Levies

Your share of the levy is determined by your lot entitlement. The formula is: Your lot entitlement ÷ Total scheme entitlements × Total levy raised = Your levy Lot entitlements are set when the scheme is registered and reflect the relative value or size of each lot. They are recorded in the community management statement. A lot with a higher entitlement pays a larger share of the levy. The total levy amount is determined by the budget approved at the AGM — the committee prepares a budget for each fund, owners vote to approve it, and the levy amounts flow from that approval. This article is general information only and not legal advice.

Levies (also called contributions) are the regular payments lot owners must make to fund the running of the body corporate scheme. There are two separate levies: the administrative fund levy, which covers day-to-day expenses, and the sinking fund levy, which builds up long-term savings for major works. The amounts are set at the Annual General Meeting when the committee presents its budget for the coming year. Your levy amount is calculated in proportion to your lot entitlement, which is set out in the community management statement — a lot with a higher entitlement pays a larger share. Levies are usually paid quarterly and are a legal obligation on all lot owners.

You can challenge a levy if you believe your lot entitlement has been applied incorrectly, or if the budget approval process at the AGM was flawed (for example, proper notice was not given). However, you cannot simply refuse to pay because you disagree with how the money will be spent. Levies approved at a properly held AGM are binding on all owners regardless of how they voted. If you believe the levy was set unlawfully, you can apply to the Commissioner for Body Corporate and Community Management for conciliation or adjudication. Importantly, continuing to withhold levies while a dispute is in progress will result in interest accruing and debt recovery action — these consequences continue regardless of the dispute outcome. This article is general information only and not legal advice.

No. A committee cannot raise a special levy on its own authority. A special levy requires a resolution passed at a general meeting of all lot owners — an ordinary resolution (more votes for than against) is sufficient in most cases. The committee would call a general meeting, present the reason for the special levy and the amount required, and owners vote on it. Special levies are usually raised for unexpected urgent expenditure not covered by the sinking fund — for example, emergency structural repairs or a large uninsured loss. The exception is genuine emergency expenditure necessary to prevent serious damage or injury, where the committee can act immediately and must then report the expenditure to owners as soon as practicable. This article is general information only and not legal advice.

The BCCM Act allows the body corporate to charge interest on overdue levies at a rate of up to 2.5% per month (equivalent to 30% per annum). This rate must be set or confirmed at the AGM. If no rate is set by the body corporate, interest can still be charged at the statutory rate prescribed under the regulations. Interest compounds monthly on the unpaid balance, meaning it accumulates quickly. For example, $1,000 overdue for six months at 2.5% per month becomes approximately $1,160 — before any debt recovery costs are added. This is a deliberate incentive to keep levies current, and one of the strongest reasons to contact the body corporate manager immediately if you are having difficulty paying. This article is general information only and not legal advice.

If levies are not paid by the due date they become a debt owed to the body corporate. The body corporate may then: 1. Charge interest on overdue amounts (up to 2.5% per month under the BCCM Act) 2. Engage a debt collector 3. Register a statutory charge over your lot — which can affect your ability to sell or refinance Interest compounds monthly and accumulates quickly. A small overdue amount can grow significantly over a few months. If you are struggling to pay, contact the body corporate manager early. Many committees will agree a payment plan before escalating to formal recovery action. This article is general information only and not legal advice.

A sinking fund forecast is a 10-year plan that projects the major capital expenditure a body corporate scheme is likely to incur — things like repainting, roof replacement, resurfacing driveways, and replacing pool or lift equipment. The BCCM Act requires most schemes to have a current sinking fund forecast prepared by a suitably qualified person, typically a quantity surveyor or building consultant. The forecast is used to set the sinking fund levy at a level that will accumulate sufficient funds when major works fall due. A scheme that has consistently set its sinking fund levy too low will face large special levies when major repairs are needed. When buying into a scheme, always review the sinking fund forecast and the current balance — a large forecast liability against a small fund balance is a warning sign. This article is general information only and not legal advice.