This article is about whether a body corporate can recover costs from lot owners.
Question: As body corporate funds may not be used on maintenance of an owner’s unit, what happens if this expenditure has been budgeted for and included in the annual levies set at the AGM?
We hear that body corporate funds may not be used on maintenance of an owner’s unit, eg mowing the yard, painting the balcony walls, or spraying the unit annually for pests and termites.
What if this expenditure has been budgeted for and included in the annual levies set at the AGM? If the body corporate cannot use the money for private maintenance, does this mean the owners who have paid the levies have lost their money?
Answer: Just because something is budgeted does not automatically mean it is approved to be spent or must be spent.
I don’t think so. Just because something is budgeted does not automatically mean it is approved to be spent or must be spent.
The key thing is the legislative fundamentals. Where a body corporate provides services to individual owners, it must, to the greatest practicable extent, recover the costs of those services from the user of them. What it means budgetary wise is that it should not spend that money that has been raised, which is really then a free klick for all owners next year when (ideally) the body corporate should not have to raise as much as they did in the previous year – noting, of course, that the owners themselves will be likely to have to make up the shortfall out of their own pockets for the individual services provided to them.
Frank Higginson Hynes Legal E: frank.higginson@hyneslegal.com.au P: 07 3193 0500
This post appears in Strata News #704.
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