Owners Corporation Levy Notices
By | 2nd Jun 17

For many people, belonging to an Owners Corporation can be daunting and confusing. Part of being involved in an Owners Corporation is understanding how the Owners Corporation fees that is reflected in your Levy notices are calculated.

The Owners Corporation fees are based on the adopted budget set at the Annual General Meeting.Pursuant to the legislation there are two types of budgets being the Administration Budget and the Maintenance Fund. 

Administration Budget – This covers the day to day operational expenses of the Owners Corporation and will include items such as common water, gas and electricity, insurance cover, security, caretaking, cleaning and your Owners Corporation Management fees, etc.   The actual costs to cover these expenses is analysed each year and then adjusted accordingly to ensure the Manager has enough funds to meet the day to day financial obligations of the Owners Corporation.

Once the annual budget is determined and accepted by the Lot Owners; the levies will be set depending on the frequency of the invoices and the lot liabilities. The levies will be charged either on a monthly, quarterly, half yearly or yearly basis, depending on the what was resolved and adopted at the General Meeting. 

The lot liabilities, are determined from the schedule attached with the plan of subdivision and each Lot will have an allocated value (i.e. units of entitlement).  This is generally based on the floor area or the actual sale price of the Lot. The levies are then generated for each Lot owner based on these units of liabilities . Most properties have both a Primary Lot being their residence and a secondary or ancillary lot, which may be a carpark or storage area. 

Maintenance Fund – This is a fund established to enable the owners to save funds to cater for major repairs / replacement or capital works in the future i.e. in the next 10 years.

The Owners will vote on whether they want to  establish a maintenance fund and the amount they want to contribute each year for a non-prescribed owners corporation ( i.e. an owners corporation with less than 100 lot or less than an annual turnover of $200,000) . This fund is generally used for major repair and replacement work, capital works or cyclical works  that occur over the life of a property such as roofing, gutter replacement, major plumbing works  or re-painting.  It is a good idea, especially for older properties, to have a maintenance fund in place to avoid a cash call from owners when these major repairs and replacement works are needed. 

Interest charges can be applied to overdue levy notices. The decision to charge interest is made by the Lot Owners by way of a vote at a General Meeting. Interest is used as a deterrent to ensure the owners pay their levies on time and to ensure that there are sufficient funds to meet the day to day expenses and to ensure that there are sufficient funds to allow the owners corporation to meet all of its financial and statutory obligations in a timely manner.

For more information on Levy notices, please do not hesitate to contact our experienced team on: owner@advnatageproperty.com.au