Why have I paid the Special Levy at Settlement?
Recently an owner made a call following settlement of their unit and quizzed one of my colleagues on why they had been charged by their conveyancer for a recurring special levy on their settlement statement.
The manager for that Strata Corporation had recommended at their meeting that they raise their sinking fund contributions toward timberwork the owners expected to take place a year from the meeting but rather than increase the quarterly levies the owners instead resolved at the meeting to have a special levy each quarter for the next year at $100 per unit.
We specialize in body corporate management, are not experts in conveyancing and we definitely recommend that you check with your conveyancer for advice.
We understand that while quarterly levies for both the administration and sinking fund are settled to be paid by the owner at the time while special levies are then charged to and paid by the person who was the owner at the time to the levy was agreed to be raised.
In this example the quarterly levies are due on the 1st January, April, July and October in the amount of $300 each and a special levy of $100 per unit is due each quarter on those same dates.
The owner has then sold the property, with settlement on 8th June.
This means that the vendor is responsible for the levies due 1st January and 1st April but the purchaser from 1st July with the corporation paid to 30th June; however the levy component from 8th June will be broken up between the vendor and the purchaser by the conveyancer as a part of the settlement process (along with water, council rates etc).
Given that there are special levies due 1st July and 1st October in the amount of $100 each that were determined at the Annual General Meeting in November last year so the vendor who owned the property in November must pay this $200 to clear these amounts even though they are not due until July and October.
Coincidentally, the vendor would also have had to pay the $400 special levy in the event that the corporation resolved it to be due in one installment rather than four.
If these levies had been sinking fund contributions instead of special levies then the vendor would have simply paid for their period of ownership, up to 8th June and the new owner would pay from then onward.
Please note that this article is for general information only, is not intended or to be used or relied upon for or as advice. Should you have queries concerning the body corporate we are happy to help but in relation to conveyancing we recommend that you speak with your conveyancer.