Are you a property owner in New South Wales considering buying or selling a strata property? Understanding the special levy in strata is essential to avoid any unexpected financial burdens. In this comprehensive guide, we will break down everything you need to know about special levies and how they impact property owners in NSW.
Throughout this guide, we will explore the legal framework surrounding special levies in strata, including the Strata SchemesManagement Act 2015. We will dive into how special levies are calculated, the different types of special levies, and the rights and responsibilities of property owners.
By the end of this guide, you will have a clear understanding of special levies in strata and be better equipped to navigate the complexities of strata property ownership in NSW.
How special levies are calculated
Special levies in strata NSW are additional fees that property owners may be required to pay beyond their regular strata fees. These levies are typically implemented to cover unexpected or extraordinary expenses that the owners corporation needs to address. The calculation of a special levy is a crucial aspect for property owners to understand, as it can significantly impact their financial obligations.
Section 81 of the Strata Schemes Management Act 2015 states:
(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.
The primary factor in determining the amount of a special levy is the nature and scope of the expense it is intended to cover. For instance, if the strata building requires major repairs or renovations, the special levy will be calculated to cover the projected costs of those projects. The levy is then divided among the property owners based on their unit entitlement, which is a predetermined percentage that reflects the relative value of each property within the strata scheme.
In addition to the cost of the specific expense, the owners corporation must also consider any available funds in the strata's reserve account. The reserve account is designed to hold money set aside for future maintenance and repairs, and the strata may choose touse these funds to offset the amount of the special levy. This can help to reduce the financial burden on individual property owners.
What is a special levy and why is it important?
A special levy in strata NSW is a one-time or temporary additional fee that property owners are required to pay beyond their regular strata fees. These levies are typically implemented to cover unexpected or extraordinary expenses that the owners corporation needs to address, such as major repairs, renovations, or legal costs.
Understanding special levies is crucial for property owners in strata NSW for several reasons. Firstly, these levies can have a significant impact on a property owner's financial obligations, potentially requiring a substantial one-time payment. This can be particularly challenging for owners who are already operating on a tight budget or who may not have planned for such an expense.
Secondly, the failure to pay a special levy can have serious consequences for property owners. In NSW, the Strata Schemes Management Act 2015 grants the owners corporation the ability to place a charge on the property, which can ultimately lead tothe property being sold to recover the unpaid levy. This can have long-lasting implications for the property owner's financial and credit standing.
The purpose of special levies in strata NSW
One of the primary reasons for a special levy is to fund major repairs or renovations to the strata building. This could include, for example, the replacement of the building's roof, the repair of structural damage, or the upgrading of the building's electrical or plumbing systems. These types of projects can be incredibly costly, and the strata's regular budget may not be sufficient to cover the expenses.
Special levies can also be used to cover legal costs incurred by the owners corporation. This might include fees associated with disputes between property owners, litigation against the strata, or the enforcement of by-laws. By implementing a special levy, the strata can ensure that these legal expenses are shared equitably among all property owners.
What must be covered in a special levy notice?
When a owners corporation in NSW decides to implement a special levy, they are required to provide property owners with a detailed notice outlining the key information. This notice serves as an important communication tool, ensuring that owners are fully informed about the levy and their obligations.
At a minimum, the special levy notice must include the following information:
1. The purpose of the special levy: The notice should state the reason for the special levy, such as the need for major repairs, renovations, or legal costs.
2. The total amount of the special levy: The notice should specify the total amount of the special levy that needs to be collected.
3. The individual owner's contribution: The notice should indicate the specific amount that each property owner is required to pay, based on their unit entitlement.
4. The due date for payment: The notice should clearly state the deadline by which the special levy must be paid.
The process of implementing a special levy in strata NSW
The process of implementing a special levy in strata NSW is governed by the Strata Schemes Management Act 2015. This legislation outlines the specific steps that the owners corporation must follow to ensure that the levy is implemented fairly and legally.
The first step in the process is for the owners corporation to hold a general meeting, where the proposal for the special levy is presented to the property owners. At this meeting, the strata must provide a detailed explanation of the purpose and amount of the levy, as well as the impact it will have on individual owners.
If the special levy is approved by a majority of the property owners present at the meeting, the owners corporation can then proceed with the issuing of the special levy. This involves issuing a special levy notice to all property owners, outlining the key details of the levy, as well as the due date for payment.
It's important to note that property owners have the right to dispute the special levy if they believe it is unjustified or excessive. In such cases, the matter can be taken to the NSW Civil and Administrative Tribunal (NCAT) for review. The tribunal has the authority to adjust the amount of the levy or even cancel it altogether if it deems the levy to be unreasonable.
Conclusion: The importance of understanding and planning for special levies in strata NSW
In conclusion, special levies in strata NSW are essential for ensuring the proper maintenance and upkeep of strata properties in some instances. These levies provide the owners corporation with the necessary funds to address unexpected or extraordinary expenses, such as major repairs, renovations, or legal costs.
For property owners in strata NSW, understanding the process and implications of special levies is crucial. These levies can have a significant impact on an owner's financial obligations, and failure to pay can result in serious consequences, including the placement of a charge on the property.
By familiarising themselves with the legal framework surrounding special levies, property owners can better prepare for and manage these financial obligations. This may involve setting aside funds in a personal savings account or negotiating payment plans with the owners corporation.
Ultimately, the key to navigating the complexities of special levies in strata NSW is to stay informed and proactive. By understanding the purpose, calculation, and implementation process of these levies, property owners can make informed decisions and ensure the long-term stablity and value of their strata property.