If you own a lot within a community titles schemes, you are required to pay your share of Body Corporate levies. Body corporates budget for expenses related to the property each year and then levy each lot owner for the money they require to pay those expenses.
Body corporates hold and annual general meeting where the amount of levies to be charged over the coming year are determined and lot owners are formally notified.
Some lot owners are not fully aware of what body corporate levies cover. The body corporate can levy for fees for the Administrative Fund, the Sinking Fund and for a Special Levy.
Administrative Fund
The Administrative Fund Budget will have estimates of necessary and any reasonable expenditure to cover items related to the property such as insurance, property maintenance, lawn mowing, utilities, bank fees and the like.
Sinking Fund
This budget serves to raise adequate amounts to cover any necessary and reasonable capital expenditure related to the property for that year e.g. replacing fixtures or fittings.
It must also leave in reserve enough funds to meet any expenditure expected in the future e.g. replacing a deteriorated driveway or painting the building.
Special Levy
If an expense arises that was not anticipated in the Administrative Fund or the Sinking Fund, the body corporate can impose a special levy on lot owners.
Special levies can be onerous for lot owners, particularly if the sudden expense is very large. An example of this could be emergency repairs that are required to make the building safe.Â
It is important for owners who own or intend to own a lot in a community titles scheme to understand that body corporate fees are enforceable. Penalties for late payment can be charged at 2.5% per month on the balance owing.
Seymour Consultants specialise in professional body corporate services in QLD and NSW.
Our knowledgeable and ethical team have over 25 years experience assisting body corporates with sinking fund forecasts, insurance replacement valuations, lot entitlement reporting and more!
If you have enquiries on body corporate reporting, be sure to call the expert team at Seymour Consultants today on 07 5573 4011.
