Whether you’re a resident or investor, Owners Corporation (OC) fees constitute a significant portion of your ongoing property expenses.
Some OC fees are fixed and predictable, making them easy to plan and manage. Others, however, spring up suddenly, often at the most inopportune times, and can cause substantial financial hardship.
To help you better understand OC fees, we’re covering the difference between ordinary and extraordinary levies. We’ll also look at how OC Committees set these fees and what property owners can challenge.
Understanding Owners Corporation Fees
In Victoria, community-titled properties with shared spaces, structures, or recreational areas are managed by an Owners Corporation, known as ‘strata’ or ‘body corporate’ in other states.
An OC Committee charges fees (levies) to cover administrative, insurance, maintenance, repair, and legal expenses. Lot owners have a legal obligation to pay levies and may face penalties for late payment.
What Are Annual Fees?
Also known as ‘regular’ or ‘ordinary’ levies, annual fees cover predictable expenses such as maintenance, insurance, and admin. An OC may also allocate a portion of its regular levies towards a maintenance fund.
What Are Extraordinary Levies?
Sometimes known as ‘special fees,’ these levies cover extraordinary or unexpected expenses. Common examples include emergency repairs, building alterations (such as replacing cladding to remain fire code compliant), and legal costs.
How Do Owners Corporations Set Fees?
An OC must follow certain rules when calculating ordinary and extraordinary levies.
Calculating General Levies
Each financial year, the OC Committee drafts an annual budget, often by reviewing previous expenses and upcoming works. The committee must send the proposed budget to all lot owners and notify them of an Annual General Meeting (AGM) to formalise the budget and levies.
The OC calculates general levies based on ‘lot liability,’ or the share of OC expenses that a particular lot owner must pay. Some lots have larger liabilities than others.
The developer assigns lot liabilities when subdividing a property. An OC can later change lot liabilities through a unanimous resolution (a vote with 100% agreement).
Many OCs prepare a maintenance plan/fund to manage for expected works. The OC determines the portion of general levies allocated to this fund and its payment conditions.
Calculating Extraordinary Levies
When extraordinary levies cost two times more than general levies, they require approval through a special resolution. Special resolutions can be decided by a poll, ballot, or in-person vote, and need support from at least 75% of all lot owners or lot entitlements.
Like general levies, extraordinary levies are charged according to lot liabilities. Exceptions exist when the related works will benefit one or some lots more than others. In this situation, the OC calculates special levies using the ‘benefit principle,’ where lot owners pay a share that is proportional to how much they will benefit from the works.
Which Fees Can Lot Owners Challenge?
In Victoria, lot owners can challenge general and special levies under certain circumstances.
- Procedural errors: Extraordinary levies costing more than double general levies that weren’t approved by a special resolution.
- Unreasonable proportions: Levies that cost more than your lot liability or were charged for facilities you can’t access (when the benefit principal should apply).
- Discriminatory levies: Levies that unfairly cost a specific lot owner more than others.
We recommend first attempting to resolve fee disputes directly with your OC. If unresolved, lot owners can take the matter to the Victorian Civil and Administrative Tribunal (VCAT).
When an OC fails to collect disputed fees from a lot owner, it must send fee and final fee notices before contacting VCAT.
Professional OC Management You Can Rely On
We don’t just run through the motions and call it a day. Above OCM goes above and beyond to provide customised OCM services that benefit every lot owner.
With an in-house team of Certified Strata Community Managers (CSCMs), Certified Practising Accountants (CPAs), and Chartered Accountants (CAs), we have the expertise to manage your OC in a way that is fair, effective, and efficient.
- 80% > team member with qualifications (SCA, CA, CPA)
- 95% satisfaction rating for two years running (2023-2024) at the Australian Achiever Awards
- $3.5b+ in property value under Above OCM management
- Full transparency guarantee; we back all documents with a qualified professional
Whether you’re managing an apartment, townhouse complex, or precinct, in Melbourne or regional Victoria, get in touch with Above OCM.
