In sectional title schemes, Exclusive Use Areas (EUAs)—like balconies, parking bays, and private gardens—are parts of common property reserved for specific owners’ use. But who is responsible for their upkeep and costs? According to the Sectional Titles Schemes Management Act (STSMA), EUA costs can be structured in different ways, depending on the body corporate’s rules. Let’s break down the essentials of EUA levies and explore various options for managing these contributions.
Key Legal Requirements for EUA Levies
- Owner Responsibilities: The STSMA mandates that owners with exclusive use rights must maintain and repair their allocated EUAs. This means keeping the area clean, tidy and in good repair.
- Body Corporate Obligations: According to section 3(1)(l) of the STSMA, the body corporate is responsible for maintaining all common property, including EUAs. However, the proviso to section 3(1)(c) allows the body corporate to collect additional contributions from EUA holders to cover costs.
- Annual Levy Collection: Each year, the body corporate must collect levies equal to its estimate of EUA-related costs unless the scheme’s rules specify that EUA holders are directly responsible. This estimate should cover expenses like insurance, maintenance and utilities for the EUA.
- Variation in Rules: Not all schemes handle EUA levies in the same way.
Structuring EUA Levies: 3 Options
The STSMA offers flexibility in calculating and collecting EUA levies. Here are three potential approaches:
- Direct Owner Responsibility for EUA Costs
Under this option, the body corporate makes EUA holders solely responsible for their maintenance and repair costs. This means no specific contributions for EUA maintenance are reflected in the scheme’s budget. When maintenance or repairs are needed, the EUA holder is responsible for the maintenance thereof. - Contribution to an EUA Fund
In this approach, EUA holders contribute a percentage of the regular levy rate per square meter to fund EUA upkeep. These contributions are allocated between the administrative fund and an EUA reserve fund. This reserve fund builds up over time, offsetting maintenance costs when necessary. This method provides a buffer for future expenses, avoiding large, unexpected costs for EUA holders. - Admin-Only Contribution with On-Demand Billing for Repairs
In this method, EUA holders contribute only towards the administration costs of their EUAs, with no funds specifically raised for maintenance. When repairs are required, the body corporate bills the EUA holder directly. This approach minimizes regular contributions but may result in larger, one-time expenses for EUA holders when maintenance is needed.
Important Considerations for EUA Levies
Clear Rule-Making: Body corporates should establish clear rules to specify if EUA holders are responsible for maintenance and repair costs. This helps avoid confusion and ensures EUA holders understand their financial obligations.
Conclusion
Properly structured EUA levies are essential for fair and effective cost management in sectional title schemes. By understanding the options and obligations under the STSMA, body corporates and EUA holders can establish clear expectations and maintain their properties with fewer disputes. Whether through direct billing, reserve funds, or admin-only contributions, the right approach can help everyone manage shared spaces effectively.