Residents at Waimea Village in Richmond say they have been left upset and scared after receiving calls from debt collectors.
After a controversial arbitration process, a decision was made in November to raise the village's fees from $125 to $182.76 a month, which was backdated to January 1 last year.
The fees increase was due on December 1, but under the terms of the village's lease agreement, residents have 60 days from that date or until January 29 before their lease is forfeit.
Despite this grace period for the rent itself, owner Michael Wright specified in November that the back-rent needed to be paid within 30 days of notification.
Now overdue since December 14, the back-rent bill comes to $635.25 for each long-term resident.
Since the arbitration began, Waimea Village's committee has distributed notices informing residents that they have the option of declining to pay the rent increase and back-rent.
A November newsletter reads: "A large number of leaseholders have told the committee they will not make a levy payment of more than $125 a month and will not pay the $635 back payment. The greater the number that will do the same will give the residents a strong united force."
Several residents this week had been contacted by debt collection company Baycorp about outstanding payments, with some saying they felt scared and upset.
Committee lawyer Warwick Heal said he told the residents not to be concerned if they were contacted by Baycorp. He said the debt collectors had the power to take debtors to the Disputes Tribunal, but the residents were entitled to contest the proceedings.
"What Baycorp do is they try and intimidate debtors by telling them they're going to lose their credit rating and they demand fees out of people, which aren't payable legally."
Mr Wright said he had used Baycorp to recoup "bad debt" in the past. He would not reveal how many residents had outstanding payments, but said several, including a former committee member, had bowed to pressure and paid him within the last few weeks.
According to the village's lease agreement, after any resident's lease is forfeit, they have 28 days to remove their property.
Mr Wright said if any property remained on Waimea Village land after 28 days, he was entitled to sell that property to recoup debt. After the debt was settled, any outstanding sum would be given back to the former owner.
As residents own their own homes but lease the land from Mr Wright, the removal clause can theoretically include their homes.
Mr Wright said around half of the houses on Waimea Village land were subject to this clause, but he said the situation was unlikely to go that far.
"The only reason that the home would be taken off or out of the village is if the lessee decides to remove that house and surrender his or her lease.
"Certainly as manager, I would certainly not take someone's place out or off of the village, it would be pointless."
He said he did not expect the conflict to reach a point where this kind of action was necessary. "Anyone that let it get to that stage would just be ridiculous in my mind, for the sake of a back-payment of $600 or $700."
Mr Wright said his and the committee's lawyers had been trying to organise conditions for a mediation session.
- The Nelson Mail
Does Nelson deserve to be classed as a city?Related story: (See story)