It’s firstly important to understand what Owners Corporation fees are?
Paying Owners Corporation fees is a fundamental necessity of living in a strata scheme. When sharing a building and common property with multiple owners it is only fair that all owners contribute to the upkeep and the running of the Owners Corporation.
Travis Henry, Senior Accountant for SSKB stated “Prompt payment of contributions by owners is essential to ensure the scheme can operate smoothly and efficiently. Adequate funding/cash flow allows services to be provided for the benefit and enjoyment of all owners. In turn a well maintained and presented scheme generally commands higher relative asset values compared to one that isn’t.”
As an owner in a strata scheme, you will receive contribution notices outlining amounts you are required to pay and what accounts will they contribute to. The notice commonly outlines annual fees.
You might be thinking, what does this mean? Where does my money actually go?
What do Strata Fees Cover?
Strata fees cover all expenses incurred in maintaining and managed strata properties. These expenses generally include:
- Maintaining and repairing all things inside and outside of the strata building that are not the responsibility of a unit owner.
- Upkeep of common areas, gardens and lobbies. Commonly includes cleaners, gardeners, pool and window cleaners.
- Regular inspection costs to ensure the safety of the building and its infrastructure is up to standard. These can include, fire alarms, lifts, water pumps, fire equipment, garage doors.
- Management and professional fees for strata managers, accountants, building managers, caretakers.
- Residential strata insurance is compulsory. It covers loss or damage to common areas, personal injury and liability.
- Power and water costs to supply common areas. Occasionally internet, phone or gas expenses are also incurred.
- Future capital expenses that is separate to Maintenance Fund.
What do Annual Fees Cover?
Annual fees cover general administration, maintenance, insurance and other ongoing costs. Lot owners pay their share of annual fees according to their lot liability.
To determine the fees for the financial year, your Owners Corporation is required to prepare an annual budget. This requires the Committee to estimate the cost of administration, maintenance, insurance and contributions to the maintenance plan before the annual general meeting each year.
A maintenance plan assists the Owners Corporation to budget for necessary works. Your maintenance plan will contain details about planned future expenditure from the maintenance fund.
An Owners Corporation’s maintenance fund is effectively an account which exists to allow an Owners Corporation to pay for the replacement/upkeep of major items within a building, in accordance with the scheme’s maintenance plan.
The money in a maintenance fund can be spent on several different things. Firstly, it can be spent on anticipated capital expenditure, or non-recurrent items. In a large strata scheme, this often includes large or one-off items, such as painting the building, lift replacement or major structural works to common property. The maintenance fund can also be used to replace major capital items in a scheme.
This might include items such as common property fences, or carpets in a lobby. Maintenance funds can then also be spent on any other reasonable expenses which should be reasonably met from capital, such as pool furniture, provided they are listed within the Maintenance Plan.
What do Special Fees Cover?
Last but not least special fees.
Special fees cover extraordinary or unexpected expenditure (such as urgent repairs) that the Owners Corporation has not budgeted for or does not have the funds available to pay for such an item. If the amount of the proposed special fee is more than double the amount of the Owners Corporation’s annual fees, it must be approved by special resolution of all owners. For the special resolution to be passed, it required support from at least 75 per cent of all lot owners.
If you have any further questions regarding levies, your Maintenance fund or any other queries please don’t hesitate to contact your Owners Corporation Manager or email email@example.com.
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