Strata Levies

by Administrator 17. February 2014 19:21

What must happen before a levy is raised?

The Strata Titles Act (WA) says that the strata corporation has to pass (at a General Meeting) the amounts and due dates of levies before they can be charged to owners. If the levy has not been passed at a general meeting, the strata corporation is not permitted to raise any levies past the last date of approval at a general meeting.

Levies are only due and payable once passed at General Meeting. The strata company will send an AGM agenda to all owners including special business such as financial statements for the year passed, insurance, council nominations, proposed budget and proposed levies.

The motion to set the levies must show the amount for each fund and can be approved by a majority vote. The minutes record the meeting, motions passed, levies due and payable. These minutes form the basis for payment of all levies. A levy notice is not an invoice; it is merely a reminder and not required under the Strata Titles Act WA.

 

So what’s this invoice I have received?

Why then, might you receive an invoice for the strata levy for the first quarter of the new financial year?

It’s because there is often a lag time between the end of the previous financial year and the next AGM – The Act states that not more than 15 months shall elapse between the date of one AGM and that of the next – Schedule 1 By-law 11 (1). This means the next AGM might potentially be a few months into the new financial year – after the levies collected for the previous year have run out.

The practical truth is that a certain amount of funds are required to run the scheme and these are raised throughout the year, typically every quarter. So a levy will be due for this period. If it’s not charged because of the time lag before the next General Meeting, then the strata corporation may run into a cashflow problem.

 

Why do they need the cashflow?

The administrative fund into which normal strata levies are paid is used for day-to-day recurrent expenses. The amount in it must be enough for the strata company to pay expenses, including:

  • Maintaining common and personal property of the strata company
  • Payment of insurance premiums
  • Any other recurrent expenses other than amounts covered by the sinking fund or by a special levy.

 

Is it legal to charge this next quarter levy?

If another quarter’s levy is not included from the previous financial year’s General Meeting, the extra levy cannot be charged.

Typically the motion relating to budget and levies is in order to raise funds for the next financial year. However, to ensure there are sufficient funds for cash flow purposes it is best practice to include a quarter or even two on from this, allowing time to hold the next AGM. It will simply carry over for the first quarter of the new financial year and can be adjusted using “extra: Levy” once the new budget is accepted.

(Sourced by REIC.com.au)

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