How are owners corporation fees calculated?
The second most asked question about OC fees after, How Much?
Answer:
Each lot of an Owners Corporation (eg. your apartment) has a declared ‘Lot Liability’. This is indicated on the Plan of Subdivision.The annual budget required to meet the anticipated expenditure is divided by the lot liability for each apartment as shown on the registered plan of subdivision.
The Equation:
- The agreed Budget for the coming year passed at the Annual General Meeting for the Owners Corporation divided by the,
- Total declared lot liability for that Owners Corporation. This will give a ‘Lot Liability’ figure for each unit of lot liability.
- You then multiply how many units of lot liability you have by this figure and that is your annual OC Fee figure. If you pay your OC Fees quarterly, you divide this figure by four.
An example:
A budget of $200,000 for OC1 for the coming year divided by 407 units of lot liability, for say 100 apartments, equals $491.40 for one unit of lot liability. And if your apartment is 7 units of lot liability. This is 7 x $491.40 – which equals $3,439.80 per annum or $859.95 per quarter.
If you are in a ‘multiple owners corporation’ – this is where your development is covered by several owners corporations, you will have budgets set for each OC and your invoice for fees will indicate an amount owing for OC1, OC2 and so on. Again, your apartment may be under OC2 for example, your car park under OC3 and OC1 may cover the exterior of your development and Essential Services, staffing, etc. Most developments are unique in their setup. Some are a single OC covering your apartment, carpark and storage cage and others are covered by a seperate OC for each. Check the ‘Plan of Subdivision’ page in the menu also.
The Long Term Maintenance Fund (formerly known as the Sinking Fund) is also based on lot liability.If you are contributing to the Long Term Maintenance Fund you will normally see this as a seperate item on your OC Fee invoice.