A homeowner in a land lease community is part of a broader community that shares services and facilities. The residential land lease community laws introduce a new way that homeowners and the operator can work together to fund future upgrades and improvements within the community.
A special levy can be useful to:
- give homeowners a say in the services and facilities provided in the community
- provide another way to finance upgrades without permanently increasing site fees
- secure money to ensure the upgrade home owners want actually happens
- increase home value as a result of better community services and facilities.
What can a special levy be for?
Either the operator or the home owners can propose a special levy to fund a new facility, new service or other improvement in the community. This could include a new swimming pool or replacing the electrical wiring within the community. Special levies are not designed for regular maintenance or recurrent operating expenses.
What must be covered in a special levy notice?
Notice of a proposal for a special levy must:
- be in writing
- clearly describe the proposed new service, facility, upgrade or improvement
- show the total amount proposed to be raised by the levy
- set out the amount or method of calculating the special levy needed from each homeowner (note: it must be in equal shares for each residential site)
- state when the special levy will be due (this can be in instalments)
- explain how the home owners can vote on the proposal.
How is a special levy passed?
Notice of the proposal needs to be given to all homeowners. The special levy cannot go ahead unless at least 75 percent of all homeowners (1 vote per site) in the community agree within 90 days of the notice being given. Homeowners who do not vote are deemed to be against the proposal.
Levies can be proposed without the operator but must be approved by them within 90 days of notice. The special levy becomes payable by everyone when 75 percent of all homeowners and the operator agree with the proposal.
Who is the special levy paid to?
All special levy payments are held on trust by the operator for the home owners. They can put the funds into their regular account or set up a separate account if they wish. It does not have to be in a trust account. Once special levy payments have been received, the operator must use the money for its intended purpose within a reasonable time. The funds cannot be used for anything else. Any unused amount must be refunded to the home owners in equal shares. Debt recovery action can be taken against any homeowner who does not pay.
What if I disagree with a levy proposal that has been passed by 75 percent of homeowners?
The NSW Civil and Administrative Tribunal will hear disputes about special levies. It has the power to make orders to either cancel or confirm a special levy.
What happens when someone leaves or moves into the community?
If the departing home owner has not fully paid their share of the special levy, the incoming home owner becomes responsible for it. This happens as part of their agreement to move into the community.
Can the operator contribute to the special levy?
Yes. Nothing in the law prevents an operator from contributing to the cost of a community upgrade. Also any fixture funded by way of a special levy technically will belong to the community owner/operator.
What are other options instead of a special levy?
- Any upgrade or improvement to the community can be solely funded by the operator.
- The site fees could be increased
- If the operator begins to receive voluntary sharing arrangements, they may choose to put some of this money towards a new community facility, service or other improvement.