When you are looking at purchasing a Strata Unit it is imperative to instruct your solicitor to obtain a Strata Inspection Report. The Report will provide information regarding not only the amount of quarterly levies and the balance of the administrative and sinking funds, but also the existence of a Special Levy or a proposed Special Levy.
A Special Levy is raised with respect to major work or expenditure that cannot be covered by the balance of the administrative or sinking fund. When a Levy is raised all Unit holders are required to contribute to the total amount based on the fraction of their Unit Entitlement. A Special Levy is generally payable by instalments.
At the time of a Purchase of a Strata Unit, if a Special Levy has been struck prior to the date of the Contract then the Vendor is liable for the payment of the Special Levy. However, if a Special Levy is struck after exchange, then this is payable in full by the Purchaser. The Strata Inspection Report will outline whether quotes for major work or expenditure are being sought. This would generally provide some indication that a Special Levy will be struck in the near future and you should factor this in to your overall budget for the proposed Purchase.
If would like further information on strata management and special levies, please contact Anna Masi of our office.