MORNINGTON Peninsula Shire councillors have voted to create a clear framework that governs the forced sale of property for the recovery of unpaid rates.
The policy, to remain in place for three years, governs the criteria that the shire will use to enforce s 181 of the Local Government Act 1989 (Vic) titled “Council may sell land to recover unpaid rates or charges”.
Under the Act, the shire can seek to sell property where the outstanding rates are more than three years overdue, no current arrangement exists for the repayment of that amount, and the council has a court order requiring payment of the amount or part thereof.
The shire’s policy sets the added criteria that:
- The debtor has consistently refused to engage with council to settle the outstanding debt.
- The debtor is to all intents and purposes delinquent and acts in a manner suggestive of the fact that they have no intention to make payment of the outstanding debt.
- The property is a commercial property or is not the ratepayer’s principal place of residence.
- The ratepayer is not a pensioner, aged or infirm.
The shire cannot, under the new policy, sell a residential property that is occupied, and in those circumstances would use the provisions in the Bankruptcy Act 1966 (Cth) to seek the bankruptcy of the property owner over the unpaid rates.
Cr David Gill asked Mark Schubert, acting director – chief financial officer, what steps are taken to avoid a forced sale under the council’s hardship policy. Schubert said “the sale of property is only a final step. At any point, owners can enter into a payment arrangement”. “So, it comes down to people who should pay, and can pay, and don’t,” said Gill.
A report to councillors said that council will review each property annually where there is an outstanding debt exceeding $5000 and three years in arrears, to determine if this policy should be applied and the property be sold.
The report stated the public policy reasons for the new framework were that failing to act sets an adverse precedent to other ratepayers and the community, and that taking no action would be inconsistent with community expectations. “This has never been used in the last decade. I think the last time was 2009, so it’s not something we’d do lightly,” said Mornington Peninsula Shire mayor Cr Anthony Marsh.
“This is reserved for cases where the debtor is delinquent, and acts in a manner that suggests they have no intention of paying the outstanding debt. “I think it’s pretty clear this is a policy that deals with people that simply refuse to pay their rates. It’s not people that are having hardship or suffering other financial issues.”
Cr Kate Roper closed the discussion by saying “we all have to pay our rates”. “It does become difficult sometimes and people always have the option of talking to our offices and organising payment plans if they are suffering from hardship. “We don’t just go and take people’s properties from them”.
The motion was carried unanimously.
First published in the Mornington News – 4 February 2025
