This article discusses how a body corporate can fund lift replacement costs by allowing some owners to pay upfront while others pay over time through loan levy contributions.
Question: Can some owners pay their share of lift replacement costs upfront, while others pay through a loan repaid by special levies?
Our body corporate is considering borrowing money to replace our aging elevator, which will involve significant interest costs.
Is it possible to let some owners pay their share upfront through a special levy, while others pay over time through a special levy covering loan repayments for the next 10 years?
Answer: There is an alternative funding arrangement that allows some owners to pay their share upfront. Others can pay over time through loan levy contributions.
In Queensland, a body corporate can raise funds for major capital works such as lift replacement either through a special levy or by borrowing money. Both options are permitted under the Body Corporate and Community Management Act 1997 (the Act), but the process and implications are different.
There is an alternative funding arrangement that allows some owners to pay their share upfront and avoid paying interest on the strata loan. Others can pay over time through loan levy contributions. This funding arrangement is permitted under the Act, but is not straightforward and requires careful consideration by the owners and body corporate managers.
To adopt this type of mixed model, the body corporate would need to pass the appropriate resolutions, and independent legal and financial advice is strongly recommended.