This article discusses self managed strata levies, explaining why volunteer owners can’t pay lower levies but may be compensated through approved honorarium payments.
Question: Can lot owners who perform the management and maintenance duties in our self managed building pay lower levies as compensation for their volunteered time?
Our Owners Corporation of 6 units is self-managed. Four of the lots are resident owners and the other two lots are investments. The resident owners all carry out voluntary work including all gardening, mowing, handyman jobs plus all the tasks usually carried out by strata managers (financial, secretarial, meetings, minutes, quotes, etc) to reduce costs. We have estimated this saving to be around $4000/pa, $666/lot per year.
Is there a legal way to “charge” the two investor-owned lots, either by increased levies or as a separate charge, to compensate resident owners for the work they put in? Are the resident owners able to pay lower levies to make up for their work?
Answer: Under Section 46 of the Act, the owners who are “running” the scheme can be compensated by honorarium payments.
The only way that levies can be raised in a strata scheme are as per the unit entitlements allocated to each lot. This is specified in Section 83 (2) of the Strata Schemes Management Act 2015. To raise levies in any other way would be differential levies and open to challenge as they have been raised incorrectly.
What the owners corporation can consider is to pay for the secretarial services performed as detailed under Section 46 of the Strata Schemes Management Act 2015 which allows the owners corporation to determine an amount payable for services performed in the period since the last annual general meeting. For example an honorarium, however, this must be paid retrospectively and approved at the annual general meeting under Section 46.
The additional costs in the budget would need to be covered by an increase to levies paid by all owners, however, the owners who are “running” the scheme would be compensated by the honorarium payments.
You will need to speak with your insurance broker or underwriter in regards to any payment made and any other works being performed, for example, gardening. Works of this nature are potentially covered under a voluntary workers policy and payment for these services could possibly invalidate that policy.
This post appears in Strata News #537.
Robert Fothergill
Strata Life
E: Robert@thestratalife.com.au
P: 02 9456 9917
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