What You Need to Know Before You Buy 

If you’re buying or owning in a strata, you may have come across the term special levy in your document review.

And if you’re not familiar with what that means, don’t worry—you’re not alone!

Special levies are one-time payments collected from strata owners when the Contingency Reserve Fund (CRF) doesn’t have enough money to cover a major expense.

These levies can add thousands of dollars to your housing costs and often come as a surprise to owners who didn’t know to look for them in advance.

So, how do you know if a levy is coming, and how can you protect yourself from unexpected costs? Let’s break it all down.

What Is a Special Levy?

A special levy is an extra fee charged to strata owners when the reserve fund is insufficient to cover repairs, legal fees, or major projects.

Common Reasons for Special Levies:

✅ Major Repairs – Roof replacements, plumbing failures, elevator repairs, or foundation work.
✅ Emergency Expenses – Unexpected damage from fires, floods, or structural issues.
✅ Legal Fees – Lawsuits involving the strata that require additional funding.

The bottom line? If a strata isn’t financially prepared for these costs, the owners are expected to pay out of pocket—and this can be a significant financial burden.

Unlike monthly strata fees, special levies aren’t optional. Once approved, all owners must contribute based on their Unit Entitlement (UE).

How to Spot an Upcoming Special Levy

One of the biggest mistakes buyers make is not checking for signs of future levies before purchasing.

While no one can predict the future, there are key warning signs that a special levy may be on the horizon.

Where to Look for Red Flags:

📑 Meeting Minutes – If major repairs are discussed without a funding plan, this could mean a special levy is coming.

📉 Depreciation Report – If large projects are listed but no money has been allocated, the funds may need to come from owners.

💰 Reserve Fund (Form B) – A low balance in the Contingency Reserve Fund means there’s not enough to cover big expenses.

⚠ Repeated Discussions About Funding – If funding issues keep coming up, it may indicate the need for a levy.

If any of these red flags appear, it’s critical to ask questions before making an offer.

How Are Special Levies Calculated?

Every strata unit has a Unit Entitlement (UE), which determines how much of the shared expenses each owner is responsible for.

Example: A $500,000 Special Levy in a 100-Unit Building

➡️ A unit with 100 UE pays $5,000
➡️ A unit with 200 UE pays $10,000

Since Unit Entitlement is fixed, owners can’t negotiate their share of the costs.

Special levies must be paid upfront or, in some cases, in installments—but your mortgage won’t cover them.

How to Protect Yourself as a Buyer

While special levies aren’t always a dealbreaker, it’s important to go in with your eyes open and protect yourself financially.

4 Steps to Reduce Your Risk:

✅ Check strata documents – Look for warning signs in meeting minutes, depreciation reports, and Form B.

✅ Review the reserve fund – If it’s low, a levy is much more likely.

✅ Ask the strata council – Are there any major projects planned with no clear funding?

✅ Include a clause in your offer – Ensure any levies approved before closing are paid by the seller!

How Special Levies Can Be Used as Leverage

Special levies can be frustrating—but they can also present an opportunity.

💡 If a levy is coming up, you may be able to negotiate a lower purchase price.

Even if the seller agrees to pay the levy, you as the buyer may have to live through the inconvenience—whether it’s construction noise, limited building access, or common areas being unusable.

By factoring these disruptions into your negotiation strategy, you can use future levies as leverage in price discussions.

📌 The key takeaway? Understanding strata finances gives you an edge—not just in avoiding costly surprises, but in negotiating a better deal.

Final Thoughts

A special levy doesn’t have to be a dealbreaker, but it does need to be fully understood before purchasing.

If you’re looking at a strata property, I highly recommend reviewing the documents carefully and making sure you know what you’re getting into.

✅ Need help reviewing strata documents? I’d love to assist!
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