This Q&A is about special levies in VIC and the need for attention to detail.
Table of Contents:
- QUESTION: Will I be required to pay the special levy for cladding leak remediation even though I have already spent $7000 to fix a leak in my apartment’s exterior wall out of my pocket?
- QUESTION: We need to carry out substantial repairs on the building. A special levy of $12,000 has been billed to all lots. Does this decision need a special resolution to proceed?
- QUESTION: A special levy was raised to replace a membrane and the work had not commenced when I sold the property. Can I request a refund?
Question: Will I be required to pay the special levy for cladding leak remediation even though I have already spent $7000 to fix a leak in my apartment’s exterior wall out of my pocket?
I have already spent $7000 to repair a leak in the exterior wall of my apartment, repaired by a tradesperson from inside my unit. The owners corporation plans to collect a special levy to address cladding leaks on the building’s exterior, with a special resolution meeting scheduled for next month. Since I have already covered the cost of fixing the leak in my unit, am I required to contribute to the special levy? In other words, will I be expected to pay twice for the remediation work I have already taken care of out of my pocket?
Answer: Carrying out repairs to the common property is an owners corporation responsibility.
The location of the boundaries, as shown on the plan of subdivision, will determine whether the works were to private or common property. Also, the layout of the building would help to determine how the benefit principle should/could be applied. Although I need more information for a definitive answer, I have provided some general information that might assist.
How did you keep the owners corporation in the loop, and what agreements were made? Carrying out repairs to the common property is an owners corporation responsibility. If the building walls are common and the cladding system providing waterproofing requires repair, the cost are usually split by lot liability as the collective owners corporation all benefits from having a water-tight building.
If the work you have done reduced the repair work by the owners corporation, you could argue that you should be credited the cost savings. A sympathetic owners corporation may agree. However, these complicated matters are often not that clear-cut.
Was the work you carried out absolutely necessary at that time and could not wait for the owners corporation to carry out the full repairs? If so, what evidence do you have to support this view? Was there any agreement requested of the owners corporation? If so, did they provide a reasonable response?
The answer to these questions will help to ascertain whether the owners corporation failed in its duty to repair and maintain the common property and you perhaps had no option but to have repairs done to protect your property and mitigate against other possible costs and damages. The answer to that might assist in working out if none, some, or all of your costs should be reimbursed. The owners corporation might argue you had other options available and that the $7000 need not have been spent and might not reduce the overall cost.
Professional people with good building knowledge could probably work through this and come to a fair assessment of what if any, costs should be reimbursed. Perhaps you and the owner’s corporation could agree to engage an independent building expert to make a determination and both parties agree to their findings. Unfortunately, their costs would need to be shared too and could be a few thousand dollars. You might prefer a negotiated settlement.
The complexities of such matters mean that they often end up in VCAT, which is costly and time-consuming. I suggest trying to negotiate a fair and reasonable settlement.
Please note that this is intended to assist with a practical way forward and is not legal advice.
Anton Silove
MBCM Strata Specialists
E: [email protected]
P: 1300 777 276
This post appears in the June 2023 edition of The VIC Strata Magazine.
Question: We need to carry out substantial repairs on the building. A special levy of $12,000 has been billed to all lots. Does this decision need a special resolution to proceed?
We need to complete some large concrete and balcony works at our building. Most owners agree to this work being done, however, a few days before the AGM we were sent a letter stating the quoted amount for the job and that each owner would be billed $12,000 per lot. This amount was due to be paid in 28 days. Works are planned for early next year.
The job is not urgent and my understanding is that to strike this type of levy there needs to be a special resolution (75% in agreement). Can you please clarify if this decision needs to be voted on to proceed?
Answer: An ordinary resolution (or unobjected interim ordinary resolution) may be sufficient to raise the funds.
(Sections 52 and 53 of the Owners Corporations Act 2006 provide that a special resolution is required to carry out significant works to the common property if a planning permit is required for the works and or the budget required for the works is more than twice the annual budget.
If $12,000 required by each owner for the concrete and balcony works does not fit the above, then an ordinary resolution (or unobjected interim ordinary resolution) is sufficient to raise the funds.
Rochelle Castro
RC & Co Lawyers
E: [email protected]
P: 1300 072 626
This post appears in Strata News #529.
Question: A special levy was raised to replace a membrane and the work had not commenced when I sold the property. Can I request a refund?
We had a special levy issued to replace a membrane and paid for over a 12 month period, with the final funds collected in Jan 2019.
Work has not yet been commissioned on the maintenance project. I have since sold the property. At what point must they spend this money on the membrane replacement project? What if they chose not to progress.
Can I request a refund?
Answer: The price you received for your property takes into account any reserve funds held by the owners corporation.
The timing for them to act depends on what resolutions have been passed. Irrespective of what happens to the funds raised, assuming that they were raised in good faith there would be no reasonable prospect of you obtaining a refund. In theory, the price you received for your property takes into account any reserve funds held by the owners corporation.
Gary Bugden
Bugden Allen Graham Lawyers
E: [email protected]
P: 02 9199 1055
This article does not constitute legal or other advice and should not be relied upon this way. Readers should take legal or other advice before applying the information contained in this publication.
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Dear Sir/Madam
At our AGM our we experienced 273% increase in strata levies. .The levy increase was based on , Building Management Committee’s Budget for the year, which included Remedial Work and painting, Since the increase there has been an ongoing dispute our what the shared faculties and common property between the residential and commercial strata’s that make up the complex. We also have a dispute over cladding on the property as to where it is residential or commercial and whether it is a fire hazard or not.
The quote for remedial and painting was based on incorrect assumptions (This was acknowledged by our Exec Committee at a recent SGM ) , which are now in dispute and it looks likely that a new revised quote will needed based on the findings.
As the incorrect levies where set at an AGM we need an EGM and majority vote to reset the levies. The problem is that as result of the huge levy increases most lot owners are non-financial and therefore can’t vote at any meeting.
We would like whatever levies paid to be returned and levies reset accordingly.
Is there any way we can rectify the situation?, without a unanimous vote which it seems in our situation is impossible.
Can our case be argued at NCAT
Thanks in advance
To some degree it depends on your State’s legislation Anne. But it is probably too late. Also, there would need to be a lot of money involved for it to be worth while. Litigating a refund claim could be complicated and expensive. The best advice is – be on the lookout next time!
We were imposed with a roof levy ad havoc about 4 years. Never thought we could do anything about it.
Can we act on it now? There were issues about how it was served and who actually contributed?