Understanding sectional title levies starts with knowing what a body corporate can and cannot charge. Owners must contribute towards the lawful expenses of their scheme, but each amount should have an identifiable basis in the legislation, budgets, resolutions or applicable rules.
A levy statement may include ordinary contributions, reserve fund contributions, exclusive use charges and other items. Seeing them together does not mean they all arise from the same authority.
For owners, the useful question is: “What authorises this charge, and how was my share calculated?” For trustees and managing agents, the answer should be available in the records.
Ordinary levies fund shared responsibilities
A sectional title scheme has expenses that continue regardless of whether individual owners use every facility. Buildings need insurance, common property needs maintenance and services must be managed.
Ordinary contributions may fund expenses such as cleaning, security, administration, utilities for common areas and routine repairs.
The Sectional Titles Schemes Management Act provides the framework for these shared responsibilities, including administrative and reserve funds.
The budget and levy calculation should connect
An owner should be able to follow the calculation from the approved expenditure to the contribution allocated to their unit.
The usual allocation follows the section’s participation quota, often called its PQ. A valid alternative contribution arrangement may apply where the required legal procedure has been followed.
Paddocks, a specialist community scheme law and training organisation, explains how participation quotas ordinarily determine contributions and how that basis can be changed.
If two units receive different levy amounts, compare their contribution basis before assuming there is an error. Similar selling prices do not necessarily mean identical participation quotas or obligations.
Not using a facility does not automatically remove liability
An owner who never uses the pool or lift should not assume that they can deduct those expenses from their levy.
The contribution method governs the allocation. Any different treatment needs a proper basis rather than an individual decision to pay less.
Owners concerned about unnecessary expenditure should raise it during the budgeting and meeting process. That is where proposals can be discussed and decisions recorded.
Reserve fund contributions prepare for future work
Routine expenses are only part of a scheme’s financial needs. Roofs, waterproofing, equipment and other common property components may require substantial work over time.
The Act requires a reserve fund reasonably sufficient to cover future maintenance and repairs. Paddocks explains the connection between this fund and the scheme’s maintenance, repair and replacement plan.
A low monthly contribution may look attractive while essential work is being postponed. Buyers and owners should therefore examine the condition of the scheme alongside its levy amount.
Ask what major work is expected, what funds are available and how future costs are being planned. Those answers give a more useful picture than the monthly figure alone.
Special levies are not just extra money
A special levy is a separate contribution raised for a qualifying necessary expense. It should not be treated as unrestricted authority to collect money whenever a project is proposed.
The prescribed framework allows trustees to raise a special contribution where additional income is required for a necessary expense that cannot reasonably wait until it is provided for in the next financial year’s budget.
Paddocks explains that the decision requires a written trustee resolution and addresses necessary expenditure not provided for in the approved budget.
Owners do not always have to vote on the contribution
A common objection is that no owners’ meeting approved the special levy. That alone does not establish that it is unlawful.
Trustees can raise a qualifying special contribution through the appropriate resolution. The important questions concern the expense, the authority, the allocation and compliance with the required procedure.
For example, unexpected storm damage may require prompt action to prevent further damage. A proposed improvement for convenience may raise different approval requirements. Authority to raise funds should not be confused with authority to undertake every possible project.
Ask for the purpose and payment terms
Request:
- The written resolution.
- The expense being funded.
- The total contribution required.
- The calculation for your unit.
- The due dates or instalment arrangement.
- Relevant supporting quotations or reports.
A proper explanation allows owners to understand both the need and the amount. It also helps trustees demonstrate that they considered the issue rather than improvised a charge.
Exclusive use contributions may be separate
An exclusive use area is a part of common property reserved for the use of a particular owner. Examples may include a parking bay, garden or courtyard, depending on the scheme’s arrangements.
The Act provides for additional contributions associated with exclusive use areas, including relevant maintenance, insurance and other specified costs, unless the applicable rules place those costs directly on the owner.
The documents establishing the right matter. Ask whether the area is part of your section, a registered exclusive use area or an area allocated under scheme rules.
A label on a statement should not be the only explanation. The body corporate should identify the relevant right and the calculation supporting the charge.
Fines need valid rules and a fair process
Trustees cannot create a penalty simply because they are frustrated with an owner or tenant.
A fine needs a lawful basis in the applicable rules and must follow a fair enforcement process. CSOS guidance emphasises that trustees must follow the procedure set out in the rules rather than decide penalties on their own.
The alleged breach should be explained
An owner should know which rule was allegedly breached, what conduct is relied on and how to respond.
A statement reading “conduct fine: R750” provides little information. A proper notice should identify the incident and explain the process being followed.
Ask for the current applicable rules and, where relevant, confirmation of approval of amendments. A circular or informal instruction should not be assumed to have the same status as a valid scheme rule.
Adding a fine to the account raises a separate question
Even where a scheme has a penalty provision, placing the amount on an owner’s account must comply with the applicable financial rules.
Paddocks’ analysis of levy litigation discusses prescribed management rule 25(5), which restricts debits that are not contributions or charges authorised under the Act or rules, without consent or an appropriate judgment or order.
The existence of a figure on a statement does not, by itself, prove that it is due.
Interest and collection costs must be supported
Arrear levies affect the whole scheme. The body corporate may need to recover outstanding contributions, and owners should respond promptly to payment notices.
That does not remove the need for accurate interest calculations and a lawful basis for collection charges.
Ask how interest was calculated
Request the authorising resolution, applicable rate, calculation period and account balance used.
Paddocks confirms that prescribed management rule 21(3)(c) permits trustees to charge arrears interest subject to the prescribed maximum.
Payments should be reflected accurately. If a statement appears wrong, supply proof of payment and identify the entry requiring correction.
Legal expenses are not automatically the owner’s debt
A lawyer’s invoice to the body corporate does not automatically establish the amount recoverable from an owner.
Applicable rules, reasonableness and any required agreement, taxation or order must be considered. Taxation is the formal assessment of legal costs.
Paddocks’ case analysis illustrates the problems created by unsubstantiated legal costs and incorrect interest charges.
Ask for an itemised explanation rather than accepting a single unexplained “collection” amount.
What an owner should request
Begin with a focused written request for the records relevant to the dispute:
- The approved administrative and reserve fund budgets.
- Your contribution schedule and allocation basis.
- The relevant trustee or member resolution.
- The current management and conduct rules.
- A detailed account showing charges and payments.
- Supporting calculations for interest or additional costs.
Identify the date and amount you dispute. This makes it easier to answer your question and avoids an argument about the entire history of the scheme.
Keep the request, response and supporting documents together.
Challenge the disputed item without creating avoidable arrears
Withholding every levy because one charge is disputed can create a separate recovery problem.
Paddocks warns against owners unilaterally deducting an alleged claim against the body corporate from their contributions.
Obtain advice on payment and allocation while challenging the disputed amount. Explain the issue in writing and use the internal process first.
If it remains unresolved, the Community Schemes Ombud Service may provide a dispute resolution route for an appropriate application.
Good governance is visible in the records
A well managed scheme can explain its contributions, show the decisions behind them and correct errors when they occur.
Owners also have a role: attend meetings, examine budgets, pay lawful contributions and raise specific concerns promptly.
Sectional title levies keep the scheme functioning. Clear authority and transparent calculations help ensure that collecting them remains a matter of proper administration rather than recurring conflict.
