“Let’s just divvy it up,” is the civilised way for friends to pay for a meal. But it doesn’t work so well when it comes to covering the running costs of an apartment block.
A Sydney owner has been told that in her self-managed 12-unit block everyone agrees to simply split the bills equally by paying the same levies.
However, although the flats are the same size, there are enough variations - such as outlook and the level they are on – for the Unit Entitlements to be significantly different. And UEs are how you calculate levies.
As a result, she and other owners in the cheaper units have been subsidizing the people in the more valuable properties for years.
It all got nasty at last levy collection time when the owner (whose first language isn’t English) calculated what her levies should have been and sent a cheque for that amount with a covering letter explaining why she’d done this to the building’s Treasurer.
“He defaced both the letter and the cheque and wrote on this letter to pay the levies based on equal amounts for all the 12 lots,” her pal, Flatchatter Jeff, told our website. “He also reminded her that failure to pay her levy by the due date will result in interest being charged for late payment.”
This Treasurer needs to wise up to NSW strata law which clearly states that levies must be calculated on the basis of unit entitlements.
And there’s no way he should be able to charge penalty interest when he’s breaking the law. We’ve prepared a stiff letter Jeff’s friend can send him, explaining the error of his ways and demanding that she be credited for past overpayments.
Probably he’s merely confused rather than corrupt … or he doesn’t have a calculator and the sums are too hard. I’m guessing he’s not alone.
It would be great if Fair Trading could simply phone all these misguided souls and explain the facts of strata life without any form-filling, mediation or tribunals required.
Meanwhile, perhaps the CTTT needs to step in and appoint a strata manager. You can follow the split bills saga HERE.
FYI, unit entitlements or their equivalent are the basis for charging levies, or fees as they are often called, across Australia. Owners can usually change their unit entitlements with a unanimous vote – but who is going to vote to have their levies increased? In NSW owners can apply to the CTTT to challenge the Unit Entitlements that have been allocated. And if, for instance, a developer has skewed UEs to attract buyers to more expensive apartments by keeping levies unfairly low, they can be liable to refund the over-payment the distortions have caused. You’ll find a brief guide to changing unit entitlements in NSW HERE and an application form to do so HERE.
In Victoria a distinction is made between Lot Liabilities and Lot Entitlements. Lot entitlements determines how much voting power and the share the owner gets of any income the strata scheme makes. Lot liabilities are the share of cost of running the building that the lot owner pays. If owners think these figures are unfair, they can apply to the Victorian Civil and Administrative Tribunal to have them altered. You can find out more about the strata system in Victoria HERE.
It’s fair to say the situation in Queensland is even less simple. The fees payable to the body corporate in Queensland are calculated on a combination of two figures: Contribution Schedule Lot Entitlements and Insurance Schedule Lot Entitlements. The former is based on the concept of equal use of common property and facilities by residents while the latter reflects variable fees to cover insurances and building repairs etc, based on the size and replacement value of the units. The two components combine to create a figure by which fees or levies are calculated
Over the past few years, community titles law in Queensland has been radically changed then tinkered with and then altered again. One effect, introduced in April 2011, was that owners could apply to the Queensland Civil and Administrative Tribunal to have the Insurance Schedule Lot Entitlements revised, based on figures that reflected something closer to the true value of the units.
That meant owners who bought units with unfairly low levies faced huge rises as soon as any fairness was injected into the system. This was hard on many people who, although they had benefited from low fees, had bought their units and budgeted on that basis.
But the laws also allowed “reversion” of the reallocation of Lot Entitlements, based on a motion to a general meeting by any owner who had held the property before the changes were made. Lot entitlements were being returned to their original figures and the effect to owners was working in reverse with many who had bought on the basis of fair Lot Entitlements suddenly having to pay much more. Adding to the problem was that once this had happened, there was no easy appeal process.
The latest changes to Queensland laws that have just come into effect this month (April) mean that Insurance Schedule Lot Entitlements can now be more easily be recalculated for a more equitable distribution. However, it will be some time before the full effects work their way through the system. You can download the current guide to Body Corporates in Queensland HERE.
These few paragraphs can’t come close to explaining the complexities and variations of strata law in all the various states and territories. If you are considering any kind of major action, consult a local professional with specialist strata or community law expertise.
