Frequently Asked Questions Regarding Strata Levies
The Owners Corporation is responsible for the management and maintenance of the common property within the strata plan. In order to meet these many obligations (i.e. paying for building insurance, cleaning, gardens, water rates, common electricity to name just a few), the Owners Corporation needs to raise funds to cover the cost of these financial obligations. Consequently, the Owners Corporation strikes levies to cover the budgeted costs of running the
These costs are divided into two classes of account. The first is for the operational or regular ongoing expenses as mentioned above which is called the Administrative Fund. The second is the Capital Works Fund which covers such items as the planned renewal of existing building features as these items need replacement. Common items covered under this heading are internal and external painting of common areas, new roof, replacement of doors and windows etc. These are by their nature, non-recurring costs.
At the Annual General Meeting, the owners agree to raise sufficient funds to cover the anticipated expenses of the Owners Corporation over the next 12 months. This is referred to as the building’s budget and determines the amount of funds that are required to meet the operating and statutory expenses of the building. The budget is established at the Annual General Meeting.
Once the amount of income that the building requires to meet those obligations is agreed to, the money is charged against the individual Lot owners in proportion to the unit entitlement of each Lot. This unit entitlement is determined at the time of the registration of the strata plan.
Levy Notices are sent to owners email address or postal address, giving 30-days’ notice prior to the levy being due. Most buildings pay these levies in equal quarterly payments. The total amount of money owed to the Owners Corporation is stated on the levy notice.
There is a statutory requirement under the Strata Schemes Management Act (2016) for the Owners Corporation to charge 10% interest on overdue and outstanding levies. This interest is charged after 30 days of the due date and is considered a debt owing to the Owners Corporation and may be recovered by legal process.