Special levies are essential in strata properties and even more so in self-managed strata corporations, helping communities manage unexpected or occasional expenses beyond regular monthly strata fees. Understanding special levies—including when they are necessary and how they are managed—is crucial for effective property management.
Why Special Levies Are Needed
Strata corporations typically depend on monthly fees and a contingency reserve fund (CRF) for standard maintenance and operational costs. However, unexpected situations like emergency repairs or significant renovations can arise, prompting the need for a special levy to cover these unbudgeted costs.
Approval Process for Special Levies
Special levies require formal approval through a resolution at a general meeting, with at least a 3/4 majority vote. The resolution must detail:
- The purpose of the levy
- Total funds required
- Allocation method among owners
- Specific payments per lot
- Due dates
The allocation method is typically based on unit entitlement unless a different method is specified in the resolution and approved by the 3/4 vote.
In cases of critical safety concerns or to prevent significant property damage, if the 3/4 majority is not reached, the strata corporation can petition the B.C. Supreme Court for approval. Note that under Section 100 of the Strata Property Act, a unanimous vote is required only if the strata corporation wishes to adopt a different general expense allocation formula for all expenses, not specifically for a special levy.
Uses and Management of Special Levy Funds
Funds collected through special levies must strictly serve the stated purpose outlined in the approved resolution. Transparency is vital, and councils must regularly inform owners about fund utilization. Special levy funds can also secure strata loans if a 3/4 majority approves.
Tracking and Record-Keeping
According to the BC Strata Property Act, strata corporations are required to prepare and retain certain financial records, including:
- Books of account showing money received and spent
- Budgets
- Financial statements
- Bank statements
- Canceled cheques
Given the complexity and importance of accurate record-keeping, leveraging tools like OnlineStrata.ca simplifies this critical process. OnlineStrata.ca enables strata councils to:
- Track special levies per unit: Manage payments and record transactions efficiently
- Send residents reminders: Automated notifications for due levies ensure timely payments
- Calculate interest on overdue payments: Accurately apply interest rates to pending dues as per regulations
- Generate financial statements: Automatically produce annual income statements and Treasurer's Reports
Late or Unpaid Special Levies
Late payments may incur regulated interest, becoming part of the levy debt itself. Non-payment can lead to liens against the property and possible foreclosure actions. Strata corporations must adhere to a two-year limitation period for collecting outstanding levies.
Special Levies and Property Sales
Upon selling a strata property:
- Sellers are accountable for levy payments due before the sale completion
- Buyers assume levies due afterward
- Refunds of levies issued post-sale typically belong to the current strata lot owner unless specifically negotiated otherwise
Investing and Managing Levy Funds
Special levy funds must be managed separately from other strata finances and can be invested securely as per Strata Property Regulation 6.11. All investment income must be documented transparently.
Handling Excess Funds
Excess funds from special levies must be proportionally refunded to contributing owners:
- Refunds over $100 are returned directly
- Amounts under $100 per owner may be deposited into the CRF
Key Takeaways
- Special levies require a 3/4 majority vote for approval
- Funds must be used strictly for the purpose stated in the resolution
- Tools like OnlineStrata.ca can simplify levy management and ensure compliance
Managing special levies proactively and efficiently through platforms like OnlineStrata.ca helps ensure your strata community's financial health and compliance, making strata living seamless and worry-free. Try OnlineStrata.ca today for stress-free levy management—sign up for a demo to see how it can benefit your strata community!
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