WA: Can Owners Reimburse Themselves by Paying Reduced Strata Levies?

This article discusses reduced strata levies reimbursement, explaining whether owners can offset levies for unapproved works and the proper accounting, approval, and inspection rights under strata law.

Question: In our 3 lot strata, the other two owners have been reimbursing themselves for work done on their lot by paying reduced strata fees. There is no approval for the expenses and the owners have not submitted receipts. Is this allowed?

I live in a 3-unit strata lot. The other two owners reimbursing themselves for work done on their lot by paying reduced strata fees. This only became evident when I obtained bank statements showing the reduced amounts. I’m the only lot owner paying full strata fees.

Our AGM financial statement presented by the treasurer showed both owners were paying the full levies. I’ve requested both owners supply invoices and receipts for the amounts. Both owner insist they have all records and agreed to send copies, but nothing has been provided.

The owners claimed a meeting took place at my unit on 25 June 20/21. This meeting never took place. False minutes were made up.

Answer: The circumstances presented in your question are concerning and do not demonstrate good accounting procedure.

Before considering my response it would be prudent to check that your Strata Company by-laws do not contain a by-law that provides exemption from performing a designated function in line with section 140(2) which states “The scheme by-laws for a 3, 4 or 5-lot scheme may exempt the strata company from a designated function”.

The circumstances presented in your question are concerning and do not demonstrate good accounting procedure.

It is not uncommon for strata owners to seek reimbursement for costs. The Strata Company Treasurer should ensure that any reimbursement is backed with documentation to substantiate the expenditure and sufficient enough for auditing purposes. Any payment should be backed by invoices or receipts that clearly demonstrate what the expense is for and the documentation should be clear enough to establish the expense relates to a Strata Company cost (common property).

I would further recommend that all owners remit their levy payments into the Strata Company bank accounts and all expenditure items be handled as separate transactions.

You state that you have been unable to obtain copies of the invoices and receipts in question. I would recommend that you make an application in writing under section 107 of the Strata Titles Act for inspection of strata company records in accordance with section 109. Section 107 provides for a person with proper interest the ability to submit a written request for inspection of the following under section 109:

1. material kept under section 104;
   
   1. Scheme documents
   2. Scheme amendments
   3. Minutes general and council
   4. Resolution information
   5. Records and statements of accounts
   6. Meeting notices
   7. Correspondence
   8. Contract information
2. the roll kept under section 105;
3. other documents in the possession or control of the strata company.

Upon receiving an application in writing, the Strata Company must agree to a time and place with the applicant for the inspection of records and if an agreement is not reached within 3 days, the Strata Company must specify a time and place in writing. The time and place must be between 9 am and 5 pm on a day not more than 10 days after the Strata Company has received the application.

In relation to the financials and minutes that you state were inaccurate, I would recommend the minutes and financials are not passed by a general meeting until they are accurate. It may be prudent for your scheme to have a suitably qualified professional carry out an audit of your Strata Company financials.

This post appears in Strata News #617.

Luke Downie
Realmark Strata
E: strataperth@gmail.com
P: 08 9328 0999