Your owners corporation (formerly body corporate) can set both annual and special fees.

Annual fees

Annual fees cover general administration, maintenance, insurance and other ongoing costs. Lot owners are charged their share of annual fees according to their lot liability. 

To determine its fees for the financial year, your owners corporation will need to prepare an annual budget. This means the committee or a delegate must estimate the cost of administration, maintenance, insurance and contributions to the maintenance plan well before the annual general meeting each year.

The owners corporation must send its proposed budget to members with the notice of the annual general meeting, where they will determine annual general fees.

A maintenance plan helps the owners corporation to budget for necessary works. A detailed plan can help you win approval for funds at the annual general meeting. 

If your owners corporation has a maintenance plan, it must also have a maintenance fund. The owners corporation can decide what, if any, portion of the annual fees should be contributed to the fund, how it is paid and when payment is due (usually quarterly).

Special fees

Special fees or charges cover extraordinary or unexpected expenditure; for example, to urgently repair the building or to cover other costs such as legal action against the owners corporation.

If the amount of the proposed special fees is more than double the amount of the owners corporation’s annual fees, it must be approved by a special resolution. A special resolution requires support from at least 75 per cent of all lot owners or lot entitlements.

Lot owners are charged special fees according to their lot liability, unless works are being undertaken that will only benefit one, or some (but not all) lots.

In such a case, special fees are charged using the 'benefit principle'.

Applying the benefit principle

The benefit principle simply means that those who benefit more, pay more. It does not always need to be applied in an exact way if it is not practical to do so. The assessment only needs to be considered reasonable.

Applying the benefit principle may not always result in lot owners paying other than according to their lot liability.

For example:

• when the greater benefit of works to a lot owner are offset by their having paid higher annual fees (because of their higher lot liabilities) or

• when works on one lot are offset by indirect benefits to the other lots; for example, by raising the value of the entire building or by reducing the possibility of legal actions against the owners corporation.

Issuing notices for fees and levies

Notices for fees issued by the owners corporation must be in the approved forms. If not, the owners corporation may have difficulty recovering the money owing.

​The first fee notice must state that:

• the lot owner must pay the fees and charges within 28 days of the date of the notice

• if the owners corporation has voted to charge interest on overdue fees, penalty interest at the rate specified in the notice will be payable on overdue fees and charges. 

• the dispute resolution process applies to disagreements about fees and charges.

Lot owners must pay the fees and charges within 28 days of the date on the fee notice. The due date for the fees and charges is determined by the date of the fee notice - that is, it cannot be pre-set independently. For example, if fees are to be paid by 1 January 2017, the first fee notice must be sent by 4 December, 2016. Allowing a margin of error of a day or so is recommended.

The final fee notice can be sent any time after the 28 days has expired and must state that:

• the lot owner must pay the overdue fees, charges and interest immediately

• penalty interest (if charged) is payable on the overdue fees and charges at the date of the final notice.  

• the amount of penalty interest that will accrue daily until overdue fees and charges are paid

• the owners corporation intends to take legal action to recover the amount due if the full amount is not paid within 28 days of final notice.

Note: Some owners corporations choose not to send a final fee notice as soon as the first 28 days has expired, but instead allow a 'grace period' (perhaps with a reminder call or email, during which no penalty interest is charged) before sending the final notice.

 

Late payment of fees and charges

Lot owners who do not pay fees, lose the right to vote on ordinary resolutions. They can attend owners corporation meetings but can only vote on special or unanimous resolutions. 

An owners corporation can:

• charge penalty interest on money owing if this is authorised by resolution. 

• take action to recover debts in the Magistrates’ Court of Victoria or at the Victorian Civil and Administrative Tribunal (VCAT).

An owners corporation can also levy fees to recover recurrent expenses from individual lot owners. These fees must be based on lot liability.

Penalty interest rate

The maximum rate of interest that your owners corporation can charge on overdue fees is determined by the Penalty Interest Rates Act 1983.

Owners corporation certificate fees

On 1 October 2014, a new fee structure was introduced, setting out the maximum amount an owners corporation can charge for issuing a certificate.

If a lot is affected by more than one owners corporation, a separate certificate may be issued for each and the owners corporation may charge a separate fee.

There are discounts for additional certificates, when required as part of a sale of land from the same owners corporation manager.