WA: Q&A What Do Strata Levies Cover? How are Increases Calculated?

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These strata Q&As explain what strata levies cover and how strata levy increases work.

Jump directly to the QUESTION you are after:

• QUESTION: Can a Special levy be raised when we have money in both our Admin Fund and Reserve Fund?
• QUESTION: Our strata manager informed the Strata Council 2 weeks after the AGM that the levies are invoiced with a 2 month lag. The suggested increase exerts financial pressure on all lot owners personal cash flow with only a few days notice of this change. What can we do?
• QUESTION: Our Council of owners have increased our strata fees mid-way through a quarter and have charged the fees for the whole quarter. Should they have not charged pro-rata?
• QUESTION: Our latest strata fee notice shows an increased from $197 to $279 a quarter. Can the strata company increase the levies by any amount they want?
• QUESTION: What do strata levies cover? I feel I receive nothing for the fees I pay. There are many problems around the building. Nobody seems to care about the complex or the people who live here.

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 levies 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 means 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 on 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 levies 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.

Shelley Fitzgerald
Strata Alliance
E: [email protected]
P: 9330 3959

This post appears in the March 2021 edition of The WA Strata Magazine.

Question: Our strata manager informed the Strata Council 2 weeks after the AGM that the levies are invoiced with a 2 month lag. The suggested increase exerts financial pressure on all lot owners personal cash flow with only a few days notice of this change. What can we do?

Our strata manager informed the Strata Council 2 weeks after the AGM that the levies (admin and a special levy) are invoiced with a 2 month lag to the financial year 12 months period. We hear that the levies schedule needs to be accelerated to align with the financial year due to accounting practices. This means 14 months levies will be due from owners in less than 12 months. 

The strata manager wants to start with adjusting payments within less than a month. This exerts financial pressure on all lot owners personal cash flow with only a few days notice of this change. 

What grounds do we have to push back on this? We have in mind calling an EGM (we’ve run these before) to discuss only this issue? Can we agree to align the invoicing into the correct year but negotiate that NO INTEREST PAYMENTS are incurred if payment is not made until payments are 2 months overdue? This will allow owners to make payments in line with the original cash forecasting and gradually catch up but not incur interest charges. This will give owners time to adjust. Or are there other options?

Answer: Any aligning of the levies to the financial year should have formed part of the notice provided to all owners for the AGM.

Without having any of the documents at hand we can only provide guidance in relation to these queries.

When an AGM is scheduled, the notice of the meeting includes items of business such as the adopting of a proposed budget and the striking of levies.

The levy detail should be included in the AGM notice to clearly show when the levies are due and payable, and in what amounts.

These items are then resolved by a majority vote at the AGM and minuted accordingly. This then provides all parties clear instructions on what amount the levies are for the upcoming 12 month period and when they are due. This is particularly important to ensure any persons buying into the property are fully informed of the levy amounts.

Any aligning of the levies to the financial year should have formed part of the notice provided to all owners for the AGM.

The Strata Manager does not have the ability to change the levy amounts or due dates except via a general meeting and the owners agreeing to do so.

The Strata Company has the ability to progress with an EGM. This gives the owners the ability to gather and discuss the matter and agree on a way forward for the rest of the year. The Strata Company can resolve to defer interest charges for a period of time. If you wish to sit and discuss the matter with the other owners then the EGM will provide the format for you to do this.

I note that the Strata Company now also has the ability to have a resolution outside of a general meeting which is a circular resolution. This still requires all owners to be formally notified and provide their voting preferences accordingly however does not require the owners to gather and discuss. The owners can be provided the options and a voting slip, and the circular resolution can then progress.

You may want to ask the Strata Manager if you will incur any changes for either of these forums to be used ie: EGM or Circular Resolution, as most management agreements will include charges for both options.

You may also want to review your balance sheet and determine whether the Strata Company had sufficient funds available as an opening balance to be able to “carry” the expenditure of the proposed budget in the 12 month period, without adjusting the levies.

To adjust levies after an AGM the owners (Strata Company) will need to do so formally via an EGM or Circular Resolution, and then minute accordingly for their records.

Shelley Fitzgerald
Strata Alliance
E: [email protected]
P: 9330 3959

This post appears in Strata News #459.

Question: Our Council of owners have increased our strata fees mid-way through a quarter and have charged the fees for the whole quarter. Should they have not charged pro-rata?

Our Council of owners have increased out strata fees mid-way through a quarter and have charged the fees for the whole quarter.

Should they have not charged at a pro-rata basis ie so many days at the old rate and the rest at the new rate or charged the new rate for the next quarter?

They will not enter into any discussion about the matter with lot owners.

Answer: Strata levies are determined at every AGM or if need be at an EGM by the strata company and the council of owners can only levy on owners what the strata company has determined.

Strata levies are determined at every AGM or if need be at an EGM by the strata company and the council of owners can only levy on owners what the strata company has determined. I would suggest that you get a copy of the latest AGM and or EGM minutes and see what was resolved concerning the budget and the accompanying levies and when they were to be invoiced to owners and how the initial levy amount was to be structured.

As levy are normally invoiced quarterly it would not be unusual to change the amounts from the commencement date of the subsequent quarter after the AGM or if an EGM had been a called.

Again, check the minutes and if they are not forthcoming under the Strata Titles Act 1985 Sections 107 and 109 you do have the right as an owner to inspect the records of the strata company, there will be fees involved however the regulations determine what fees can be charged to access the information.

Your first step is to access the minutes. These should be forwarded to all owners within a reasonable time after the meeting.

Brian Rulyancich
StrataTAC
E: [email protected]
P: 0428 970 067

This post appears in Strata News #403.

Question: Our latest strata fee notice shows an increased from $197 to $279 a quarter. Can the strata company increase the levies by any amount they want?

My wife and I own a townhouse in a strata complex of 9 in Western Australia. We are owner-occupiers and have owned the property since it was built 8 years ago.

We’ve just received our latest strata fee notice which has increased from $197 to $279 a quarter. Can the strata company increase the levies by any amount they want?

Answer: The Council of Management cannot make a decision to increase the levy payments themselves and can only collect the monies as determined and agreed at the Annual General Meeting.

The Strata Company (all owners collectively) go through a formal process annually to discuss the planning for the upcoming year. Every owner should be provided with a copy of the intended business for that meeting, including the estimates of the expenditure and the monies to be collected from the owners to meet that expenditure. These items are then voted on and carried by a majority of the owners at that meeting.

The Council of Management cannot make a decision to increase the levy payments themselves and can only collect the monies as determined and agreed at the Annual General Meeting.

It would be important to view the notice and minutes of the Annual General Meeting that agreed to this considerable increase in the fees to be able to determine the reasons behind the increase.

Determine what your strata levies cover

If the Strata Plan is such that the external walls and roof area are common property, then the Strata Company may be gathering funds for painting of the complex, or fairly major roof works as the property is now 8 years old and may be starting to show signs of wear and tear.

It is a matter to be looked at holistically with all aspects to be considered such as the boundaries of the Strata Plan, the formalities of the recent AGM and the adopted budget and proposed works (expenditure) to be reviewed.

Shelley Fitzgerald
Strata Alliance
E: [email protected]
P: 9330 3959

This post appears in Strata News #279.

Question: What do strata levies cover? I feel I receive nothing for the fees I pay. There are many problems around the building. Nobody seems to care about the complex or the people who live here.

I am a pensioner and the owner of a small unit in a WA strata complex. I pay Strata fees every 3 months. They are around $700 each quarter.

I feel I receive nothing for the fees I pay. There are many problems around the building. Nobody seems to care about the complex or the people who live here.

We do not have a Caretaker or somebody who maintains the building and common areas. No-one on the Council of Owners seems to have any idea about what they are required to do.

Answer: When you own a unit in a strata scheme, you own property “in common” with a bunch of other owners.

With the ever-rising cost of living, we all feel the pinch as nothing is free. There are many variables to consider and your costs for Strata Levies reflect those variables.

What Do Strata Levies Cover?

When you own a unit in a strata scheme, you own property “in common” with a bunch of other owners. In common means joint ownership of some or all of the buildings and land.

As you own your property in common, you are required to be a company. In this case, a Strata Company. Company law can also apply. In this company, you are a Director along with all of the other owners.

You can be held accountable, along with the other owners/directors, for failure to comply with the laws governing Strata Complexes in WA.

Ignorance of the law is no excuse if you are being sued e.g. if there is a pothole in the driveway and it is not repaired in a timely manner and someone living at the complex, visiting or a tradesperson doing work trips may trip on the pothole breaking his/her leg. If an insurance assessor deems your complex is run down or a pothole has been left to grow larger, you may void any cover you thought you had under the Strata Complex insurance.

Each Strata Complex has a Strata Plan. This plan has vital information on it. The Strata Plan states what each individual owns and what is common property or jointly owned.

If you have a small unit but it is in a strata complex of 100 units that indicates a large asset and common grounds which may include lifts, swimming pools, spas, large gardens, gyms, mechanical services, fire equipment, driveways, parking, common laundry, undercover parking, security, auto gates, CCTV, trees, bitumen, paving, barbecue areas, patios. The Strata Company must repair, maintain or replace any item of common property in need of maintenance. This maintenance what your strata levies go towards.

The Lot Owners are the Strata Company.

The Strata Complex must be insured.

You are a part owner in the complex.

At a General Meeting, Owners have the power to make decisions. One of those decisions is to elect a group of owners to oversee the running and management of the complex until the next AGM. As there is a considerable amount of administration required, the group of elected owners may choose to delegate those duties via the services of a Strata Management Company.

The Strata Manager acts as your administration arm – collecting funds, issuing invoices and paying bills, advising the elected owners on matters of compliance and the associated paperwork requirements.

Your $700 levy was approved by the Owners at a general meeting, along with approval of the budget, and may be made up of a Reserve Levy also (for future works). This will be apparent when reading the minutes of the general meeting. The owners must try and approve a sufficient Budget for expenses for the following year. This is usually based on the actual costs from the previous 12 months, with some variation if other works are planned.

Strata complexes need to have an active elected group of owners. There are publications such as the information contained here on the LookUpStrata site and works shops available for people to get an overview of strata. Some assistance may be available from Strata Management Companies who have fact sheets and include explanatory notes with notices of meetings.

The cost of management can be greatly reduced when owners are aware of their responsibilities.

As an Owner, you are a Director. As a Director you have power. Knowledge is power. If you are ill-informed, others will have power over you.

Strata Martyr

This post appears in Strata News #128.

Have a question about what strata levies cover or something to add to the article? Leave a comment below.

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This article is not intended to be personal advice and you should not rely on it as a substitute for any form of advice.

Please note this advice was provided prior to the proclamation of the new strata title amendments and will be updated in due course.

Related posts:

• WA: Q&A Strata Neighbour Noise Due to Hard Flooring
• WA: Q&A Lot Owner’s Overdue Strata Levies. What are the rules?

Still after more information about what strata levies cover or even more general articles about strata in WA? Visit our Your Strata Levies OR Strata Information WA

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