Question: Can a Special levy be raised when we have money in both our Admin Fund and Reserve Fund?
Can a Special levy be raised when we have money in both our Admin Fund and Reserve Fund? The total value of the special levy is approx $4k which is far lower than we have in our funds. Surely if we have the money in the reserve fund we should be using that first?
Answer: The first step is to determine whether these strata fees are for the repairs/maintenance of Common Property or whether the Strata Company is proposing an addition or upgrade to your current common property.
A Strata Company has the ability to raise levies for common property items that require repairs, maintenance or replacement. These are normally raised at an AGM and require an ordinary resolution.
A Special Levy requires a different voting method and is normally for items that are outside of the normal maintenance of common property and may be for an “upgrade” or “additional” common property. Something like a CCTV installation or an addition to the current system, a shade cover for the pool, a bbq installation etc. Additions to the current Common Property.
Section 91 (2) A strata company may improve or alter the common property in a manner that goes beyond what is required under subsection (1).
Note for this subsection:
Expenditure above a certain amount incurred for the purposes set out in subsection (2) must be authorised by special resolution, except for expenditure on sustainability infrastructure, which may be authorised by ordinary resolution: see section 102.
Without knowing what the levies are for it is difficult to know whether they are raising “special” levies for an addition to common property, or it is being called a special levy however it is for maintenance of common property.
With some of these “additions” to common property, a special resolution and levy mean that the owners have to get involved and provide their voting on these projects for them to progress. If the project is not supported by at least 50% of the owners then the resolution will fail and, so too, the project. This is the democratic way of determining how the owners feel about a particular proposal and whether the Strata Company should progress.
It is important to remember that the funds held belong to the owners collectively so it would be worth raising the question at the meeting as to why the funds being held are not being determined for these works. I note your comments about using the Reserve Funds first. There is no right or wrong way to do this. The Strata Company may have allocated those funds for another project.
The first step is to determine whether these strata fees are for the repairs/maintenance of Common Property or whether the Strata Company is proposing an addition or upgrade to your current common property. The latter will require the owners to show they support it and the funding can then be determined by a special levy or utilising the funds currently held.
This post appears in the March 2021 edition of The WA Strata Magazine.
Shelley Fitzgerald Emerson Raine E: shelley@emersonraine.com.au P: 9330 3959