Three things to know about recovering costs:
- Only levies and levy-related charges (like interest) can be included in a levy notice to lot owners.
- Payment for extra services should be agreed with lot owners before the service is provided.
- Signed agreements are best administrative practice.
▶️ Watch the 3-minute explainer video below
🔊 Listen to the audio version below
Levies are to benefit everyone
Recovering costs from lot owners that are not usual body corporate levies requires careful consideration.
When a lot owner pays a body corporate levy, the money should be used towards purposes that are common for everyone – not just to individual lot owners.
It's not uncommon for bodies corporate to arrange bulk supplies of services to both the common property and individual owners at the same time.
The body corporate funds should be used to pay for the services provided to common property, and the services provided to individual owners should be paid for by those individual owners, not by the body corporate.
Recovering non-levy costs from lot owners
A common issue is pest control or termite inspections. The body corporate arranges for the treatment of termites across the common property, and they offer an option to people individually to have that same termite inspector inspect and treat their lot at that point in time.
The method to recover those costs is not in the by-laws. By-laws cannot impose monetary liabilities, despite many of them trying to do so.
A body corporate also can't recover costs by simply adding it to an owner's levy statement. That's simply unlawful. What goes on levy statements is clearly set out in the legislation itself.
The only way to recover extra costs like this is by agreement with that individual lot owner, in writing, in relation to that particular service.
While that might be an administrative burden, that's what the legislation requires.
A well-advised committee would be saying to people, ‘We're going to get this service. This is the benefit that's being offered to owners from the provider. If you engage them on the same day, here's the paperwork and payment terms which you need to sign and return.’
That's contrary to how it is often done, where the body corporate will arrange the complete service and then invoice people afterwards.
What you can do
Just remember, if you are providing services to individual owners through a body corporate you need to lock down that agreement to recover the cost before you start.
If you need any advice about this issue, feel free to get in touch.
This content relates to buildings regulated by the Body Corporate and Community Management Act 1997 and not the Building Units and Group Titles Act 1980.
