A building, strata complex and multi-use precinct all have several running costs that need to be maintained and kept up to date. As an owner of a lot, you are financially liable to contribute your share of expenses on things that pertain to ‘common property’. These contributions are called levies. They are payable to your strata scheme.
A notice is normally sent out to each owner around two-four times a year. This is to meet the financial obligations of the body corporate.
Who sets the levies?
A budget is set out every year. This is voted on by the members and then subsequently approved by the body corporate at the Annual General Meeting (AGM) every year. As part of the budget, there will be an outline for levies that each owner has to contribute towards every year. Ultimately, the answer lies with you as an owner and your sway within the AGM.
When a budget is set, it takes into account the forecast for the following year to assist the building in making better, and more informed financial decisions to safeguard the strata scheme. Levies are calculated based on each unit’s entitlement. There are times when all units in a corporation have the same entitlement. Other times, there are entitlements that vary based on the size or amenity of each unit.
How are levies spent?
- The administrative fund – It can include maintaining the common property, payment to insurance premiums and any recurring expenses that are not covered by the sinking fund or special levies
- The sinking fund – This is to pay for expected and unexpected long-term expenses pertaining to the strata scheme. This can be structural damage, repairs and maintenance.
What happens when levies go unpaid?
If there comes an instance where you are unable to pay your levy by the confirmed due date, interest is normally calculated on the overdue payment. You will be deemed ‘un-financial’ and you will be unable to vote in future meetings until all debt is cleared.
The body corporate can take several steps to recover unpaid levies. Initially starting out with a notice, they can then turn to a debt collector or a lawyer to facilitate the payment of the unpaid levies. If everything fails, the body corporate can recover the unpaid levies through the court system. Some body corporate’s may decide to implement a payment plan scheme to help recover the overdue levies.
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With robust expertise in residential strata management, our site-specific knowledge is achieved through real world experience in managing and connecting the individual lives that make-up strata and creating new communities that feel like home! We invite you to chat to our strata managers in Perth today. Our team is ready to help you navigate your unique strata scheme, so that you have one less thing to worry about.