How to Navigate Body Corporate Fees

Body corporate fees, sometimes known as strata fees or levies are payable by all owners in a strata scheme. Whether it's a strata apartment building or a shared community, managing fees is a thankless task, often left to volunteers and strata committee members. However, these fees are crucial to the survival of any strata community, which is why many committees seek professional strata management services.

We explore everything you need to know about body corporate fees, and how to deal with any issues that may arise.

What do body corporate fees cover?

Body corporate fees are payable by all lot owners in strata schemes and community title properties. These fees are primarily in place to cover annual expenses associated with maintaining common areas. These can include gardens, hallways, stairwells and lifts, foyers and other shared amenities like gyms and pools.

The fees also contribute to the administrative side of a scheme, such as legal fees, insurance for shared areas and professional strata management costs. It's important to note that lot owners are responsible for the maintenance and upkeep of their property's interior – body corporate fees cover the areas outlined in your bylaws.

Different types of body corporate fees

While every scheme is slightly different, most will charge lot owners three different types of levies for the various funds held. These include:

Administrative fund: This fund is responsible for day-to-day expenses such as cleaning, gardening, minor repairs, administrative costs and insurance premiums. These are your basic body corporate fees.
Sinking fund: The sinking fund is set aside for long-term maintenance and capital works, such as roof replacements or repainting. Most shared communities require all owners to pay sinking fund levies to contribute.
Special levies: These are raised for unplanned expenses like emergency repairs or legal costs.

We'll touch on sinking funds and special levies in more detail shortly.

What determines the amount of fees?

Several factors determine the amount of strata. Typically, these factors include the age and size of the building and the number of shared amenities. For example, an apartment building with a lift, pool, gym and other common areas will have higher running expenses for cleaning, maintenance and repairs. As such, strata levies will be higher to cover the expenses.

It's not necessarily always about paying more for a higher-quality property, though. Some older buildings may have more extensive maintenance needs, so it's important to consider these factors when buying into strata or shared community schemes.

When are body corporate fees paid?

In most South Australian strata schemes, body corporate fees are payable each quarter. Ultimately, it's up to the Owner's Corporation and committee as to how frequently levies are collected. Some may be monthly, others may be paid annually. When living in a strata community, it's crucial to understand your obligations, as late payments often incur penalties.

The importance of a sinking fund

A sinking fund is like a Plan B in case urgent repairs or maintenance are required. In South Australia, it's a requirement to have a 3-year sinking fund budget for 7-20 properties, while schemes with over 20 properties must have a 5-year sinking fund budget. This allows committees to plan for essential maintenance or upgrades while also ensuring funds are available for emergencies.

What are special levies and how are they raised?

In the event that there isn't enough money in the sinking fund for unexpected expenses, special levies may be raised. For example, if the property suffered significant damage not covered by insurance, a special levy may be required. While most schemes hesitate to impose special levies, they are sometimes necessary.

To raise a special levy, it's common practice for committees to call a special general meeting. This depends on the procedures outlined in your bylaws, as some committees may have pre-approval to raise levies under special circumstances.

Can you dispute body corporate fees?

It's not uncommon for some lot owners to have issues with body corporate fees. This can be a dispute over the amount or even the management of the administrative fund. If owners feel their fees are unreasonable or financial mismanagement has occurred, the first step is to raise the matter at the Annual General Meeting. If this doesn't resolve the issue, there are options to take strata disputes to the South Australian Magistrates Court for an order.

Professional strata management of body corporate fees

If your strata community requires assistance in managing body corporate fees, pursuing missed payments or generally managing the day-to-day aspects of your scheme, Strata Management SA is here to help. With years of experience in strata and community management, we have the expertise to ensure seamless operations without needing volunteers. From keeping costs down to managing Annual General Meetings, we're the team you can count on. Contact us today to find out how we can help.