This article is about lot allocations and levies in VIC.
Table of Contents:
- QUESTION: Is there any way to have liabilities changed without having 100% agreement?
- QUESTION: If you’re purchasing a unit, how are the owners corporation fees determined?
- QUESTION: When allocating bills to unit holders for expenses such as owners corporate fees or cost of maintenance projects, is there a principle, guideline, rule or legislation that applies?
- QUESTION: What role does the Victorian strata manager play in ensuring lot allocations are correct for the purposes of issuing levies?
Question: Is there any way to have liabilities changed without having 100% agreement?
Is there any way to have liabilities changed without having 100% agreement? We have a vast majority of votes returned in favour of a review. However, we cannot even get 75% of eligible votes for anything.
Answer: We don’t need to do entitlement contemporaneously.
We’ve been using the terms entitlements and liabilities collectively. They don’t have to be dealt with separately. You might, for example, unanimously seek to resolve or apply to VCAT to change only the lot entitlement or the lot liability. You’re not necessarily having to do both. I’ve just taken that question and I’ve fashioned the fact that it does refer to lot liability only. I’ve taken that part of it and said ‘I think it’s a good question because it makes it clear to us that we can just make an application or unanimously resolve in regards to liability. We don’t need to do entitlement contemporaneously.
This post appears in Strata News #518.
Question: If you’re purchasing a unit, how are the owners corporation fees determined?
Answer: When someone purchases the apartment, they get the section 32 document which identifies the Owners Corporation fees for that lot.
For a brand new development, the developer will prepare a budget for that property, and that’s usually for a year, an annual term. When someone purchases the apartment, they should get the section 32 document, which entails the Owners Corporation certificate. This will basically identify the Owners Corporation fees for that lot. When someone buys, they’ll be responsible for the balance of the fees for that remaining year.
If there is a debt with the lot, that debt stays with the lot and therefore the purchaser would take on that debt. However, when the settlement of a property occurs there is what is called the statement of adjustments where the conveyancer will typically reimburse the Owners Corporation for the outstanding amount.
If there are works undertaken in a common property or a lot which is wholly or substantially for the benefits of one, or more many lot owners, but not all of our owners, then, know the costs of those works can be invoiced to that group of owners who benefit from the work. So basically, it’s based on units of liability in the first instance.
This post appears in Strata News #505.
Question: When allocating bills to unit holders for expenses such as owners corporate fees or cost of maintenance projects, is there a principle, guideline, rule or legislation that applies?
When allocating bills to unit holders for expenses such as owners corporate fees or cost of maintenance projects, is there a principle, guideline, rule or legislation that applies?
Do bills get divided equally between all members of an owners corporation or does the size of each unit determine the allocation?
Answer: When it comes to the division or apportionments of Owners Corporation fees, it comes down to what is stipulated on the plan of subdivision.
When it comes to the division or apportionments of Owners Corporation fees, it comes down to what is stipulated on the plan of subdivision. Whenever a parcel of land is subdivided into private lots as well as common areas, a plan of subdivision must be created and that is registered with the land title’s office Victoria.
A land surveyor will prepare that plan of subdivision and they will allocate what is called units of liability to every individual private lot on that plan of subdivision.
Sometimes lots have equal units of liability. However, at other times those units of liability do differ, and it does sometimes come down to the size of the lot, and also the location of the lot. For example, if it’s an apartment building, it could be that a lot towards the top of the tower has more units of liability than the lot on the on the ground floor because the people residing in that lot utilise the common areas more than those in the ground floor e.g. using the lift because the ground floor occupiers don’t use the lift, whereas those on the top floor do.
It’s the responsibility of the land surveyor to determine the units of liability and the calculation and there was a change to the subdivisions Act recently where it specifies that the reasoning must be provided with the plan of subdivision as to how the units of liability are calculated.
There’s also units of entitlements, which are also prepared for each lot. Sometimes the units of lot entitlement and liability are the same. However, typically speaking, units of entitlements should be based upon the value of each lot, whereas units of liability should be based upon the usage of common property. Typically, these days, I’m dealing with a lot of land surveys. They look at how many bedrooms are within an apartment potentially or for an office, how large the office suite is, if it’s an Owners Corporation and work out the size and the number of bedrooms to determine how many units of liability that lot should have.
This post appears in Strata News #479.
Question: What role does the Victorian strata manager play in ensuring lot allocations are correct for the purposes of issuing levies?
Answer: It is an Owners Corporations responsibility to ensure levies are issued in accordance with Lot Liability.
A great question, and one that has a few parts which link together. It is an Owners Corporations responsibility to ensure levies are issued in accordance with Lot Liability. Sec 23 of The Owners Corporation Act 2006 covers this:
23. Owners corporation may levy fees
- An owners corporation may set annual fees to cover—
- general administration; and
- maintenance and repairs; and
- insurance; and
- other recurrent obligations of the owners corporation.
- If the owners corporation has an approved maintenance plan, the annual fees must include fees that are—
- designated for the purpose of the maintenance plan; and
- sufficient to allow the maintenance plan to be implemented.
- The fees set must be based on lot liability.
- An owners corporation is to be managed by or under the direction of the lot owners.
- Subject to subsection (3), an owners corporation may, by instrument or by resolution at a general meeting, delegate any power or function of the owners corporation to—
- the committee of the owners corporation;
- the manager of the owners corporation;
- a lot owner;
- the chairperson of the owners corporation;
- the secretary of the owners corporation;
- an employee of the owners corporation.
- An owners corporation must not delegate any of the following powers or functions under
- a power or function that requires a unanimous resolution, a special resolution or a resolution at a general meeting;
- the power of delegation under that subsection.
However, most Owners Corporation’s employ a Manager to carry out this function, and delegate the authority to do so. This is completed under Sec 11.
11. Management of owners corporation and power to delegate
By delegating the power to raise fees, the Manager is bound to do so in accordance with the requirements conferred on the Owners Corporation under Sec 23.
To provide weight to these obligations, both the Manager and Owners Corporation have duties under the Act (Sec 5 and 122). These are to act honestly and in good faith and they must exercise due care and diligence when carrying out their role(s).
The best way to ensure that the lot liabilities are correct is to obtain an up to date Owners Corporation Search Report from Landata Victoria. This is a simple exercise, taking around five minutes and costing no more than ten or fifteen dollars.
The Search Report is often grouped with the Plan of Subdivision. These documents are available to anyone willing to pay the small fee.
Once this document has been obtained, lot liabilities can be confirmed by the Manager.
Remember to ensure you don’t confuse lot liability with lot entitlement. These are often the same value but are applied to different circumstances. When raising fees, as stated earlier, they are done so based on lot liability.
If you have a query about the allocation of fees, your levies or lot liability, it is recommended to discuss this with your Manager.
This post appears in Strata News #352.
Have a question about lot allocation and levies or something to add to the article? Leave a comment below.
- VIC: Q&A Setting Up a Maintenance Plan and Deciding on a Budget
- VIC: Effective Debt Recovery through Payment Plans
- VIC: What’s yours and what‘s common property?
Looking for strata information concerning your state? For state-specific strata information, take a look here.