 If
there is one subject which can be relied on to cause disagreement between
the owners and the trustees of bodies corporate it is the level at which
levies should be set, says Michael Bauer, General Manager of IHFM, which
specialises in the management of bodies corporate and home owners’
associations.
“There are,” says Bauer, “two principles here which should
be observed. The first is that the levies should be sufficient to cover
all the ordinary budgeted operating costs facing the body corporate -
and members are usually able to accept that.
“However, the other principle is that in every body corporate there
will always come a point at which some unforeseen repair, maintenance,
improvement or upgrade item will become essential - and this has to be
recognized and allowed for in advance.
“For this reason, wise trustees will always add to their budget
a little extra sum, increasing the levy by more than it is actually required
and allowing for a profit to accumulate reserves that can later be used
for planned and unplanned repairs and maintenance.
“If this is done, the likelihood of special levies having to be
raised at some stage, e.g. for lift repairs or the replacement of windows,
can usually be avoided.”
Special levies, says Bauer, are always ‘a shock to the system’
and cause owners to resent the trustees. However, they may be the only
option open to the body corporate if it has no reserves.
“It is characteristic of all successful bodies corporate that they
do increase their levies on an ongoing basis and are never forced into
having to raise a special levy,” says Bauer. “It is the unsuccessful
schemes which invariably end up having to take this route and raise a
special levy, but collecting the funds in these cases from owners can
be very difficult.”
A good managing agent, adds Bauer, will always coax the trustees into
recognising the possibility of major repair or other items becoming payable
at some stage in the life of the body corporate and make provision for
that.
At the same time, he says, members of bodies corporate should not be
too complaint: they should go through the proposed budget figures which,
by law, they have to receive two weeks ahead of the Annual General Meeting
and they should check them thoroughly and take the opportunity to analyse
them and question them critically.
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Newsletter:
25 May 2012 2012 to 1 June 2012 - Dullstroom, Mpumalanga, South Africa
