FactSheet: Your Strata Levies

• NSW: Capital Works Funds: What’s new…. Mar 2017 - We’ve now all had a little time to adjust to the new terminology but there still seems to be some
• NSW: Signing DAs and problems with NCAT penalties – PODCAST Mar 2017 - A behind the scenes insight into the strata sector: executing the DA for works to common property plus how to
• NSW: Buying Into Strata – What is a Special Levy? (Part 2) Feb 2017 - What is a Special Levy? A Special Levy is a one-off payment due by all owners when there’s not enough
• NSW: Developers Liable for Inaccurate Levy Estimates Sep 2016 - The following changes relate to the levies and funds charged from lot owners and the ways in which an owners’
• NSW: Unpaid Levies…the New Rules! Sep 2016 - As of 1 December 2016 the new laws will give a lot owner the right to request an owners corporation

Will the New Reform Mean that Owners Corporations Will Now Raise Money to Match their 10 Year Sinking Fund Plan?

David Bannerman, Bannermans Lawyers
Mar 2016: Under the current legislation there is a requirement for owners corporations “to take into account” the 10 year sinking fund plan. The new legislation seeks to make it harder for schemes to completely ignore their 10 year plan when it comes to having money in the bank.

Can I Recover Strata Levy Arrears by Lodging a Caveat?

Bronwyn Smith, Smith Partners Lawyers
Jan 2016: We are asked this question often by both Strata Managers and Executive Committee members. I understand the reasoning which is that strata levies are outstanding and levies (like council rates) are a debt to the land and not the person.

Why Leave it so Long to Recover Strata Levies in Arrears?

Bronwyn Smith, Smith Partners Lawyers
Jan 2016: Why do executive committees and strata managers in New South Wales leave it so long to recover strata levies in arrears?

Do Strata Plans Need a Debt Recovery System in Place?

Bronwyn Smith, Smith Partners Lawyers
Dec 2015: Having the debt recovery procedure incorporated into the yearly AGM Minutes is a reminder to all lot owners of the debt recovery process.

Is There Enough In The Sinking Fund?

Paula Byrnes, Metropolitan Strata Reports
Oct 2015: How about the sinking fund plan? Dig deeper than just the sinking fund balance when buying a new strata property, as a big balance does not always tick boxes.

Considerations when contemplating bankruptcy proceedings against debtor lot owners

Allison Benson and Nicola Bailey, Kerin Benson Lawyers
Feb 2015: Once judgment is obtained against debtor lot owners, there are various enforcement options that may be canvassed by the owners corporation.

Sinking Funds – The Superannuation of Strata

Bailey Compton, Leverage Group
Jan 2015: A simplistic way of looking at sinking funds. At your next AGM, you may want to try presenting your Owners Corporation with this explanation of a sinking fund.

• NSW: Q&A Overdue strata fees – When Can Legal Action Commence? Apr 2017 - Question: What are the requirements to contact a lot owner regarding overdue strata fees? When can legal action against the
• NSW: Q&A Capital Works Fund Strata – How Many Quotes Are required? Mar 2017 - Is it a requirement that managing agents in NSW solicit and present three competitive quotes for any work requiring Capital
• NSW: Q&A Capital Works Fund – What Do We Need To Do Now? Jan 2017 - How do I get the executive to acknowledge obligations under the new legislation - have a 10 year plan, have
• NSW: Q&A How Does the Committee Organise a Leaky Roof Repair? Oct 2016 - A step-by-step guide to repairing a leaky strata scheme roof. From inspecting the issue and sourcing quotes to chasing up
• NSW: Q&A Strata Levies Per Quarter – How Do I Know How Much to Pay? Oct 2016 - Question: I am looking for how much I am paying for strata levies each quarter but I can't find this
• NSW: Q&A Strata Levy Contributions – How are My Levies Calculated? Jun 2016 - The following question from a NSW strata owner concerns apportioning of strata levy contributions. Thank you to Leanne Habib, Premium
• NSW: Q&A Strata Repairs Who Is Responsible For Neighbours Roof? Jun 2016 - The following question is from a NSW strata lot owner asking about strata repairs who is responsible? Thank you to

Q&A Why do Special Levies Raised for the Sinking Fund go Into the Administration Fund?

Leanne Habib, Premium Strata
May 2016: Strata levy information and Sinking Funds Question: Why don’t special levies raised go straight to the sinking fund instead of the administration fund?

Q&A Leaky Floors and Outstanding Body Corporate Levies

Andrew Jakes, Ace Body Corporate Management + Hayley Eighteen, Whitbread Insurance Brokers
Feb 2016: In this Q&A post, we answer two NSW Strata Questions: 1. Who pays for a leaky floor and 2. When is interest charged on outstanding body corporate levies?

Q&A Fair Strata Levies Increase to Boost Sinking Fund?

Leanne Habib, Premium Strata
Dec 2015: Q: What can you do if you feel your owners corporation’s strata levies increase to boost the balance of the sinking fund is not justifiable?

Q&A Strata levy increases – how much and how often?

Leanne Habib, Premium Strata
Nov 2015: How much can strata levy increases be & what timeframe is reasonable? Are there limitations for time & cost or are they at the discretion of Strata Management?

Using by-laws to change application of Unit Entitlements?

Question

We are in an old NSW Strata, with both unit/apartments and houses. In times past, someone decided that direct application of the Unit Entitlements might cause some unfairness for some owners (house owners), and by-laws were created so that the unfairness could be “avoided”. Simple application of Unit Entitlements would mean that house owners would pay for painting and maintenance of their own houses as well as painting and maintenance of the apartment buildings….

So we now have a 2 tier system, where some types of common property costs are separated from the base Administration and Sinking Funds. Everyone pays a proportion of the strata levies for the Administration and Sinking Funds based on their Unit Entitlement – but then a separate levy is applied on those other common property items (associated with unit/apartment common costs), so that house owners do not pay repair and maintenance costs on the apartment buildings.

The first question: is it legal to use by-laws to redirect how Unit Entitlements apply? An outsider said that this could be illegal.

Answer

We have received a response back from Susan Cornish of Dubbo Strata & she confirms your suspicions stating “By-laws cannot conflict with legislation”.

Further, please see Registrar General’s Directions regarding Change of Unit Entitlements – after the scheme has commenced. Here are listed the three ways that changes may be made to the unit entitlements of an existing scheme.

What do strata levies pay for?

Question

I am looking at buying a unit in The Sands complex at Yamba NSW which is strata title. Its strata levies are $2500 per quarter. I cannot find anywhere what this money is directed to – what it will pay for that I don’t have to pay day to day? Also, information on current projects and future project, amount in the bank for the strata title. How am I able to search this? I am new to this concept and I am struggling to understand strata levy information.

Answer

From Susan Cornish, Dubbo Strata:

Have you requested an inspection of records? I would recommend that you do if you have not as yet.

The budget set at the general meeting determines the levy that you pay. If you can obtain a copy of the budget and view the minutes of the last meeting this will give you an indication of what your levies contribute towards.

Also view the 10 year sinking fund plan as this will give you a view of future works that maybe necessary.

• QLD: Lot entitlements – Can you unscramble the egg? Oct 2016 - QUT professors have recommended a solution to the strata titled lot entitlements problem. Read on to find out what it
• QLD: Property Law Review – Have Your Say On Body Corporate Issues Oct 2016 - Before making any decisions about possible changes to the lot entitlements system, the Government would like to hear from the

Where my overdue strata levies fees charged in error & can I get a reimbursement?

Lisa Rutland, MyBodyCorpReport.com.au
Oct 2015: Being stuck with overdue strata levies fees due to a mixup with addresses can be costly – so who is in the wrong and are the overdue strata fees recoverable?

What is the Difference Between the Strata Administrative Fund and Sinking Fund in Queensland?

Kelly Borell, Tower Body Corporate Administration
Sep 2015: A common question from owners about their body corporate financials – “what is the difference between the Strata Administrative Fund and the Sinking Fund”?

What’s an “average” Brisbane body corp fee?

Bees Nees
Sep 2014: Located in Brisbane’s inner-city our sales team naturally sell a lot of apartments. So we get an up-close and personal look at the body corps of this city’s buildings, the details disclosed to home buyers before they sign up for any apartment or townhouse that’s part of a community title scheme.

• QLD: Q&A Implementing the 10 year sinking fund forecast May 2017 - Question: For the last two years the Body Corporate has significantly underspent against the current year expense forecast and then
• QLD: Q&A How Do Overseas Lot Owners Make Strata Fee Payments? Nov 2016 - Question: Most of our lot owners live overseas. How do they pay their strata fee payments, including levies and other
• QLD: Q&A If the Scheme Sells, Who Keeps the Sinking Fund Account Balance? Oct 2016 - Question: If our scheme sells to one buyer, do the lot owners or the purchaser get to keep the amount
• QLD: Q&A Calculating Average Levies and Sinking Fund Amounts Oct 2016 - Question: For a building of 4 townhouses, what would the average levies be? How much should we have in the

Q&As About Strata Living

Kelly Borell, Tower Body Corporate Administration
Apr 2016: Questions about changing to a self managed body corporate, filling committee positions and strata levies.

FAQs about QLD Strata Levy Information

What action can be taken against lot owners who don’t pay their levies?

Question

Levy recovery process: who designs the debt recovery process? The Regulation indicates 2 years as the time frame. What does this mean?

If 12% of lot owners are not paying their levies what is to stop all lot owners from not paying?

What action could be taken against all lot owners in this case? It seems like a minefield.

Answer

From Tower Body Corporate, QLD:

In Queensland, under the BCCM Act Standard Module 145 or Accommodation Module 143, the Body Corporate must recover the amount of the debt, if the levy amount has been unpaid for 2 years, the Body Corporate must, within 2 months after the end of the 2 year period, start action to recover the unpaid amount.

However, at each Committee Meeting that we attend, the financial statements are tabled along with an aged balance list which identify those owners who’s levies are in arrears.

If an owner pays the levy on time, depending on the scheme, they may be entitled to receive discount as an incentive to pay by the due date. This can be up to 20% of the levied amount.

If the owner owes a debt to the Body Corporate, they will not be eligible to receive the discount, and if the debt is passed to a Solicitor, the Solicitors costs may also be recoverable from the owner.

There may be a number of reasons why a particular owner is in debt, and in most cases the Committee will resolve to decide on the best course of action to be taken to recover the debt given the circumstances of the owner.

Our normal procedure at Tower Body Corporate allows for three stages of recovery of the arrears:

1. First reminder letter to owner
2. Second reminder letter to owner
3. Referred to Solicitors for levy recovery

In our experience, in most cases, the arrears are cleared before the file is referred to the Solicitors. There are of course those who continue to be in arrears and make no effort to clear the debt. In these cases, and following instructions from the Committee, the debt is passed to our Solicitors.

If 12% of owners are not paying their levies, there is nothing to stop all lot owners from not paying. However, the above recourse would come into place to recover the debt by being sent to Solicitors for recovery and could end up costing the Lot owner more in the long term.

• SCA (SA) Funding Capital Works Breakfast Seminar May 2017 - Debbie Barker, National Manager, StrataLoans and Deborah Sullivan, National Client Relations Manager, QIA Group, presented two viewpoints on corporations funding

Sinking Funds in Adelaide – Lessons Learned

Peter Greenham, Independent Inspections
Jan 2016: Adelaide unit owners are still coming to terms with the new legislation and the lack of maintenance of the Strata and Community Corporations, consequently there has been no choice to but temporary increase levies up to $1000 per lot.

• SA: Q&A Can a disputed special levy payment be set as a debt against the lot owner’s levy account? Feb 2017 - Question: If a special levy payment has been imposed and is being disputed, can this be set as a debt

Can $ be with held from owners when collections for common area upgrades fail?

Question

Legally, can $ be with held from owners when collections for common area upgrades fail? I wish to have my money returned.

3 strata units. Common area is a driveway. 1 of the 3 units have not met their Levy obligation. I wish to have my Levy returned. Can my strata management company legally hold onto the amount paid?

Answer

From Pam Lewer, Integra Strata Melbourne:

If two of three units have paid for the works to be carried out, then the defaulting unit should progressed to debt recovery to collect the outstanding fees.

The project for repair would have been resolved at a meeting and all owners are responsible in their duty of care to make sure that the common property is safe. So, the project is not over because one owner has not paid, it has just been delayed until legal recovery proceedings are completed.

• WA: Money, money, money … strata levy payments explained Oct 2013 - Strata Managers receive lots of queries about strata levy payments. People ask: How are strata levies determined? Why they have

When can strata levies be charged?

Abode Strata Team
Oct 2013: The Strata Titles Act (WA) says that the strata corporation has to pass (at a General Meeting) the amounts and due dates of strata levies before they can be charged to owners. If the levy has not been passed at a general meeting, the strata corporation is not permitted to raise any levies past the last date of approval at a general meeting.

• WA: Q&A What Do Strata Levies Cover? Why Am I Paying Strata Levies? Feb 2017 - Question: What do strata levies cover? I feel I receive nothing for the fees I pay. There are many problems
• WA: Q&A Can My Strata Levies be Increased to Cover Outstanding Levies? Dec 2016 - Is the Strata Insurance supposed to be part of the Levies budget? Can the Strata Management Company increase my levies

Can levies be raised without a general meeting?

Question

I have just received a strata levy invoice for October 2013, at the last General Meeting of the Strata Company the quarterly levies were to be paid up to 1st July 2013.

Can you please advise if the Strata Company can charge the new levy, as my understanding of the Strata Titles Act (WA) is that the Strata has to pass (at a general meeting) the amounts and due dates of levies before they can be charged to owners and that if the levy has not been passed at a general meeting the strata is unable to continue raising levies past the last date of approval at a general meeting.

Answer

Thanks so much to Jeanette, Strata Data WA for this response:

Cannot provide definitive answer without first checking the minutes of the last AGM, the budget adopted by the strata company and the financial year end period.

Depending on when the financial year ends and when the AGM is held it may be that the levy charged in the October quarter has been adjusted to enable the strata company to raise funds as accepted in the budget for the new financial year? There is usually a lag time between the end of the previous financial year and the next AGM (…………not more than 15 months shall elapse between the date of one AGM and that of the next – Schedule 1 By-law 11 (1).

The levy from the previous financial year may carry over for this quarter and is then adjusted once the new budget is accepted. (If the budget remains the same as the previous year then the levy would not change.) Of course there may be other reasons but a search of the strata company records would be required. The strata manager could clarify.

If the AGM was adjourned then re-convened and no one from the strata company attend the meeting then the budget as presented with the meeting notice is accepted. The purpose of an AGM is to:

1. Accept the minutes of the previous AGM
2. Elect a Council
3. Approve a budget

Most important for Owners to attend AGM or submit proxy so that the budget can be considered and adopted. Strata managers DO NOT determine strata company levies.

Answer

From the Abode Strata Team:

We agree with the other reply but wanted to add –

Yes, it’s likely the owner is correct. Levies are only due and payable if passed at a General Meeting. Typically the strata company will pass a motion that includes the next financial year only i.e. 4 quarters.

HOWEVER, we have usually found it best practice to include another quarter’s levy payment, being one quarter into the next financial year – otherwise this problem will always occur (due to the lag time mentioned in the other reply).

In the end it’s about practicality. As you know, a certain amount of funds are required to run the scheme and these are raised throughout the year, typically every quarter, and therefore a levy will be due for this period.

What is the definition of “unfinancial ” when determining an AGM quorum?

Question

What is the definition of “unfinancial ” when it comes to determining quorum for AGM? Does the outstanding relate only to levy contributions or does it also include all other monies owing such as electricity bills etc.

Answer

From Simone Balsara, TEYS Lawyers:

In Western Australia there is a special provision in respect of ‘unfinancial proprietors’ and when they are entitled to vote:

STRATA TITLES ACT 1985 – SECT 3D

3D. Unfinancial proprietors may vote in certain cases

Despite anything in the by-laws of the strata company, a proprietor is entitled to exercise his powers of voting on a matter requiring a unanimous resolution or a resolution without dissent even though all contributions payable in respect of his lot have not been duly paid or other moneys recoverable under the Act by the strata company from him have not been paid.