On this page:
Setting fees
Your owners corporation (formerly body corporate) can set:
- annual fees to cover general administration, maintenance, insurance and other ongoing costs. If you have a maintenance fund, the annual fees must include contributions to the fund. The owners corporation can decide the fee amount, how they are paid and when payment is due (usually quarterly)
- special fees or charges to cover extraordinary or unexpected expenditure; for example, to urgently repair the building. 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 75 per cent of all lot owners or lot entitlements.
Lot owners must pay their share of annual and special fees according to lot liability.
To determine its fees for the financial year, your owners corporation will need to prepare a budget.
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.
This means your owners corporation 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.
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. For more information about preparing a maintenance plan, see our Preparing a maintenance plan page.
If your owners corporation has a maintenance plan, it must have a maintenance fund. Any amount reserved for the maintenance fund must be included in the annual fee.
Issuing notices for fees and levies
Invoices 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.
Notices for fees must go out at least 30 days in advance.
The first fee notice must state that:
- the lot owner is obliged to pay the fees and charges within 28 days of the date of the notice
- if your 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 (see penalty interest rate information on this page)
- the dispute resolution process applies to disagreements about fees and charges.
The final fee notice must state that:
- the lot owner is obliged to pay the overdue fees, charges and interest immediately
- penalty interest is payable on the overdue fees and charges at the date of the final notice (see penalty interest rate information on this page)
- 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.
Below is a sample process and timeline for notices of fees:
| |
Due date |
Notice should be sent |
Reminder letter or telephone call |
Final notice should not be sent before |
| First notice of annual fees/first quarter |
28 December |
28 November |
14 January |
28 February |
| Second quarter |
28 March |
28 February |
14 April |
28 April |
| Third quarter/half yearly |
28 June |
28 May |
14 July |
28 July |
| Fourth quarter |
28 September |
28 August |
14 October |
28 October |
Your owners corporation can assist you to arrange for automatic payment of fees to help you with budgeting and reduce the risk of the owners corporation not being able to meet its financial and legal obligations due to unpaid fees.
Late payment of fees and charges
If lot owners do not pay fees, they 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 (see penalty interest rate information on this page) if 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 annual fees to recover recurrent and extraordinary expenses from individual lot owners. These fees must be based on lot liability
- charge penalty interest on overdue fees (see penalty interest rate information on this page).
These fees and charges must apply equally to all lot owners and comply with Part 3 of the Owners Corporation Act 2006. For example:
A lot owner has 10 per cent of the lot liability and has not paid their fees.
The owners corporation manager charges the owners corporation $33 for late payment, as allowed by the manager’s contract of appointment.
The lot owner can only be charged 10 per cent of the late payment fee, in this case $3.30.
An owners corporation or its manager cannot charge a lot owner any other fees or charges, such as an ‘administration fee’, for overdue owners corporation fees.
A manager’s contract of appointment is a contract between the owners corporation as a legal entity and the manager or their company. This means:
- it is the owners corporation that is subject to the contract, not individual lot owners
- individual lots owners are bound by the contract as members of the owners corporation.
The contents of any contract of appointment must comply with the Owners Corporation Act 2006, the Owners Corporations Regulations 2007, and the Fair Trading Act 1999.
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.
The current penalty interest rate is published:
- in The Age newspaper every Monday under the Law List
- on the Department of Justice website.
Last updated: 05/04/2012