This Q&A about Owners Corporation levy increases in Victoria.
Table of Contents:
- QUESTION: Our Strata manager has requested we pay our next due levies a month early. Can they do this?
- QUESTION: Our Owners Corporation levies have been increased substantially to pay for necessary maintenance. Is there a limit to how much levies can be increased by?
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: administration@mbcm.com.au P: 1300 777 276
This post appears in the May 2022 edition of The VIC Strata Magazine.
Question: Our Owners Corporation levies have been increased substantially to pay for necessary maintenance. Is there a limit to how much levies can be increased by?
How much can Owners Corporation levy fees be increased by?
At our AGM at the end of 2018, the owners voted to increase the Owners Corporation levies by $125 per quarter / $500 per year. I didn’t vote for this increase because I felt it was unreasonable.
The understand the unit complex is getting old and needs maintenance and repair more than previously. However, is there a cap on the amount fees can be increased by?
The large increase has caused financial stress for some lot owners. Some lot owners have suggested they would rather be invoiced for repairs as they occur rather than pay the levy increase. Is this an option our Committee could consider?
Answer: The short answer is no …. there is no cap on the amount that your fees can be increased by.
This is a good question and one that a lot of people wonder about.
The short answer is no …. there is no cap on the amount that your fees can be increased by at a budget that is adopted at an annual general meeting.
There should, however, be an opportunity for all owners to have some input and discussion around the proposed increase before it is adopted.
Prior to the AGM, each owner should receive the proposed budget with the meeting agenda which should also provide an opportunity to review the proposed increase and reflect back on the previous year’s financial statements which include the expenses.
You have mentioned that your building is getting older and requiring more maintenance and repairs and this is where I feel obliged to put my “due diligence/duty of care” hat on and refer back to the responsibility that the owners corporation holds. The members of an owners corporation have the responsibility to repair and maintain the building including all common property. This is not only to retain the value of the building but also because neglect or poor maintenance can lead to serious damage or even safety issues.
If it is a prescribed owners corporation then, under the Owners Corporation Act 2006, they are required to have a maintenance plan prepared. However, if this is not a prescribed owners corporation then there is still a duty of care to think longterm about the ongoing maintenance and capital works for the building and should start to consider allowing for sufficient funds to be allocated in the sinking fund to prepare for those works.
By allowing for this in an annual budget and making sure that the appropriate increases are made once each year instead of unexpectantly adhoc through the year, this means that all owners can budget accordingly as they have a clear understanding of what is coming up and when it will be due and payable. It also means that value is being added to the building and each individual owner’s investment. This is because when prospective purchasers are looking at buying into an owners corporation they are more inclined to invest into one that has a healthy sinking fund and has placed importance on maintaining the building, not only now but into the future.
It is not attractive to a purchaser if an Owners Corporation is unable to demonstrate that a maintenance plan has been prepared or that there is a healthy sinking fund.
There is a risk that the new purchaser may have to pay unexpected special fees to cover repairs (or maintenance) that should have been allowed for at an earlier date or are due to lack of maintenance by the previous owners.
In summary, it does sound like your owners corporation are being very proactive. They seem to have recognised that the fees have not been sufficient for some time are finding that more repairs and maintenance are required. It is a very wise idea to address and allow for that now in the budget so that everyone is aware and can allow for it within their own financial circumstances.
I hope this has been helpful but I would be happy to elaborate further if required. Please note that this is just my interpretation and if you would like to obtain actual advice it would be a good idea to seek that from a specialised owners corporation lawyer.
Jane Giacobbe Strata Reports Victoria E: info@srvic.com.au P: 0402 341 848
This post appears in Strata News #293.
Have a question about owners corporation levy increases in Victoria or something to add to the article? Leave a comment below.
EmbedThis 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.
Read next:Visit Your Strata Levies OR Strata Title Information Victoria.
After a free PDF of this article? Log into your existing LookUpStrata Account to download the printable file. Not a member? Simple – join for free on our Registration page.