Due to the COVID-19 emergency and to its financial impact on the global economy, a growing number of strata schemes are considering reducing the level of levies to be raised for their administrative and capital works funds.
However, it is important to note that strict procedures are set out in the Strata Schemes Management Act 2015 to determine the amount of levies payable by a strata scheme each year.
Below, is a list of the key sections of the Act that each strata scheme should comply with when setting their levy contributions or when considering a levy reduction.
Owners corporation to set contributions to administrative and capital works funds
(1) The owners corporation must determine the amounts to be levied as a contribution to the administrative fund and the capital works fund to raise the amounts estimated as needing to be credited to those funds.
(2) That determination must be made at the same meeting at which those estimated amounts are determined.
(3) The owners corporation must levy on each person liable for it such a contribution.
(4) If the owners corporation is subsequently faced with other expenses it cannot at once meet from either fund, it must levy on each owner of a lot in the strata scheme a contribution to the administrative fund or capital works fund, determined at a general meeting of the owners corporation, in order to meet the expenses.
(5) A contribution is, if an owners corporation so determines, payable by the regular periodic instalments specified in the determination setting the amount of the contribution.
This provision requires that each owners corporation determines the amount of levies (including special levies) for both the administrative and the capital works funds at a general meeting. The determination will apply to each owner and will specify the amount of the contributions, as well as the dates on which the instalments will be due over the year.
Levying of contributions
(1) An owners corporation levies a contribution required to be paid to the administrative fund or capital works fund by an owner of a lot by giving the owner written notice of the contribution payable.
(2) Contributions levied by an owners corporation must be levied in respect of each lot and are payable (subject to this section and section 82) by the owners in shares proportional to the unit entitlements of their respective lots.
(3) Any contribution levied by an owners corporation becomes due and payable to the owners corporation on the date set out in the notice of the contribution. The date must be at least 30 days after the notice is given.
This section provides that each owner shall receive written notice of the contributions payable for the administrative and capital works fund plan, that such contributions are based on the lot’s unit entitlements and that the notice should include the contribution due date. However, the owners should be given at least 30 days to pay their levies after the notice is given.
Liability of persons other than owners for contributions
(1) If, at the time a person becomes the owner of a lot, another person is liable to pay a contribution in respect of the lot, the owner is jointly and severally liable with the other person for the payment of the contribution and any interest on the contribution.
This provision clarifies that if a levy payment is due when purchasing a property, the new owner will be responsible together with the other person (the seller, for example) to pay that contribution.
Sections 81, 83 and 84 above mean that should an owners corporation wish to reduce the amount of levies as set at the last general meeting, it will only be able to do so by ordinary resolution at a new general meeting. In order to comply with the Act, the motion will have to determine the (revised) amounts to be raised, as well as the dates by which the owners shall pay their contributions. Each owner shall receive a new notice detailing the amounts and due date of each instalment.
If you are concerned with the current level of your levies, we encourage you to get in contact with your strata manager. They will be able to guide you through the procedures required to possibly reduce the levy contributions in compliance with the Act.
Article authors: MA and AB