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Strata Building in NSW.
Our AGM is approaching and one of the motions raised is to vote for a special levy to cover a shortfall in our administrative account. We have a healthy capital works account.
What I would like to suggest is to have a first quarter levy amount that will cover the shortfall rather than a special levy. This amount would be on top of the amount worked out for our quarterly contribution to the administrative account.
So, if the shortfall is $1000 per unit, and the proposed budget calls for $800 per unit per quarter to go to the Admin fund, could we instead vote to have the first quarter levy set at $1800 and subsequent quarterly levies set at $800?
This would cut down on the costs associated with special levies.
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Even better, borrow the money from the maintenance fund and agree to pay it back over a couple of years. That way nobody is getting hit with a large increase in the one go.
This is perfectly legal under section 76, provided the OC determines how it’s going to pay the money back, within three months.
To be clear, you just have to decide within three months how you are going to pay it back. You don’t have to pay it back within three months.
This is what Section 76 says:
The owners corporation must, not later than 3 months after the transfer or use, determine the amount to be levied as a contribution to the fund from which the transfer or use was made to reimburse the amounts paid from the fund.
The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
Can your strata manager tell you anyone who has ever got into trouble over this? Cite an NCAT ruling or a strata manager being suspended (ha ha, only joking) because they broke this law?
Maybe the strata manager is right and you have found one of the few SMs who stick rigidly to the rules. Lucky you! But I’d want to see it in writing before I shackled myself in that way.
It’s not like you’re trying to swindle anyone and remember, the SM is supposed to do what the owners want, not the other way round.
Or am I the only one who thinks that well-intentioned and totally transparent creative accounting is all that’s required here?
Maybe we should ask the Property Services Commissioner. Oops! He’s gone. Or the Fair Trading Minister. Nope, She gone too. Quick, while no one’s looking!
The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
There are many creative ways thst are within the law to handle this situation.
Levies do not have to be in equal instalments and the instalments do not even have to be agreed at the AGM. The act just states that only the amount of levies needs to be agreed.But for some strata managers this lumpy collection of levies is an extra item to monitor ( their software usually likes to make 4 equal payments).
Secondly, it’s not a bad idea to be compliant with the act. All a strata needs is a disgruntled owner to request a compulsory strata manager and use all the non compliance, no matter how minor, to build their case.
The appointment of a compulsory manager is based on the facts presented, not why something was done ( for convenience).I do agree with JT that it’s not likely to happen, but then courts are full of cases where people were doing the expedient thing and got caught out.
I am not sure what the problem is here. The AGM is coming up. A budget will be approved. Levies will be decided. I am in the ACT so some nuance of our legislation might be different. However, when the underlying balance of our Admin fund has been a bit low, we have simply decided a levy that was enough to cover the budgeted expenses plus a bit more to get the balance back to a healthy level. Conversely, when we have sometimes left levies the same as the previous year even when the budget has increased a bit because we had a more than ample end of year balance.
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