How to Respond to Lot Owner Questions about Levies

Can the body corporate change the levies?

While a committee is responsible for day-to-day management of the body corporate (within its expenditure limits), the legislation does not allow a committee to change the budgets set by lot owners at an annual general meeting.

Can we adjust the budgets?

A body corporate can approve the adjustment of its budgets for the administrative and sinking funds at a general meeting. The committee is responsible for preparing the draft budget and will need to act reasonably in considering the nature and extent of any budget adjustments.

What does the body corporate need to consider?

If lot owners are struggling to pay their levies in accordance with the contribution notice issued by the Body Corporate, then the Committee can address the specific concerns of the individual lot owner on a case by case basis.

It is also important to consider the specific needs of your own body corporate (ie, does it have a small or large number of lots; does it have a paid caretaker; does it a high rise or a town house complex ect).

One size does not fit all!

Some bodies corporate have entered into long-term maintenance and service agreements prior to the COVID-19 crisis that requires them to pay a fixed amount each month for a caretaker or service provider to look after all the common property. That includes areas that are not restricted from use, like foyers, lifts, gardens and grounds.

Committees should work with their body corporate managers and other strata industry professionals to appropriately identify and weigh up the extent of any costs which may be variable or possible to renegotiate before committing to any change to their budgets.

There can be serious adverse legal consequences for bodies corporate if they breach these agreements.

What if lot owners cannot pay their levies?

If lot owners do not pay levies, they may lose discounts given to those who make timely payments. They may be liable for penalty interest of up to 2.5% per calendar month (30% per annum) and reasonably incurred recovery costs, which can include administration and legal costs. These additional costs and interest can seriously exacerbate the financial impact of unpaid levies on lot owners.

A body corporate committee may (without calling the general meeting) decide on a case by case basis to reinstate lost discounts, waive penalty interest and/or agree to a payment plan with a lot owner.

What can a lot owner do?

• A lot owner should inform the body corporate committee early if they are having financial hardship in trying to pay levies - rather than letting your levies fall into arrears, incurring interest and recovery costs.
• Speak to your bank, loan institution, accountant, lawyer or other advisor to help you pay your levies.