out of what the seller receives, not carried forward onto the new owner's account. Leaving this unresolved risks the new owner inheriting a debt tied to the lot itself, since some state strata schemes can pursue outstanding levies against the property regardless of who technically incurred them. This is particularly relevant where a seller has been disputing a charge with the owners corporation and simply stopped paying while the dispute was ongoing, since an unresolved dispute does not automatically suspend the obligation to pay at settlement.

Why This Sometimes Gets Missed

Arrears can slip through when a levy certificate is ordered too early in the process and is out of date by settlement day, when a strata manager is slow to respond to requests for an updated figure, or when a private sale between parties who know each other skips the usual formal checks. Off-the-plan and newly registered schemes can also cause confusion, since the first levies may not have been raised in a way that shows clearly on a standard certificate yet.

Buyer Protections Built Into the Process

Buyers are generally protected by the requirement that a current levy certificate be obtained close to settlement, and by the adjustment mechanism itself, which is designed to ensure you only ever pay for levies from your date of ownership onward. If a dispute arises over the accuracy of a certificate or the timing of an adjustment, this can create the kind of last-minute tension that leads to a delayed settlement, which is why ordering the certificate at the right time in the process matters as much as the figure itself.

What Sellers Should Do Before Listing

Sellers benefit from checking their own strata account is current well before listing, rather than discovering an unexpected arrears figure once a buyer is already under contract. If levies are behind because of a broader dispute with the owners corporation, for example over the standard of building maintenance, this is worth resolving or at least disclosing early, since it can otherwise resurface as a point of negotiation close to settlement, alongside unrelated issues like easements or boundary disputes that buyers are separately checking for. A seller who clears arrears before marketing the property also avoids the awkward position of a buyer's conveyancer raising the issue mid-negotiation, which can affect confidence in the transaction even where the amount involved is genuinely minor.

Requesting an Updated Certificate Close to Settlement

Because levies can be paid, or fall further behind, in the weeks between contract signing and settlement, a conveyancer will typically request an updated certificate shortly before the settlement date rather than relying solely on the figure obtained earlier in the transaction. This protects both parties from an adjustment based on outdated information, and gives the seller a final opportunity to clear any arrears voluntarily before it is deducted from their proceeds at settlement.

The Connection to Finance and Settlement Timing

An unexpectedly large arrears figure discovered late can occasionally affect a buyer's finance arrangements if it changes the net amount required at settlement, particularly for buyers working to a tight budget. This is a similar dynamic to what happens if your finance falls through at a late stage, where the earlier an issue is identified, the more options everyone has to resolve it calmly rather than at the eleventh hour.

How a Conveyancer Manages This

A conveyancer acting for either party requests the levy certificate at the right point in the transaction, checks it against the contract terms, and ensures any arrears are correctly reflected in the settlement figures rather than left to be sorted out afterwards. Where resources such as the NSW Government's guidance on unpaid strata levies are relevant to a seller's broader circumstances, a conveyancer can point them in the right direction, though the settlement adjustment itself is usually enough to resolve the immediate transaction issue.