Ever wondered what your monthly levies cover?
Discover the difference between Administrative Funds, Reserve Funds, and Special Levies in a Body Corporate.
Discover the difference between Administrative Funds, Reserve Funds, and Special Levies in a Body Corporate.
What are levies used for?
In a Sectional Title Scheme, your monthly levies are divided into two distinct funds required by law: The Administrative Fund (for day-to-day running costs) and the Reserve Fund (for long-term maintenance and major repairs).
The Administrative Fund (Day-to-Day Operations)
The Administrative Fund covers the estimated annual operating expenses of the Body Corporate. Think of this as the checking account for the complex. When you pay your monthly levy, a portion goes here to cover:
The STSM Act requires every scheme to have a separate Reserve Fund. This acts as a savings account strictly dedicated to the future maintenance, repair, and replacement of common property assets. To manage this, Trustees must create a 10-Year Maintenance Plan. This plan outlines exactly when big projects—like painting the entire complex, waterproofing roofs, or replacing paving—will need to happen, and how much they will cost. A portion of your monthly levy is legally mandated to go into this fund to ensure the complex has the cash on hand when these large projects arise.
What is a Special Levy?
Even with the best planning, emergencies happen. If a massive, unforeseen expense arises that was not budgeted for in either the Admin or Reserve funds, the Trustees have the power to raise a Special Levy. This is an additional contribution raised to cover urgent needs, and it is calculated based on your unit's Participation Quota (PQ).
When are levies due?
Levies are officially due and payable monthly in advance. If an owner falls into arrears, the Body Corporate is entitled to charge interest and take legal action, including handing the account over to attorneys for debt collection. Unpaid levies put an unfair financial burden on the rest of the paying owners.
In a Sectional Title Scheme, your monthly levies are divided into two distinct funds required by law: The Administrative Fund (for day-to-day running costs) and the Reserve Fund (for long-term maintenance and major repairs).
The Administrative Fund (Day-to-Day Operations)
The Administrative Fund covers the estimated annual operating expenses of the Body Corporate. Think of this as the checking account for the complex. When you pay your monthly levy, a portion goes here to cover:
- Municipal charges for common areas (water, electricity, refuse).
- Building insurance premiums.
- Managing agent fees and auditor costs.
- Salaries for Body Corporate employees, like caretakers and cleaners.
- Routine, day-to-day maintenance (like replacing lightbulbs, garden services, and minor repairs).
The STSM Act requires every scheme to have a separate Reserve Fund. This acts as a savings account strictly dedicated to the future maintenance, repair, and replacement of common property assets. To manage this, Trustees must create a 10-Year Maintenance Plan. This plan outlines exactly when big projects—like painting the entire complex, waterproofing roofs, or replacing paving—will need to happen, and how much they will cost. A portion of your monthly levy is legally mandated to go into this fund to ensure the complex has the cash on hand when these large projects arise.
What is a Special Levy?
Even with the best planning, emergencies happen. If a massive, unforeseen expense arises that was not budgeted for in either the Admin or Reserve funds, the Trustees have the power to raise a Special Levy. This is an additional contribution raised to cover urgent needs, and it is calculated based on your unit's Participation Quota (PQ).
When are levies due?
Levies are officially due and payable monthly in advance. If an owner falls into arrears, the Body Corporate is entitled to charge interest and take legal action, including handing the account over to attorneys for debt collection. Unpaid levies put an unfair financial burden on the rest of the paying owners.