Special levies are an important aspect of strata living in British Columbia. They can have significant financial implications for owners and can impact the process of selling a strata property. This article will explain what special levies are, how they are handled and paid, and the effects they have on owners and the selling process.
What Are Special Levies?
A special levy is an additional charge imposed on strata owners to cover expenses that are not included in the regular strata fees. These levies are typically used for unexpected or large-scale expenditures that exceed the budgeted amounts or are not covered by the Contingency Reserve Fund (CRF). Examples of situations requiring special levies include major repairs, building upgrades, or addressing unforeseen damage.How Are Special Levies Handled?
Proposal and Approval
- Proposal: The strata council identifies the need for a special levy and prepares a proposal outlining the purpose, amount required, and how the funds will be used.
- Notice: Owners must be given advance notice of the proposed special levy. This includes the details of the levy and the date of the general meeting where it will be discussed and voted on.
- General Meeting: The proposal is presented at a general meeting, either the Annual General Meeting (AGM) or a Special General Meeting (SGM). Owners have the opportunity to discuss the proposal and ask questions.
- Voting: A resolution to approve the special levy is put to a vote. In most cases, a 3/4 majority vote is required for the levy to pass. If approved, the levy becomes a binding obligation on all owners.
Payment and Collection
- Payment Schedule: The resolution for the special levy will specify the payment schedule, including due dates and the amount each owner is required to pay. Payments can be structured as a lump sum or in installments.
- Collection: Owners are responsible for paying their share of the special levy by the specified due dates. The strata corporation will collect these payments, which are typically handled in the same manner as regular strata fees.
- Enforcement: If an owner fails to pay their share of the special levy, the strata corporation can take similar enforcement actions as with unpaid strata fees, including charging interest, placing a lien on the property, and pursuing legal action.
Effects of Special Levies on Owners
Financial Impact
Special levies can have a significant financial impact on owners, especially if the levy amount is substantial. Owners need to budget for these additional expenses and may need to seek financing if they are unable to pay the levy in full.Property Value and Marketability
The existence of a special levy can affect the value and marketability of a strata property. Potential buyers may be hesitant to purchase a property with an outstanding special levy, as it represents an additional cost they would need to assume. On the other hand, if the special levy is for improvements that enhance the property's value (e.g., building upgrades or major repairs), it can be seen as a positive investment.Effects of Special Levies on Selling a Strata Property
Disclosure Obligations
Sellers are legally required to disclose any outstanding special levies to potential buyers. This is typically done through the Form B Information Certificate, which provides detailed information about the strata lot, including any special levies that have been approved but not yet paid in full.Negotiations
The presence of a special levy can influence negotiations between the buyer and seller. Buyers may request that the seller pays off the special levy before completing the sale or negotiate a lower purchase price to account for the outstanding levy.Timing of the Sale
The timing of the sale can be affected by the special levy. If a special levy has been approved but not yet collected, it may be beneficial for the seller to either pay the levy in full or negotiate with the buyer to share the cost. This can help avoid delays or complications in the selling process.Special levies are a critical aspect of strata living in BC, used to cover significant or unexpected expenses that cannot be managed within the regular budget or CRF. They require careful handling and clear communication to ensure that all owners understand their obligations and the reasons behind the levy. For owners looking to sell their strata property, being aware of the implications of special levies and proactively addressing them can help facilitate a smoother and more transparent transaction process. If you have any concerns or questions about special levies, consulting with your strata council or a real estate professional is advisable.