Company no buffer to losing apartment, says expert

Joanna Pidgeon says there are consequences for not paying fees.

People cannot avoid losing their apartment if they don't pay their levies, even if they buy under a company name.

Joanna Pidgeon, Auckland District Law Society vice-president, said the advantage of buying in a company was that it could avoid personal bankruptcy for non-payment.

But a place could still be sold, whether it was owned by a company or an individual, she said.

Readers said apartment owners who did not pay their fees needed to be held liable so their apartments could be sold to recoup money which the other owners depended on for the running of their building.

But Pidgeon said she only recommended buying as a company after society president Brian Keene referred to the Auckland apartment scene as being the wild west.

"That point was raised in response to Brian's comments on unlimited liability of body corporate owners," she said.

"Essentially, a company is liable for levies and if they are unpaid and the company couldn't pay the levies, the apartment could be sold, whether by its mortgagee or by court order and a new owner would then be liable for any levy arrears from the previous owner and would factor that into the price they paid.

"It would prevent bankruptcy as an owner, subject to any remaining personal guarantee for any bank borrowing against the property.

"If an owner doesn't pay their share of levies then the body corporate may need to levy the remaining owners to cover cash flow issues pending debt recovery action/pursuing the sale of the unit to cover those unpaid levies," she said.

"I am certainly not advising that people shouldn't pay their levies."