Two kinds of fee
| Fee | What it covers | How it is shared | How it is set |
|---|---|---|---|
| Annual fees | General administration, maintenance, insurance and other ongoing costs | By each lot’s lot liability | Owners set them at the annual general meeting, from a proposed budget sent out with the notice of that meeting |
| Special fees | Extraordinary or unexpected spending, such as an urgent building repair or the cost of defending legal action against the owners corporation | By lot liability, unless the works will only or mainly benefit some lots; then the benefit principle applies | A special resolution is needed if the special fees would be more than double the current annual fees |
The budget comes first. Before each annual general meeting, the committee or its delegate must estimate the year’s costs of administration, maintenance and insurance, along with any contributions to the maintenance plan. A special resolution needs the support of 75% of lot owners, or 75% of lot entitlements when the vote is a ballot or poll.
The benefit principle, in CAV’s own short version, means “those who benefit more, pay more”. The split only has to be reasonable, not exact, and CAV notes it may still end up matching lot liability: when an owner’s larger benefit is balanced by the higher annual fees they already pay, or when works on one lot help the others indirectly, for example by raising the value of the whole building.
The fee notice timeline
Fee notices must use Consumer Affairs Victoria’s approved forms; an owners corporation that uses something else may struggle to recover what it is owed.
- The fee noticeIt must state that the owner has 28 days from the date of the notice to pay; that penalty interest at the stated rate applies to overdue amounts, if the owners corporation has voted to charge it; and that the dispute resolution process covers disagreements about fees.
- 28 days to payLot owners must pay within 28 days of the date on the notice. Some owners corporations allow a grace period, perhaps with a reminder, before the next step.
- The final fee noticeIt can go out any time after those 28 days. It must state that the overdue amount and any charges and interest are payable at once; that penalty interest, if charged, is payable on the overdue amount as at the date of the final notice; how much interest will build up each day; and that the owners corporation intends to take legal action if the full amount is not paid within 28 days of this notice.
- VCATAn owners corporation in dispute over a fee must have given both notices before it applies to VCAT for a ruling. VCAT’s own example is an owners corporation that waited 28 days after the final fee notice and then applied.
Falling behind has a cost beyond interest: an owner in arrears for any amount loses the right to vote on ordinary resolutions, though they can still attend meetings and vote on special or unanimous ones. An owners corporation of just two lots does not have to restrict votes for unpaid fees, or use the approved forms for fee notices. The most an owners corporation can charge in interest is set under the Penalty Interest Rates Act 1983. Consumer Affairs Victoria points to the Department of Justice and Community Safety for the current rate, which, as at October 2026, gives it as 10% a year, in effect since 1 February 2017.
No extra fee for paying late
An owners corporation can charge only the fees the Act allows, based on lot liability. For an overdue notice it may pass on only the owner’s proportional share of the actual cost of issuing it, and it cannot add charges such as “administration fees” for late payment.
Consumer Affairs Victoria’s own example: a manager charges the owners corporation $33 for handling a late payment, as its contract allows. The owner who paid late holds 10% of the lot liability, so the owners corporation may pass on $3.30 to that owner, not the whole $33. Nor can a manager make a lot owner pay the manager’s own fees, because the manager’s contract is with the owners corporation, not with individual owners.
When paying is hard
Consumer Affairs Victoria’s advice to an owner in financial hardship is to contact the owners corporation and its manager as soon as possible and ask for a payment plan, and it points to the National Debt Helpline’s guide to strata levies for the steps. An owners corporation can also make a rule letting owners in financial difficulty pay their fees by instalments.
The maintenance plan
A maintenance plan is compulsory for tier 1 and tier 2 owners corporations, which must prepare and approve one; tiers 3, 4 and 5 may choose to have one, and Consumer Affairs Victoria recommends that all owners corporations have one. A plan can be amended by ordinary resolution. In CAV’s words, a plan must cover:
Consumer Affairs Victoria, Maintenance plan
- “major capital items for repair and replacement over the next 10 years
- the present condition of those items
- when the items or components will need to be repaired or replaced
- the estimated cost of the repair and replacement of those items or components
- the expected life of those items or components once repaired or replaced.”
An owners corporation with a plan must report on how it is being carried out at each annual general meeting.
| Kind | CAV’s examples | Paid from |
|---|---|---|
| Corrective | Cleaning gutters, changing light bulbs | Annual fees |
| Predictable, on major capital items | Replacing lifts worn out by use | Annual fees, under the maintenance plan |
| Emergency corrective | Roof repairs after a storm, replacing broken glass | Replacement and reinstatement insurance |
The maintenance fund
The fund is where the plan’s money sits. Consumer Affairs Victoria lists what it must contain:
Consumer Affairs Victoria, Maintenance fund
- “part of the annual fees designated for the maintenance plan
- amounts received under an insurance policy for any item in the maintenance plan
- interest earned by investing fund money
- amounts of a prescribed kind (there are no prescribed amounts at this time)
- amounts of a kind determined by the owners corporation.”
Spending it has its own thresholds. Paying for an item that is in the plan takes an ordinary resolution at a general meeting; paying for an urgent matter that is not in the plan takes a special resolution. The owners corporation decides how much of the annual fees goes into the fund, how it is paid and when; CAV says it is usually quarterly.
A buyer sees the fund’s total in another document: the owners corporation certificate must state the total of funds the owners corporation holds.