Insurance charges by owners corporation

[cfi99]

I own a townhouse in a complex for which an owners corporation was just created, although the buildings are about 5 years old. I believe there was no owners corporation before this because the developer owned more that 50% of the lots.

At the first meeting of the owners corporation, it was decided to charge a special levy for strata insurance to cover from October 2013 to October 2014.

In the 2013 - 2014 budget for the administrative fund, there is another charge for insurance. Presumably this is to cover the insurance for the 2014 - 2015 year because the special levy covers 2013 - 2014.

Is this normal? Why would I pay insurance charges up to 12 months in advance, particularly if I plan to sell within that time?

 

[HotRod]

I own a townhouse in a complex for which an owners corporation was just created, although the buildings are about 5 years old. I believe there was no owners corporation before this because the developer owned more that 50% of the lots.

At the first meeting of the owners corporation, it was decided to charge a special levy for strata insurance to cover from October 2013 to October 2014.

In the 2013 - 2014 budget for the administrative fund, there is another charge for insurance. Presumably this is to cover the insurance for the 2014 - 2015 year because the special levy covers 2013 - 2014.

Is this normal? Why would I pay insurance charges up to 12 months in advance, particularly if I plan to sell within that time?

Special levy probably to pay the insurance in arrears (and maybe some interest charge by the insurance co.) and the admin fun budget to save it up to pay it up front for 2014-15.

That's my guess.

If you don't pay it you'd be in arrears and any buyer worth his salt would pick up on that and maybe put the sale at jeopardy.

Put it down as a learning experience.

 

[cfi99]

No, the special levy is not for arrears payments. It is for insurance from October 2013 to October 2014. The administrative fund budget for the same period also includes insurance.

There are 2 possibilities, either it's a mistake and the insurance shouldn't be in the budget because it's covered by the special levy or they are charging the insurance 1 year in advance.

I am checking whether it's a mistake but my question here is, is it normal to pay strata insurance 1 year in advance?

 

[jenni_nextplace]

No I don't think so. I haven't had to ever pay strata insurance 1 year in advance.

 

[Peterw]

Sounds to me that they are wanting to have the monies ready to pay when due, rather than having a second levy when due. It is usual for Insurance to be in the budget, however its also usual that the account has some funds at commencement, so it can pay all the usual annual bills when due.

 

[badcliq]

I would suspect because it is a new Owners Corporation, it will not have any funds collected from the Admin levies yet ($0 balance or near to nothing)...however, the Owners Corporation needs an insurance now....to pay for it, you need to raise special levy (due in 28 days or something) to have enough money to pay the insurance now....next year's insurance will be on budget as you would have the funds available to pay for it....

 

[Peter_Tersteeg]

I am checking whether it's a mistake but my question here is, is it normal to pay strata insurance 1 year in advance?

Most insurance policies allow you to pay periodically or annually. It's always paid in advance. It's less paperwork to pay it annually, I suspect because it's a newly formed strata corporation, they're raising the special levy because they need the funds.

Your regular strata fees will include an allowance for next years policy renewal. It will probably also be paid 12 months in advance but the money will have been budgeted and set aside over the course of the previous year.

It's not uncommon for a newly formed strata corporation to raise special levys for things that have been neglected under the previous management.