Be Wary of Additional Fees When Entering Strata

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Tuesday, September 1st, 2015
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Strata owners should remain well apprised of some of the gratuitous fees that management companies can levy upon the unsuspecting.

Purchasing an apartment or unit in an Owners Corporation is not without its own small pitfalls and difficulties, however, giving that strata properties entail divvying up the ownership and management of a single physical structure amongst multiple parties.

One area of potential peril lies in the administrative fees that lot owners must pay for the maintenance and up keep of the overall building. The fees can be improperly allocated on occasion, leaving certain lot owners bearing a disproportionate share of the burden.

Under section 28 of the Owners Corporations Act 2006, all lot owners collectively bear the costs for repairs, building and maintenance works on a lot liability basis. In order to manage these and other costs, Owners Corporations frequently enlist the aid of specialised management companies.

Unfortunately lot owners can at times find themselves incorrectly lumped with additional administration fees that do not lie within the remit of lot liability, and are charged by management companies based upon their Contract of Appointment.

Australian law has clearly established, however, that any administrative fees charged to lot owners that are not a part of lot liability are invalid charges, and cannot be recovered at the Victorian Civil and Administrative Tribunal.

In a land mark decision Owners Corporation PS507084R v Kiran (Owners Corporation) (Civil Claims) [2010] VCAT 1968 (26 November 2010) an Owners Corporation Manager attempted to charge a lot owner $165.00 for additional fees, after said owner failed to pay his Owners Corporation fees on time in accordance with the Final Fee Notice.

Senior Member I Lulham found that that the sum was excessive, and that a resolution of the lot owners themselves at a general meeting for the charging of further administrative fees was invalid.

Illegal fees of this type remain a widespread problem for the Australian strata sector, with many lot owners still charged with a $33 late payment fee each time that they receive an additional notice following the due date for payment. Under Kiran, however, this fee cannot actually be legally charged

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