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

Our strata complex of 9 units has recently completed a large scope of work regarding maintenance of the buildings, for example – replacing barge boards, scribes, Hardie sheeting etc.

During the process, the carpenters found and completed roofing issues that needed to be fixed immediately. The original maintenance and painting invoices amount to $51,000. We have enough in our reserve fund to cover these expenses. The unplanned additional work is $13,000, due for payment in a few week’s time. We do not have the fund available to pay for the extra work.

We are looking to raise a special levy to cover the roofing invoice. The levy will be a one-off payment of $1,445 per unit.

What is needed in the correspondence to all of the complex owners, and what is the process for raising the special levy?

Answer: You have two options for raising the special levy.

There are two options:

Pursuant to Section 128 of the Strata Titles Act 1985, the strata company (via the Council of Owners) instructs the strata manager to convenes an Extraordinary General Meeting that includes a motion to raise a special levy.

Pursuant to Section 120 of the Strata Titles Act 1985 & Regulation 89 of The Strata Titles (General) Regulations 2019, the strata company (via the Council of Owners) instructs the strata manager to put a motion to all owners to raise a special levy outside of a general meeting.

Note: Regulation 89 has five specific conditions to be met when voting outside of a general meeting.

Andrew Chambers Chambers Franklyn Strata Management E: andrew@chambersfranklyn.com.au P: 08 9200 4200

This post appears in the December 2022 edition of The WA Strata Magazine.

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:

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

the roll kept under section 105;

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.

Luke Downie Realmark E: ldownie@realmark.com.au P: 08 9328 0999

This post appears in Strata News #617.

Question: We’ve been invoiced to pay levies for the month of July twice after strata changed the date of our financial year. Why is this?

My strata company issued a levy notice in April for 1 May to 31 July. Strata voted to change the financial year date from end July to end June at the last AGM.

I have just received another levy notice for the strata levy of 1 July to 30 Sept. Why are we paying for the month of July twice? The two invoices are for a similar amount.

When I asked for clarification, the strata company stated that levies are charged on a quarterly basis rather than monthly so we have to pay for July again. This does not seem fair. I also think they are overcharging me based on my unit entitlement! Are we paying double because of the changed date of the financial date?

Answer: If the meeting decided and the minutes read that this month is being double paid then that is correct.

It depends on what was decided on at the meeting. If the meeting decided and the minutes read that this month is being double paid then that is correct, if it doesn’t then it’s not correct.

You will need to check the levy contributions motion and dates on the minutes. Whether either way is technically right or wrong is another question altogether and the act doesn’t really have a provision for this.

As for you unit entitlements; you will need to refer to your strata plan and calculate from what is mentioned on the meeting minutes in that same motion.

Jordan Dinga Abode Strata E: abode@abodestrata.com.au P: 08 9368 2221

This post appears in Strata News #577.

Question: A strata fee increase was voted on and accepted at the AGM. The strata manager failed to reveal the extent of increases proposed and may have hidden the information behind strata jargon. Should minutes be clearly stated so lot owners are aware of what they are accepting?

Our strata fees increased by 60%. My fees jumped from $1175/quarter to $1750/quarter.

The fee increase was voted on and accepted at the AGM. However, the strata managers failed to reveal the extent of increases proposed. The minutes showed only each unit’s share of the increase. The increase was not made clear, and I believe may have been deliberately concealed by strata jargon not understood by a majority of owners. When the new strata fee invoices were distributed with the 60% increase, there was an outcry.

Under the Act, are minutes required to be understandable to the layman? Should this have been handled differently?

Answer: If Levies need to be amended subsequent to the AGM, there is some flexibility in the way to present proposed resolution/s to members of the strata company.

I’m pleased to advise that the short answer is: possibly!

Whilst the Budget and Levies are voted upon at each Annual General Meeting as required by Section 102 (Budget) and Section 100 (Levy Contributions), if the Budget or Levies need to be amended subsequent to the AGM, then as per Section 120(3) there is some flexibility in the amended Act to put the proposed resolution/s to members of the strata company in either of two ways:

at a general meeting (i.e. convene an Extraordinary General Meeting).

outside of a general meeting as prescribed by Regulation 89 of the Strata Titles (General) Regulations 2019.

For something as important as proposed changes to the Budget and Levy Contributions, I would recommend that the Council of Owners convene an Extraordinary General Meeting (EGM) for that purpose.

That will ensure that sufficient notice is given to all proprietors, and will enable all proprietors who choose to vote to do so in the exactly the same manner as they would have done at the AGM when the current Budget and Levies were approved.

Andrew Chambers Chambers Franklyn Strata Management E: andrew@chambersfranklyn.com.au P: 08 9200 4200

This post appears in Strata News #560.

Question: What happens if half of the owners in a 13 unit block can’t afford to meet the suggested 10 year plan payments?

What happens if half of the owners in a 13 unit block can’t afford to pay for the repairs suggested in the first year of the 10 year plan. Our 10 year maintenance plan states $92,000 has to be raised.

Our levies have had a 95% rise in 12 months. We have several pensioners and low income earners in the block who struggle to pay the current fees, not to mention any further increases.

How do we keep the fees and reserve fund payments at a manageable amount for everyone? We feel that, with the current increases, we are on track to achieve a small surplus over the next few years.

Why do we need to cause such financial distress to these struggling lot owners?

Answer: Consideration should be given to the practicalities of achieving maintenance objectives without causing financial difficulty for owners.

Section 100(2A) applies in this instance whereby a designated strata company (that is, a strata scheme with 10 or more lots) is required to have a 10-year plan that sets out common property maintenance requirements as prescribed by Regulation 77.

A key aspect of Section 100(2A) is that the 10-year plan is revised at least once in each 5 years, and extended to cover the 10 years following each revision. It’s important to note however that there is no specific time frame on implementation of a 10-year plan once it has been composed (or obtained from a specialist plan provider) and adopted.

When using a 10-year plan for budgeting and future planning purposes, consideration should also be given to the practicalities of achieving those maintenance objectives without causing financial difficulty for owners. There doesn’t need to be a significant and immediate increase in levy contributions if longer term planning and implementation can be done to achieve the goals set out in the plan. Of course, if urgent or potentially dangerous, maintenance items are identified then those items should be addressed as a matter of priority.

This section of the amended Strata Titles Act 1985 was designed to eliminate past apathy by some strata companies by providing a framework to plan ongoing preventative maintenance and improvements. A balanced approach is needed to raise the necessary funds over time for the identified maintenance and common property improvements, coupled with consideration about the financial ability to actually do those things without causing undue financial hardship for owners.

In the circumstance described, if the levy increase was included in the meeting agenda, then that could have been amended at the meeting. Section 102(4) of the Strata Titles Act 1985 permits your strata company to vary its approved budget by ordinary resolution at a general meeting (or by ‘vote outside of a general meeting’, as per Regulation 89 of the Strata Titles General Regulations 2019).

Andrew Chambers Chambers Franklyn Strata Management E: andrew@chambersfranklyn.com.au P: 08 9200 4200

This post appears in the February 2022 edition of The WA Strata Magazine.

Question: I settled the sale of my strata unit in March 2021. Am I responsible for a special levy that was due on 1 December 2020? Or is the new owner responsible?

Answer: Generally, if a Special Levy is payable within the financial year, the current owner is responsible for it.

Generally, if a Special Levy is payable within the financial year, the current owner is responsible for it.

If the levy was due on 1 December 2020 in one instalment, the outstanding levy should have been paid by the Vendor.

If there wasn’t a section 110 enquiry made about the levies, the Purchaser could be responsible for the outstanding amount.

There are too many unanswered variables to be able to give a full answer.

Shane White Strata Title Consult E: shane.white@stratatitleconsult.com.au

This post appears in Strata News #527.

Question: Our Strata Manager has varied the levy amounts. Can the manager do this without a vote from the strata company?

At our last AGM, the Strata Company voted for an amount of both ordinary and reserve fund levies to cover costs in the proposed budget and to maintain our reserve fund balance after planned project costs at a figure that was agreed on at a previous AGM.

Our Strata Manager has varied the levy amounts, considerably decreasing the levy for the reserve fund. Can the manager do this without another vote from the strata company?

Answer: Section 102(4) requires an ordinary resolution of the strata company to vary an approved budget.

The short answer is no.

There is no provision in the Strata Titles Act 1985 for a strata manager to vary the levy contributions. Section 100 clearly states that the strata company (i.e. all owners) must determine the amounts to be raised via a general meeting, and as part of the Budget required by Section 102.

Section 102(1) requires that the budget for each financial year is submitted for approval at each Annual General Meeting, and Section 102(4) requires an ordinary resolution of the strata company to vary an approved budget.

Andrew Chambers Chambers Franklyn Strata Management E: andrew@chambersfranklyn.com.au P: 08 9200 4200

This post appears in Strata News #524.

Question: Can WA Strata Companies reduced strata fees for owners who participate in a busy bee? If not, how else can we reward owners who do volunteer and participate in organised busy bees?

Answer: Provide sausage sizzle/food/drinks as a reward for those that attended, participated and engaged.

The Strata Titles Act WA does not make any allowances for “discounts” in relation to the collection of strata levies. The only way to differ the amounts that people pay in their levies is to have a bylaw providing for an alternative way to raise levies that is not in accordance with the unit entitlement.

We have found that some Strata Companies organise a busy bee and provide sausage sizzle/food/drinks as a reward for those that attended, participated and engaged. It is a great way to get people in a community together and to celebrate the community in a positive way. That is their reward. The Council can agree to allocate funds to the food/drinks as this is part of managing the common property, remembering to be reasonable with the costs.

The people that don’t participate or don’t engage will miss out on the community get together and those great positive community feelings that go with it. The Strata Company can’t control those that don’t wish to engage however you can celebrate those that do.

Shelley Fitzgerald Emerson Raine E: shelley@emersonraine.com.au P: 9330 3959

This post appears in Strata News #491.

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.

Shelley Fitzgerald Emerson Raine E: shelley@emersonraine.com.au 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 strata fees 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 strata fees (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 strata fees.

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 charges 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 Emerson Raine E: shelley@emersonraine.com.au 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 our 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. 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. 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 strata fees 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 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: strata@stratatac.com.au P: 0428 970 067

This post appears in Strata News #403.

Question: Our latest strata fee notice shows an increase from $197 to $279 a quarter. Can the strata company increase our strata fees 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 our strata fees 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.

Please note: this response was provided prior to the proclamation of the new strata title amendments.

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 upon 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 fees 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 Emerson Raine E: shelley@emersonraine.com.au P: 9330 3959

This post appears in Strata News #279.

Question: In WA what do strata fees 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.

Please note: this response was provided prior to the proclamation of the new strata title amendments.

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.

In WA what do my strata fees 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.

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 fees reflect those variables.

What Do Strata Fees Cover in WA?

In WA, many lot owners what their strata fees 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 indicate 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. Your strata fees go towards this maintenance.

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 the 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 fees cover in WA or something to add to the article? Leave a comment below.

Embed

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:

Still after more information about strata in WA? Visit our Your Strata Levies OR Strata Information WA

Looking for strata information concerning your state? For state-specific strata information, try here.

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.