Body Corporates: Levying

A body corporate is a legal entity made up of all unit title owners in a complex. Owners of a unit title own part of a property, such as buildings which have multiple property ownerships within them. For example, a townhouse or apartment complex.

Unit title owners become part of the body corporate upon purchase. Every member of a body corporate must pay their allocated levies.

What is a levy?

A levy is a yearly payment made by each unit title owner to the body corporate. Levies are generally used for insurance, maintenance, cleaning, and repairs or shared utilities for common areas of the complex.

Any funds required to be paid by a body corporate are financed exclusively by levies. The body corporate will specify a date by which the levy must be paid and interest will accrue on the principal sum.

How are levies calculated?

Each year, the body corporate will create a budget which is approved at the annual meeting. This assessment includes expected costs for the year, with reference to the usual annual fees and planned upcoming works needed. Once the budget is approved, it will be split amongst the unit owners according to each owner’s “ownership interest”.

Levies are split into different funds and calculated differently. Levies are calculated by utility interest for the operating account, Long-Term Maintenance Fund and Contingency Fund.

There is also the Capital Improvement Fund, for which levies are calculated in proportion to each unit title holder’s ownership interest.

Any overdue levies are recoverable as a debt.

There are necessary procedures which must be followed if you are part of a body corporate. If you are confused about these, it pays to seek advice from a professional with experience in the area.

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