You have gone through the long process of buying your first home and excited about moving in and owning your first property. Your mind is in overload after dealing with real estate agents, banks, insurance businesses, lawyers, telecommunications providers, power companies and the list goes on. You were handed a folder of documents titled ‘Your Owners Corporation’ but have had no time to digest any of this and the pack is filed to the bottom of the pile. Until, you receive a levies notice!
So, what have you bought into and what do you need to know going forward?
Your owners corporation manages the common property of the residential building you have bought into. An owners corporation is automatically created when a plan of subdivision containing common property is registered with Land Use Victoria.
So, what do you own and what is common property?
Common property is listed in the plan of subdivision and may include, walls, stairwells, pathways, driveways, lifts, foyers, gardens, passages, pools, gyms and fences. The owners corporation is responsible for managing, administering, repairing and maintaining the common property according to the Owners Corporations Act 2006.
The plan of subdivision also identifies the land that can be sold separately, referred to as lots which is what you purchased. As a Lot Owner you are automatically a member of the owners corporation for your subdivision. As a member, you have legal and financial responsibilities to the owners corporation. If you have bought into strata title, you do not have a choice whether you want to contribute to the owners corporation.
Responsibilities of the owners corporation also include the following:
Annual fees, or levies cover general administration, maintenance, insurance and other ongoing costs incurred by the owners corporation.
To determine the fees for the financial year, your owners corporation prepare an annual budget which is approved at the Annual General Meeting. Each lot owner is charged their share of annual fees according to their lot liability.
The lot entitlements and lot liabilities are stated in the plan of subdivision.
These entitlements and liabilities are determined by the developer at the time of subdivision.
There may also be instances where you are required to pay Special levies which cover extraordinary or unexpected expenditure. Examples of special levies are where the owners want balcony repairs which is more expensive than budgeted for or where there is an unforeseen major leak or problem in the building which is not covered by insurance.
If the body corporate meeting approves the special levy, a bill is sent to each unit owner for their share of the levy.
There is so much to learn and understand when buying into strata, but Tideways are here to help with any questions or concerns. We have years of experience and fully understand the day-to-day running of an owners corporation as well as the special circumstances which may arise. Please don’t hesitate to ask.