Crowdfunding reprieve for Earlwood pensioners facing strata bankruptcy

“From a health perspective, the community’s support has meant everything for Nitsa and Spiros’ mental health – they cried when they read the messages of support, but their tears were tears of heartfelt gratitude rather than tears of fear, helplessness and anguish.”

The Tzavellases’ initial debt was about $18,000, of which they say they paid $13,000 in regular instalments before receiving legal advice to stop paying. As of two weeks ago, the debt had grown to $44,000 because of a 10 per cent interest rate and the rapidly growing legal costs of the owners’ corporation and strata company.

The nephew set a fundraising target of $60,000 based on Khalil’s advice about the likely amount required to settle the debt.

This should not affect the couple’s pension, as a Services Australia spokesperson said the agency generally treats money received from crowdfunding or another fundraising appeal as a gift rather than assessing it as income.

Khalil said the bankruptcy proceedings were adjourned until August 9, and she had started discussions with the plaintiff’s solicitor to negotiate a settlement before that deadline.

She was also looking for a solicitor who could advise on the best way to distribute the funds, such as whether a trust account is needed.

“Another unresolved issue is that every unit owner’s windows have been replaced, except for [theirs],” Khalil added. “That final injustice in this whole debacle needs to be fixed too.”

Not long before The Sun-Herald article, the couple applied for Centrelink’s home equity release scheme – a government program akin to a reverse mortgage for pensioners. Khalil said they would proceed with this application because it was important for pensioners to have access to emergency funds to pay for unforeseen expenses.

Loading

She said the social media comments showed the community expected the government to fix legislation so that vulnerable people were not forced into bankruptcy over strata debts. The Sun-Herald article quoted several consumer financial experts calling for reforms such as raising the threshold for personal bankruptcy to $50,000 from the current $10,000 and requiring owners’ corporations to offer hardship processes.

Khalil said it was inappropriate for people to direct anger to the strata company, which was simply acting under the instructions of the owners’ corporation, and the real focus should be seeking to change the legislation to include hardship provisions.

Strata Community Association (NSW) president Stephen Brell said the organisation empathised with the Tzavellases but had confirmed with their strata company that the upgrades to the building were necessary works required to maintain the safety and integrity of the building.

Brell said owners’ corporations should be aware they did not have to charge interest in strata debt and could offer payment plans for overdue levies, and should only consider bankruptcy as a last resort. However, he opposed raising the bankruptcy threshold to $50,000, saying this had the “potential to create financial calamity” by removing consequences for owners who refused to pay debts.

Loading

Strata lawyer Amanda Farmer from Your Strata Property said the law required buildings to have a capital works fund plan to map out foreseeable maintenance costs up to 10 years ahead. “The problem is there is no legal obligation to follow that plan,” Farmer said.

“There are a lot of apartment buildings in Sydney that are not meeting their duty to repair and maintain the common property. They’re only raising the bare minimum in levies and the current owners are crossing their fingers and hoping that any problem down the track will not be theirs, it will be the problem of some future owner that they’ve sold to.”

The Morning Edition newsletter is our guide to the day’s most important and interesting stories, analysis and insights. Sign up here.