Purchasers Strata Inspections Pty Ltd Online Commentary

MAINTENANCE CONTRIBUTIONS

Maintenance contributions are levied in respect of each lot and are payable by the owners in shares proportional to the unit entitlements of their respective lots. Contributions are calculated from the approved budgets, which must be set to raise enough funds to carry out the Association’s duties.

Unit entitlements determine a lot owner’s rights and responsibilities in the strata scheme, including such things as voting rights, the amount you are to contribute to levies and your share of the common property. All lots have a general unit entitlement, which is set out in the Association roll.

OUR REPORT

Our report indicates the current contributions to the administrative and sinking fund

If contributions are not calculated correctly then there could be ramifications in the future, eg special levies and increases in administrative and sinking fund levies to meet ongoing expenses.

Special levies:

Special levies are raised as additional contributions for unfunded or under funded capital works which the Association is unable to pay out of the sinking fund. The amount of levy you pay is usually an amount in proportion to your unit entitlement.

Our report shows any current special levies, due dates and purpose.

OUTCOMES

Levies not correctly determined or future special levies could have a financial impact on a prospective purchaser and their ability to meet these.

Special levies are usually the result of a shortfall in contributions over a long period (poor planning) or some unexpected or unplanned urgent repairs.

Problems can occur when lots are sold sometime after a special levy commenced, or worse still, is yet to commence. A new owner is in fact paying the special levy for the previous owner’s liability and this very real liability should have some impact on the sale price.

It is important to know that there are no adjustments to sale price regarding the future liability of special levies. Any purchase pressure that can be exerted by a purchaser for these matters must occur at the price negotiation stage or must have a provision covering these matters in the contract of sale. The vendor may reduce the price.

Welcome to PSI's Online Commentary

About The Commentary

This commentary has been written by Gary Bugden OAM DUniv. Gary is the Chairman of the Board of Directors of Purchasers Strata Inspections Pty Ltd.

Gary Bugden has been Australia’s leading authority on strata and community titles for the past 40 years.

He has authored numerous books and loose-leaf services on strata related subjects and has provided this commentary to assist purchasers to interpret and apply the contents of this report.

The commentary is not intended as a substitute for legal advice and purchasers should refer any concerns they have about the contents of the report to their solicitors or conveyancers for proper analysis and advice.

While every effort has been made to ensure the accuracy and relevance of this commentary, neither Gary Bugden nor Purchasers Strata Inspections Pty Ltd will accept any responsibility for any inaccuracy or incompleteness of its contents, nor if at the time of use it is out of date. They each intend to rely upon this exclusion of liability in the event that a purchaser suffers any loss or damage as a consequence of relying upon any part of this commentary.

By indicating your understanding and acceptance of the above conditions you agree to such exclusion of liability by clicking on the button below which you will forward to your commentary subject. Should you not wish to proceed exit the commentary system. This overlay screen will not appear again until 7 days has elapsed.

[I Am Aware Of The Terms Of Use ]