Things go wrong in buildings old and new. From unforeseen weather-related disasters to plumbing emergencies, sometimes things arise that you didn’t see coming. Levies are therefore an inevitable part of owning a unit in a strata-run building.
What’s a levy?
Owners’ corporations use levies to pay for planned repairs and general maintenance throughout the year. These fees are pre-calculated and agreed at the Annual General Meeting which all unit owners may attend.
Well-run owners’ corporations will budget for a contingency within these levies for unforeseen costs. But sometimes, special levies may be raised in order to pay for unplanned repairs.
When Can I Expect a Special Levy?
A special levy can relate to any un-budgeted expenses within a strata property. If run properly, your owners’ corporation should have a budget for all reasonably foreseeable costs and therefore special levies will be reserved to unexpected damage caused by things like severe weather for example.
Before raising a special levy, the owners’ corporation must call a meeting and receive the approval of unit owners prior to spending money on any repairs. You should never therefore be charged a special levy in retrospect but depending on the nature of the damage, time may be of the essence and you’ll need to be able to provide the money quickly.
How To Raise Funds For Special Levies?
Depending on your financial situation at the time and the severity of the damage, you may not necessarily have the cash-flow to immediately deal with whatever costs may arise. There are however a few ways you can ensure that you are prepared for the unexpected.
Raising General Levy Costs
One way of avoiding or minimising the costs of special levies is to increase the general levies throughout the year. This allows the owners’ corporation to keep a pot of emergency money and the financial impact on unit owners will be spread gradually over time.
Hope for the best, prepare for the worst. In other words, put your own contingency money aside throughout the year as a buffer just in case disaster strikes.
Strata Finance Loan
If cash-flow is an issues for any of the unit owners, strata can take out a loan. This means that the work can commence immediately, whatever the coast. The loan repayment will be added to the general levies, meaning owners can repay the debt over time rather than face one big financial hit.
Need Some Advice?
Are you confused about what your levies are paying for or concerned your strata management team isn’t budgeting effectively? Contact our team today for confidential advice and information on how to switch over to Real Property Services.