VIC: Q&A Owners Corporation Levy Increases and Due Dates

This Q&A about Owners Corporation levy increases in Victoria.

Table of Contents:

• QUESTION: Can an owners corporation seek reimbursement from a negligent strata manager for legal fees waived due to the strata manager’s levy administration error?
• QUESTION: We received an email about paying a special levy. The levy is required because the owners corporation has cash flow issues. Does the OC need to hold an AGM to get an ordinary resolution before sending a special levy notice?
• QUESTION: Our Strata manager has requested we pay our next due levies a month early. Can they do this?

Question: Can an owners corporation seek reimbursement from a negligent strata manager for legal fees waived due to the strata manager’s levy administration error?

One unit holders was not charged strata levies for the first 12 months of ownership. When discovered by our strata manager, the owner entered into a payment arrangement, which they have maintained. However, the owner failed to pay new levies as they fell due. If the owner continues with the current payment arrangement, it will take at least 18 months to catch up.

The owners corporation commenced legal proceedings to recover the outstanding levies. In response, the owner lodged a complaint with VCAT to dispute legal costs. This situation only occurred because the strata managers failed to issue levy notices when ownership was transferred to the new owner. If the committee agrees to waive the legal costs, can we request reimbursement of the legal fees from the strata manager?

Answer: If there has been a breach of the manager’s duties, it may expose them to liability for loss or damage caused to the OC.

Under Section 31 of the Owners Corporations Act 2006 (Vic), a lot owner must pay any fees and charges set out in a valid fee notice within 28 days of the date of that notice. This requirement applies even where the owner is on a payment plan for prior outstanding levies unless the OC has specifically agreed to defer payment of new fees. In other words, payment arrangements for old debts do not suspend the obligation to pay new levies on time unless there is a separate agreement to that effect.

In this case, the owner has continued to make payments under an agreed plan for the initial 12 months of missed levies but has not paid subsequent levies as they fell due. The OC was, therefore, entitled to pursue recovery action for the new debts.

The question is whether the OC is within its rights to seek reimbursement of legal costs from the strata manager, given that the manager appears to have failed to issue levy notices to the current owner during their first year of ownership.

Under Section 134(1) of the Act, a vendor must notify the OC of the new owner’s name and address within one month of settlement. Similarly, under section 134(2), the new owner also has an obligation to notify the OC of their details within that same timeframe. These provisions are critical in ensuring the OC has accurate records and can issue levy notices to the correct person.

If the new owner failed to comply with their obligation under Section 134(2) by not providing their contact details, the OC or its manager would not have had the necessary information to issue fee notices. In that case, the manager cannot be held to be at fault.

On the other hand, if the OC manager was properly notified of the change in ownership but failed to properly address the levy notices or issue them at all, this may indicate a failure to exercise due care and diligence, as required under Section 122 of the Act. For example, if the manager received the transfer of ownership details via the vendor’s solicitor or a certificate request but failed to update their records, they could be held responsible for the oversight. If there has been a breach of the manager’s duties, it may expose them to liability for loss or damage caused to the OC.

To determine whether reimbursement ought to be pursued, the committee should review:

• Whether and when the manager was notified of the change in ownership;
• Whether the manager had enough information to issue levy notices; and
• Whether the failure to issue those notices caused the current situation and subsequent legal costs.

It should be noted that in fee recovery proceedings, the Tribunal generally takes the view that it is only fair that the lot owner who fails to pay owners corporation fees should contribute a greater amount to the cost of a fee recovery application than the other lot owners.

Fabienne Loncar
Moray & Agnew Lawyers
E: [email protected]
P: 03 8687 7319

This post appears in Strata News #745.

Question: We received an email about paying a special levy. The levy is required because the owners corporation has cash flow issues. Does the OC need to hold an AGM to get an ordinary resolution before sending a special levy notice?

Answer: Confirm where the authority came from to raise the levy if you have concerns about the process.

There are several scenarios where a special levy can be raised, and these are covered under Section 24 of the Owners Corporations Act 2006.

In short, an ordinary resolution must be passed by the owners corporation in order to raise a special levy, provided the levy to be raised is not more than twice the total amount of the current annual fees set under Section 23. Ordinary resolutions can be passed by all the owners, either at a General Meeting or by ballot. They can also be passed by a committee, at a meeting or by committee ballot. Most of the time, the committee will make these decisions based on the information they have at hand.

On some occasions, and where necessary, the manager may be authorised to raise a special levy in the event cash falls below a threshold or a specific number. This is not typical but does happen where there is authorisation through the Contract of Appointment or a delegated authority – maybe at the AGM.

It’s important to check these points and confirm where the authority came from to raise the levy if you have concerns about the process.

Joel Chamberlain
Horizon Strata Management Group
E: [email protected]
P: 03 9687 7788

This post appears in the February 2025 edition of The VIC Strata Magazine.

Question: Our Strata manager has requested we pay our next due levies a month early. Can they do this?

My Strata Manager just issued our quarterly levy bill but expects levies to be paid one month early. We’ve just paid the last levy payment on 1 April. The next levy payment would normally be due 1 July but our strata manager wants it paid by 1 June so they could make sure it was paid before the end of the financial year. Is this legal?

Answer: The Owners Corporations Act 2006 says that the owners corporation may determine when annual fees are to be paid.

The annual fees are set by the owners corporation who may also determine when annual fees are to be paid. The Owners Corporations Act 2006 says that the owners corporation may determine when annual fees are to be paid. If such a decision has not been made then it might be that the manager has been delegated the power to make such a decision.

It is likely that the annual fees will have been set at the annual general meeting and at the same meeting the timing of the payment of those fees has been determined. If that is the case then the fees ought to be struck according to those resolutions. It is generally accepted practice to split the annual fees into four payments with each one being payable on the first day of each quarter but that is not a legal requirement.

If the owners corporation has not set a date or a change is needed then who decides on timing of striking annual fees will depend on whether there is a committee in place and on the delegations given by the owners corporation or the by the committee. That having been said it would be very unusual for there to be an additional payment needed towards the annual fees required at the end of the year but there might be a good reason for this and I would suggest inquiring with the manager as to why this came about.

So, given the above, it might be legal to make the fees payable on the first of June depending on what resolutions have been made and on what authority they have been struck on that date. Perhaps a more helpful question to ask, rather than “is it legal”, may be “is it reasonable, under the circumstances”, to have struck the fees on that date.

Anton Silove
MBCM Strata Specialists
E: [email protected]
P: 1300 777 276

This post appears in the May 2022 edition of The VIC Strata Magazine.

Have a question about owners corporation levy increases in Victoria or something to add to the article? Leave a comment below.

This article is for reference purposes only and is not intended to be a comprehensive review of the developments in the law and practice or to cover all aspect of the subject matter. It does not constitute legal or other advice and should not be relied upon this way. Readers should take legal or other advice before applying the information containing in this publication.

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