A Qld lot owner would like to know if they can refuse a levy increase. Todd Garsden, Mahoneys provides the following response.
Jump directly to the QUESTION you are after:
- QUESTION: Our levies have been increased substantially to cover a deficit from a few years ago. Can the body corporate increase the levies by a large amount?
- QUESTION: Can strata lot owners refuse a levy increase proposed by new body corporate managers if we do not feel the increase is warranted?
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Question: Our levies have been increased substantially to cover a deficit from a few years ago. Can the body corporate increase the levies by a large amount?
Our AGM was in February 2020. 4 out of the 10 owners agreed to increase our Body Corporate fees. From December 2019 to June 2020 they decided to increase our fees by $500. We now pay $2044 every 6 months. They say the increase was to recover a deficit of $2000 from 2-3 years ago. The other owners are angry at this. We have no lifts, no pool, no tennis court just 10 townhouses.
Can the body corporate increase the levies this much?
Answer: There is no cap or limit on what the body corporate can approve but the levies are based on a forecasted budget.
The body corporate (through the owners) sets its own levies at general meeting. There is no cap or limit on what the body corporate can approve but the levies are based on a forecasted budget.
It may well be that only 4 owners approved the levy, but what also matters is how many owners voted against the levy. There would need to be at least 4 votes against the levy otherwise it is properly approved.
Bodies corporate aren’t run to make a surplus – so it is rare that things are over-budgeted for. They are normally run on fairly slim margins.
This post appears in Strata News #375.
Question: Can strata lot owners refuse a levy increase proposed by new body corporate managers if we do not feel the increase is warranted?
Can strata lot owners object to a body corporate fee increase if we do not feel the increase is warranted? Our body corporate changed body corporate managers and the new strata managers are now intending to increase the strata fees.
Answer: If an owner disputes the levies then they have rights to do so by voting against the budget and levy at the general meeting.
I think the first thing to remember is that the strata manager is not increasing their fees – the levies are proposed by the committee and approved by owners at the general meeting. The strata manager will normally provide a recommendation to the committee based on the anticipated expenditure. With increases like this, it normally indicates that the prior years were under-budgeted and now that needs to be made up for.
If an owner disputes the levies then they have rights to do so by voting against the budget and levy at the general meeting. It can then be challenged in the Commissioner’s Office but you would need to show that the budgeted expenditure is not a reasonable estimate of the costs to be incurred by the body corporate as opposed to simply arguing about them being increased.
This post appears in Strata News #252.
Have a question or something to add to the article? Leave a comment below.
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Todd Garsden
Mahoneys
E: [email protected]
P: 07 3007 3753
W: https://www.mahoneys.com.au/
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Body corporate managers don’t ‘raise levies’. Owners vote on levies at general meetings via the budget and if an owner doesn’t like the budget presented and think they can do better, they are quite at liberty to put a motion to a general meeting with their own budget proposal. Which can then get voted upon like any other motion.
Does a large sinking fund levy increase (265%) have to be approved by a unanimous vote or a simple majority in a complex of 5 townhouses?
Always interesting to read what the next excuse for being late or not paying levies is likely to be. Too many owners know too little about how levies are arrived at and education is the key.
It’s not important to time- or understanding- poor owners that the legislation states their responsibilities and duties. They need to see how it works, be involved, want something from their scheme that isn’t there already (or that is high maintenance).
Dear owner….. you are important because
> you with other owners comprise the strata company
> you contribute to the success of this scheme
> you contribute to the failure of this scheme
> you have the power to influence other owners
We’d like to work with you
Totally agree with you.
Whilst what Todd is saying is likely true for an Administrative Fund budget there is an issue in relation to a Sinking Fund budget because the contributions may not bear any resemblance to the expenditure given contributions are collected to fund expected future expenditure. Just experienced a situation where owners were content with the budgeted contributions but not the expenditure which was for something not included in the 20 year forecast. If the proposed budget is varied by the maximum 10%, the regulations state that the contributions need to be adjusted likewise – to me that is an absolute nonsense!
This looks like yet another case of ‘tail wagging the dog’. The BCM is just a service provider… a very important service provider, but answerable to the committee and the owners who are the ones who make the decisions.