Question: An owners corporation ended the year with an admin fund surplus as big as its budget. Can the owners corporation return the surplus to owners?
Our owners corporation finished the financial year with a massive surplus in the administrative fund. The surplus is about as big as the original budget, so we believe the budget was set far too high.
That error meant a massive increase in our levies for the year, and now there’s a large surplus. Can we return it to the owners?
Answer: An owners corporation can return surplus funds to lot owners, but this would generally require a resolution at a general meeting.
The owners corporation does have the ability to return surplus funds to lot owners; however, this would generally require a resolution of the owners corporation at a general meeting. To ensure procedural fairness and compliance with statutory requirements, the proposal must be included as a motion on the meeting agenda and circulated to all lot owners with the required notice period, giving owners sufficient opportunity to consider the motion and its implications before voting.
In addition, the committee may have the authority to resolve a refund or credit to lot owners where such authority falls within the delegation granted to the committee under the owners corporation’s rules or by resolution of the owners corporation. The committee also has the power to set interim levies where appropriate.
From a practical perspective, rather than issuing a direct refund, the owners corporation may instead resolve to reduce levies for the following financial year by applying any surplus funds already held in the owners corporation’s accounts. Because lot owners have effectively paid these funds in advance, the owners corporation manager could credit each lot owner’s account. This credit would offset future levy contributions, reducing or eliminating levy notices until the credit balance has been exhausted.
Alternatively, should the owners corporation resolve to refund surplus funds directly to lot owners, this could be undertaken first, with the owners corporation then preparing its budget for the upcoming financial year based on actual expenditure, anticipated costs, and the financial commitments arising from existing service agreements and contracts entered into by the owners corporation. Future levies would be struck in accordance with the approved budget and funding requirements.
Ultimately, the preferred approach is a matter for the owners corporation to determine, taking into account its current financial position, forecast expenditure, contractual obligations, cash flow requirements, and the views of the lot owners.
This post appears in the November 2026 edition of The VIC Strata Magazine.
Sim Firns
Bluestone OCM Pty Ltd
Sim.firns@bluestoneocm.com.au
P: 03 8535 2770
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