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700% increase in Quarterly Levies - is this possible
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Sammi
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20/08/2018 - 1:22 pm
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I’m hoping you can help me – I own a unit in a block of ten on the Northern Beaches, NSW and my strata levies have gone up by 700%…yes, you’ve read correctly, it’s not a typo. My levies have increased from $900 per quarter to $7,250 per quarter.  Not a special levy, there are no immediate works planed and when I enquired what the dramatic increase in levies was for it I was told it was for re-concreting the driveway; installing automated roller garage doors; installing/repairing damaged common toilet door; installing new laundry windows; interior painting and having window locks installed to be Strata compliant (yep, we still haven’t got them).  As no quotes have been provided for these works, I did some estimation work via the internet and discovered these vaguely proposed works only amount to $35,999.00, which we currently have sufficient funds to cover.

Item Price   Total of proposed works  
Common toilet door $925.00   $35,999.00  
Automated garage doors $10,000.00      
Painting $11,560.00      
Locks $1,514.00      
Driveway $5,000.00      
Laundry Windows $7,000.00      
         

 

I’m therefore wondering firstly, if 700% increase in quarterly levies is actually allowable, especially as there are no works planned or quotes provided, plus minutes from the AGM where this was agreed to are yet to be circulated, so receipt of the levy notice was the first myself and other unit holders knew about it – I have asked for the minutes to be circulated and I am still waiting.

Secondly, after reading your post from 11/14 https://www.flat-chat.com.au/levies-high-low/ there is no valid reason for levies to be this high as we have no swimming pool, no lifts, no gym, the building is not air-conditioned nor is it a security building plus automated roller doors may not be possible as there is no power in the garages, plus the garages at the rear don’t have the space required for the automated unit.  So could I propose that I continue to pay the quarterly levy of $900.00 and then a special levy for my share of $25,999.00 over a 3-5 year period (3-5 years is generally the time it takes for ideas/proposed works to become actual works, if at all)

Lastly, this is not the first time we have been asked to raise large amounts of money without quotes or even estimations. At last year’s AGM there was a resolution to raise $700,000.00 for works to be done on balconies, no works were carried out and that resolution was rescinded at this year’s AGM.  And in Nov 2016 there was a resolution to raise that same sum being $700,000.00, payable by March 2017 but no works was carried out and no money was raised; the seems to be a pattern of continually raising money, yet no foundation for doing so.  Just wondering what protection there is for monies raised.  And as per Forum Question: AGM decision – can something done against it, would these works be considered an upgrade and therefore require 75% vote.

Whilst I’m on the executive committee I have the feeling I am not fully informed of matters and have raised this with the strata manager. When I asked who voted for the levy increase I was given the vague response of ‘the owners did’, I was given another vague response of ‘we are’ when I asked who the signatories on the account are, when I asked to have information resent to me I was instructed by him that I would have to do a strata search and when I asked what my options were available to meet the increase I was threatened with legal action if I didn’t meet them.  I find all of this behaviour very concerning and I’m just wondering what my rights are – I’m a sole parent of two children who both have medical needs, I was unable to attend the last two meetings as my daughter required an operation, I need to know where I stand so my children aren’t affected by the above. 

Thanks in advance for your help – can provide more information if required.

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JimmyT
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20/08/2018 - 3:43 pm
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There is obviously something dodgy going on here – it could be incompetence or it could be that someone with a majority of votes is trying to force owners out so that they can gain control of the building and sell it to a developer. Stacking up legitimate charges for dubious reasons is one way of doing that.

You have a number of options. 

1. If you think this is urgent, apply directly to NCAT under Section 231 for an Interim Order requiring the OC to use existing financed for these capital projects.

2. If it’s not so urgent, apply for mediation with a view to pursuing the OC under section 232, seeking orders to resolve a dispute.

3. If you think there are individuals on the strata committee trying to push you out so they can sell the block to a developer, go directly to NCAT for the statutory appointment of a strata manager to take over the running of the building.

You will find more information and links to forms here.

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JimmyT
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20/08/2018 - 3:51 pm
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Sammi said
So could I propose that I continue to pay the quarterly levy of $900.00 and then a special levy for my share of $25,999.00 over a 3-5 year period (3-5 years is generally the time it takes for ideas/proposed works to become actual works, if at all)

No.  If you don’t pay the full levy you attract penalty interest and you lose your vote on the strata committee and the Owners Corp.

I think this sound like you need an interim order and you should try to get other owners to come in with you on that so that you can have the levy rise postponed until such times as someone has had a look at the accounts.

In fact, if you applied for an interim order with the same effect as Section 87 (below) that would put the levy hike on hold for up to three months until the accounts could be examined.

87   Orders varying contributions or payment methods

(1)  The Tribunal may, on application, make either or both of the following orders if the Tribunal considers that any amount levied or proposed to be levied by way of contributions is inadequate or excessive or that the manner of payment of contributions is unreasonable:

(a)  an order for payment of contributions of a different amount,

(b)  an order for payment of contributions in a different manner.

(2)  An application for an order may be made by the lessor of a leasehold strata scheme, an owners corporation, an owner or a mortgagee in possession.

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Sammi
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20/08/2018 - 3:55 pm
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Thank you so much for your advice – it has a terribly wrong / dodgy feel about it.  I will speak to another unit owner about your advice see which option they think we should take.

Thanks also for the links you’ve provided – I’ll look at those as well.

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Flame Tree
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22/08/2018 - 4:33 pm
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This query doesn’t sound right. If you are one of only 10, and attended the AGM, and are on the Committee: why are you not informed on what this is all about?

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Sir Humphrey
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23/08/2018 - 1:40 pm
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The list of works sound like a mix of some things that should be attended to with some urgency and other things that should be done but can be part of a staged program of works. Eg, nobody will die if interior painting is not done immediately. So, why not have a series of levies anticipated for every quarter over a couple of years to enable all the works to be done without such a large levy increase. 

If this were the ACT, it would be an ordinary resolution to amend the sinking fund plan to change the schedule of anticipated levies and to add these various works to the planned maintenance over the next several years, certain safety matters immediately, other items next year, the least urgent in year 3.

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zerobullying
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01/09/2018 - 1:11 pm
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Just a query about NSW strata world – do you have a Commissioner of Body Corps in NSW? Our property is in Qld…

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JimmyT
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02/09/2018 - 10:52 am
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No. We have a Commissioner for Fair Trading (aka, the Department of broken TVs, dodgy builders, shonky mechanics and dangerous toys). 

The highly credentialed Rose Webb was appointed last October without any reference in the official press release to strata or owners corporation law.

That’s a measure of how high a priority strata law gets in NSW.  Personally, I haven’t heard of her or spotted her since.

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Sammi
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11/09/2018 - 2:13 pm
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Hi – just wanted to provide you with an update. 

Applications have been lodged with Dept of Fair Trading for mediation and NCAT, just waiting for the applications to be processed and for hearing dates.

NCAT require a copy of the Strata Roll with Strata Applications.  The strata manager would not give this to me without the Strata Committee’s approval.  Two people approved the strata manager providing the strata roll to me, plus being on the strata committee I also approved it, majority approval and after two weeks I still have not received the strata roll – I’ve given up asking for it.  One of the strata committee members did not approve it and as the email received from this member was unpleasant and hostile I submitted my application to NCAT without the strata roll and I’m wondering why this person was so against NCAT receiving the roll.

I’m still trying to find out what the levy increase is for, as the amounts don’t add up to what’s being raised.  Plus I’m also trying to find out how long it’s intended to be at this excessive rate for.  An email I received indicates there is no intention to reduce the levies and that they will rollover each year ahead of the AGM.  When I questioned this with the Strata Manager I was told a letter could go out each year to all owners delaying the levies until the AGM, which doesn’t sound right to me.  I spoke to Dept of Fair Trading about this, but they seemed to be just as confused as I was about the levy hike and said everyone would have to vote on it to delay levies ahead of AGMs, a letter wouldn’t do this. I asked the Strata Manager for a sample copy of the letter, my request was rather abruptly refused and I was told it would be drafted if and when it’s needed – I feel it’s needed now so that the owners corporation can have some guarantee the levy hike won’t continue into next year and beyond. 

All of this seems not to add up. I don’t feel the unit owners are aware the levies will remain at this excessive rate and rollover each year ahead of the AGM. I strongly feel the owners corporation have been mislead and misinformed at the AGM when the levies were determined. The levies are now due so the Strata Manager is collecting excessive amounts from all unit holders, yet still only vague works are being proposed.

Will keep you posted on how things go.

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Sir Humphrey
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11/09/2018 - 7:54 pm
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So you are on the committee? Presumably you have a treasurer. Why not just ask the treasurer? What did the treasurer present to the last AGM?

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Sammi
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12/09/2018 - 8:38 am
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Hi Sir Humphrey

Yes, I’m on the Strata Committee.  Unfortunately I wasn’t able to attend the AGM due to family court appearances, daughter’s operation and family illness (life is never dull…and then there’s next level strata), although not at the AGM I was re-elected and I would say that is because I have the trust of the unit owners.  I always attend meetings and on more than one occasion I’ve brought my children with me. I don’t just read the agenda/minutes I study them so I’m fully across what’s being proposed and raise questions to ensure there are safeguards in place for the owners – it is a shame I was not at this meeting.

I have raised a number of issues regarding the governance and due diligence in relation to this levy hike with the Treasurer, Strata Manager and SC as a whole.  The Treasurer informed me the owners were persuaded into the excessive levy hike ‘as the impost on owners is not as great as the amount they were asked to raise last time’.  At face value this might be the case but as the $700K is on hold until the balcony works are reassessed (for the umpteenth time) there is the very real chance that money raising exercise will be revisited and therefore the levy hike will be much more than the owners initially thought.    

The Treasurer is also not willing to meet ahead of the AGM to redetermine the levies and from discussions I’ve had with Dept of Fair Trading and the Strata Manager this would mean the levies would continue at this rate and there is no guarantee they will be reduced and returned to be in accordance with the market value of the units. The impact of this is our units are un-marketable, any sale would be at well below market value and from inquiries I’ve made refinancing of loans and taking out additional loans is not an option due to the excessive levies. 

I sincerely hope mediation with Dept Fair Trading can resolve this, if not I do hope NCAT can help us determine a common sense approach to the levies of our unit block. 

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Tess McGill
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12/09/2018 - 11:18 am
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I hope you get some positive action from NCAT etc. What a mess your block has got itself in – and despite your active interest in it even you can’t get to the bottom of it.

One thing that I can’t get past is that there are, in most unit schemes, two charges to unit owners:

1. Quarterly strata levy for day-to-day running (paying common accounts such as insurance, electricity for common areas etc); and

2. Quarterly levy for the sinking fund. The sinking fund is to cover maintenance issues that arise – some short term (emergency fixes eg broken light fitting in common area) and some long term (painting the block).

At some stage expert advise should have been sought to estimate how much you need to hold in your sinking fund – or to put it another way – how much owners need to be levied to build up reserves so that when maintenance issues arise – you have a fund to dip into.

If there hasn’t been an accumulation into the sinking fund over time a Body Corporate may need to suddenly jack up a levy to get money for things that need to be done NOW. But if nothing needs to be done immediately for safety reasons (as Sir Humphrey points out) there’s no need to raise all the money RIGHT NOW.

And, to repeat the point, it should be raised as a special levy and not as an increase in your strata levy.

Best of luck and let us know how you get on.

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spmanager
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12/09/2018 - 12:28 pm
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Hi Sammi

As a Strata Manager this situation smells. There are two things you must do.

1. Do a strata search, your an owner so they can not stop you. All records including the Agendas , Minutes, Financials and the Strata Roll must be made available to you in an inspection. There is a fee involved but it just over $34.00. its set in the strata reg’s.

2. Get a lawyer. You can seek leave from NCAT to be legally represented. They can give it or not, but with the money your talking about, I would.

Make sure the lawyer has had dealings at NCAT on Strata issues. A quick google search will get you a list of them. If the lawyer is a sponsor of any strata industry awards/conferences etc all the better as that usually means that Strata is their bread and butter business so they don’t need to read the Act or regulations to know whats the way to proceed.

Hope that helps.

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