MAINTENANCE CONTRIBUTIONS

The owners corporation raises contributions (or levies) to both the Administrative Fund and the Sinking Fund. Contributions may be either:
• Standard (which are budgeted for on an annual basis).
• Special (which are raised when there are inadequate funds to meet a particular expense).

While it is arguable whether there can be a special levy to the Sinking Fund, in practice there can be standard and special levies to either or both funds. Most bodies corporate raise standard levies to both the Administrative Fund and the Sinking Fund each year and only rarely impose special levies. However, most bodies corporate raise the standard levies by means of “regular periodic contributions” (i.e. by instalments). The most common interval of instalments is quarterly.

The first part of this section of the report will show the current level of standard levies. These may be expressed as an amount per unit entitlement per annum, in which event the actual annual levy can be calculated using the unit entitlement for the lot being purchased (which can be ascertained from the “General Information” section of the report). The report will also indicate whether the contributions “appear” to have been properly determined. If they appear not to have been properly determined, then they may not be legally recoverable. This can be a concern for purchasers, not so much in relation to the lot being purchased, but rather in relation to other lots where there may be the risk of an owner claiming a refund of amounts previously paid in the mistaken belief that they were legally payable. While this is not common, it has occurred on a number of occasions.

The timing of the last increase in levies may be an indicator of whether a future increase is likely.

The report also provides information on special levies. The information is divided into “current” and “proposed”. If there is a current special levy and it has not been paid, it may (under the terms of the purchase contract) be payable by the seller of the lot. The purchaser should discuss this with their solicitor or conveyancer. However, if it has not yet occurred and may occur in the future (after the contract or after the settlement), then the purchaser will usually be liable to pay it. Again, the purchaser should discuss these circumstances with their solicitor or conveyancer.

Purchasers should also note that there is a due date for the payment of contributions and if they are not paid by that date penalty interest may be applied. The notice levying the contribution will set out the due date and the consequences of paying after that date.