What Family Law Practitioners Need to Know
I've recently valued several properties hit with a special levy and it's had a real impact on the assessed value. If you're working on a property settlement involving a unit or townhouse, this is worth understanding.
What is a special levy?
A special levy is an extra cost charged to owners in a community title building, on top of the regular Body Corporate fees.
Body Corporate fees are usually split into two parts:
- Administration Fund, which covers day to day running costs
- Sinking Fund, which covers future works like painting, repairs and major maintenance
A Quantity Surveyor typically sets these funds up at the start of a building's life. The plan assumes steady maintenance and CPI-style increases over time.
Why special levies happen
Sometimes the numbers don't hold up. Costs can rise faster than the original budget allowed for. I think we'll see plenty of this in Brisbane as the city gears up for the Olympics.
Other times, a building develops a structural fault. Water ingress and roof replacement are the usual culprits. When that happens, the work needs to happen fast to stop the damage getting worse, and the sinking fund often doesn't stretch far enough to cover it.
That gap gets filled by a special levy on unit owners.
The real cost to owners
Special levies aren't optional. If one gets imposed, every owner has to pay their share.
I've seen special levies as high as $100,000. It's a significant hit to a client's asset position.
Buyers will spot this in the Seller Disclosure Report, which includes Body Corporate records. Sellers can't hide it, and neither can your client's asset pool.
How special levies affect property valuations
We don't request Body Corporate meeting minutes as standard practice when valuing a property. Special levies usually come to light through conversations with local agents, or through our own knowledge of a particular building.
In some cases, the impact shows up in the sale price itself. A unit sells well below expectation, and further investigation reveals the owner couldn't cover the special levy and had to sell with the debt still attached.
Once a valuer knows about a one-off special levy, the market value is usually reduced by that amount. That said, the adjustment can vary depending on the specifics of the case.
Why this matters in family law settlements
If your client's asset pool includes a community title property, a special levy can change the numbers significantly. A property that looks straightforward on paper might carry a hidden liability that only becomes clear once you ask the right questions.
This matters even more for older buildings, where sinking funds are more likely to be under pressure and major works more likely to be overdue.
What to ask your client
Before a valuation goes ahead, it's worth checking:
- Is the property in a community or strata title scheme?
- How old is the building?
- Has the client heard of any special levies being discussed or imposed?
- Are there any known structural issues, such as water ingress or roofing problems?
If the answer to any of these is yes, or even maybe, request the Body Corporate minutes. You'll need them to confirm the amount and timing of any payments before the valuation is finalised.
The bottom line
A special levy can shift a property's value by significant amounts. Asking about it early saves everyone time, and protects your client from being blindsided by a liability nobody flagged.
If you're working through a settlement with a community title property in the mix, get in touch before the valuation stage. A quick conversation upfront can save a lot of back and forth later.