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Sectional-title buyers, watch out for special levies

Category Advice

For many, the appeal of sectional-titles lies in its convenience. A Body Corporate can take the stress and frustration out of property ownership. With levies collected, they are responsible for repairing, maintaining, managing and administering the common property. They're also tasked with paying rates, taxes, and other local municipality charges.

What may be surprising to prospective buyers, is the special levies a Body Corporate can also impose. It was a hot property topic last year and even featured on 702's Afternoon Drive radio show.

With so many left confused by the levy, you would do well to read on. By understanding special levies, you can make your property purchase with confidence. 

What are special levies?

According to the Sectional-Title Schemes Management Act, these are special contributions the trustees of the Body Corporate can call upon owners to make for expenses which were not budgeted in the last Annual General Meeting. 

When can special levies be implemented?

Special levies should only be imposed when disaster strikes. This can include new projects, urgent property upgrades or repairs. For example, it could be an emergency repair to a leaking roof, pest control or restoring stolen furnishings.  

How do special levies work? 

These levies and contributions can be required in one sum or by instalments when the trustees of the Body Corporate sees fit. As long as the expense is necessary, the trustees can raise special levies without seeking approval from the owners of the units. There is no cap on the amount the trustees can request; the amount is dependent on the expectations of the challenge needed to be rectified. 

What is the process? 

While the trustees of the Body Corporate do not need approval, they do need to follow procedure. According to Lauren Maltby, Director of Venns Attorneys Property Division, they will need to:

    - Inform owners of the decision to impose a special levy;
    - Advise on the required amount;
    - And, outline what the special levy will be used for. 

Who is liable to pay special levies?

All owners of sectional title units are liable for special levy payments. As a buyer, ensure you ask your real estate agent if there's a special levy being raised or is currently being paid. Previously, the seller had to settle special levies for the body corporate to issue a levy clearance certificate. 

However, you could be liable for special levies - even from before the date of transfer. According to sectional title law specialists, Paddocks, "if a unit is transferred during the course of the financial year or during the period in which a special contribution is paid, the new owner becomes liable to pay the contribution, pro rata, from the day of transfer". Checking the minutes from the Body Corporate meetings is a good way to keep up-to-date on any possible special levies that may be instituted.

Can I dispute special levies?

As an owner, you are not allowed to dispute liability for the payment of levies even if you think it's too high. Because the idea of an additional levy can be frustrating, you can request a special general meeting. Here, you can get a better insight into the issues surrounding the levy. The trustees may provide expert reports and quotes from contractors and retailers. It's a good idea to attend as you may be able to come up with a suggestion to reduce or prevent the levy altogether. 

When it comes to special levies, the right real estate agent can give you peace of mind. With our expertise, De Lucia Group provides sound advice and guidance to eliminate property risks. To find out more, speak to us today.

Author: De Lucia Group

Submitted 24 May 19 / Views 176