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  • #7162
    Anonymous

      The developer has retained (purchased) one of the units in our complex. It appears he has excluded over 100 sq m from his unit entitlement calculation so e.g while the total area he occupies is say 220 sq m he has only included 120 sq m for purpose of unit entiltlement calculation. Hence  he is not paying any strata levy for the other 100 sq m. What steps can the Owners Corp take to rectify this, does there need to be a full meeting to authorise any action or can the EC determine this and what documentation is needed ? All the units entitlement have been valued on the basis of sq m they occupy.

      Peter

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    • #12267
      Jimmy-T
      Keymaster

        The CTTT's adjudicators have a specific power that allows them to correct levies when they have clearly been skewed to favour one owner, usually either the develepors themselves or purchasers of large apartments or commercial areas whom they are trying to lure to the building.

        The cheapest way to go about this is to get unanimous agreement from all owners to re-allocate unit entitlements.  But seriously, that's never going to happen. Instead you need to consult a specialist strata surveyor with a track record in this area who knows exactly what need to be done to present a compelling case to the CTTT. I'm not sure but I think I remember reading somewhere that in some cases the CTTT can order the developer to refund the Owners Corporation all the money they failed to pay.

        Unless the difference is miniscule, it's worth it and the success rates for the best companies are incredibly high, so go for it

        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.
        #12272
        easty
        Flatchatter

          There is provision in Section 183 of the Act for financial penalties to the developer.

           

          The registration of strata plans and Units of Entitlement (UOE) is prone to abuse by developers who have no real interest in the ongoing financial imposts on owners except insofar as the setting of UOE (and by default levies) can help sell their properties.  Understandable from a commercial aspect but unacceptable as a process – prone to abuse.  I am not sure what the answer is but I do think the fact you can’t review UOE unless you have valuations as at the time of registration makes it very difficult (perhaps purposely) to review UOE’s.

           

          I would like to think in this day and age with all the data around that UOE’s could be more fluid and adjusted say on a five or ten yearly basis depending on valuations, if an OC so desires or simply as a part of the legislative process.   The current system is very inflexible and the older a plan the more difficult it is to review.  I would be interested to know from a valuer and maybe strata lawyer as to why the act was framed in such a way that we have to seek a reallocation of UOE based on the original valuations.

           

          Away for the legal aspect the real problem for an OC is that if the UOE is badly skewed at registration it makes the imposition (usually increases) of levies at later dates difficult because of the percentage multiplier effect.

           

          So for example say one owner whose property is valued at say $850,000 and pays $2,200 a qtr in levies and is faced with a 10% increase then s/he is up for an $880 a year impost.  Another owner whose property is worth a similar amount but pays $900 a quarter in levies only pays an additional $360 a year.  As the years go on the differential becomes more and more.  The above is based on an actual situation where the initial valuations by the developer, ten years ago, were clearly skewed.  Yes the owners can seek recourse but very often they don’t and they quietly stew – the process for UOE review is daunting and very expensive (in this case the quote was $16,000).

           

          Eventually, in the above scenario, you have a situation where the gap between similarly valued properties is enormous and if enough lots are affected passing budgets where an increase is necessary becomes a nightmare.

           

          I think there has to a better way to review UOE as a matter of course.  We have periodic review of land for rating purpose – why not for units?

          #12330
          Anonymous

            This is a really interesting topic. 

            To add to the information provided by JimmyT and Easty, orders regarding unit entitlements may be made on many occassions in the life of a strata scheme. For example – 

            1. any time after the registration of the strata plan

            2. any time after registration of each strata plan of subdivision 

            3. any time after a change in the permitted land use, and 

            4. any time after registration of a revised schedule of unit entitlements for a concluded staged strata development. 

            Therefore strata schemes may want to consider reviewing and altering their unit entitlements to ensure that each lot owner is paying the correct amount of levies in accordance with their correct unit entitlements. 

             

            Kind regards

            Simone Balsara

            simone@teyslawyers.com.au

            https://www.teyslawyers.com.au

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