Forum: Loan or levy? Choice isn’t really yours


Strata loans or special levies – if your strata scheme has to pay a bill how would you rather pay your share?  A one-off hit to your bank account or payments spread across a few years via a strata loan that will attract interest?

This is an issue a lot of strata schemes face, especially the older ones we’ve been talking about recently, where some owners just want to make their contribution and move on while others don’t have that kind of money lying around.

Now, the way strata finances are arranged in most states is that levies have to be paid according to owners’ unit entitlements (the figure that gives them their voting power and by which their levies are calculated).

And that means you either have to have a special levy or a strata loan; you can’t mix and match.

But this also brings us to a truism of strata – people with more money tend to buy bigger apartments which means they have to pay higher levies.

And that means if you are paying interest on a strata loan, the people in the posh flats are going to be paying more interest too. 

However, unless they paid over-the-top for the flat, are mortgaged up to their eyeballs and the start-up that was going to make them billionaires can’t get past square one, they will probably have more money lying around to pay special levies.

So they don’t want a strata loan – they want to pay it all off in one go.  But the less well-off neighbours might have zero financial wriggle room and be grateful for the chance to pay their share of the strata loan, interest and all.

The government could fix this with a tweak of the regulations, allowing owners corps to set up separate funds into which money is paid either as a special levy or as a loan which is only paid off by those who didn’t pay the special levy.

But perusing the 139 strata reforms currently under discussion, that doesn’t get a mention.  Perhaps our new Fair Trading minister and our new Property Services Commissioner could discus that … if they ever meet.

You can read which way out Flatchatter’s scheme went – special levy or loan – HERE.

Elsewhere on the Forum

  • When one committee member is driving the others nuts with their unreasonable behaviour, causing mass resignations, is compulsory management worth the risk?  That’s HERE.
  • Can the strata committee make opening of a communal gate “by prior arrangement only”? That’s HERE.
  • Have new limits on proxy farming in Victoria made it harder to get a quorum? That’s HERE.
  • The new Community Land Management Act allows owners to confer property rights to others via a Special Resolution.   Anyone had any experience with this? That’s HERE.

We’ve had a bumper number of posts to the forum in the last week, most of them about ongoing discussions like:

  • The saga of the leaning gatepost that was once common property but isn’t now. That’s HERE.
  • And is it possible to transfer responsibility for common property repairs to the owners whose lots are affected by it?  That’s HERE.

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  • #61710

      Strata loans or special levies – if your strata scheme has to pay a bill how would you rather pay your share?  A one-off hit to your bank account
      [See the full post at: Forum: Loan or levy? Choice isn’t really yours]

      The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
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