When acting for a Purchaser of a strata property, it is generally assumed that outstanding strata levies will be paid by the Vendor from sale proceeds at settlement. However, accepting this general position without further investigation, may be somewhat careless.Standard condition 23.6.1 deals with strata contributions that are not regular periodic contributions (such as a special levy), not disclosed in the Contract.
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Special levies are generally raised when there aren’t enough funds in either the administrative or sinking fund to pay for an essential expense. Standard Condition 23.6.1 reads:. 23.6 If a contribution is not a regular periodic contribution and is not disclosed in this contract-. 23.6.1 the vendor is liable for it if it was levied before the contract date (unless it relates to work not started by that date), even if it is payable by instalments;Significantly, the words in brackets are often overlooked, causing an unaware Purchaser to become liable for more than they bargained for. The critical wording in brackets, “(unless it relates to work not started by that date)”, provide that where a special levy (ie – not a periodic contribution) is levied prior to the contract date, but where work has not commenced at the date of contract, the Vendor will not be responsible for payment of this levy. In other words, the Purchaser will “inherit” the levy on settlement.Special levies can often be quite hefty so it is important that a Purchaser is fully informed as to whether they will become responsible for any such levies on settlement.
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