The one-minute guide
What a special levy is: A one-off, additional charge raised by the Owners Corporation to cover a specific expense that regular funds cannot meet.
When one is raised: Typically when a major unexpected repair arises, the capital works fund is insufficient, or a legal or insurance cost falls outside the normal budget.
How it is approved: A special levy must be resolved at a properly convened general meeting of the OC. It cannot be raised by the committee alone.
Your obligation: Like any levy, a special levy is legally binding and must be paid by the due date. There is a one-month grace period before interest applies, but any unpaid amount can affect your voting rights at meetings.
Your rights: You have the right to attend the meeting, ask questions, vote on the resolution, and challenge an improperly raised levy through NSW Fair Trading or NCAT.
Key tip: A well-funded capital works fund is the best protection against unexpected special levies. Check the fund health before you buy into any scheme.
Few things cause more alarm for strata owners than receiving a special levy notice. Unlike the regular quarterly contributions that owners budget for, a special levy can appear with little warning and carry a significant price tag. Understanding what they are, when they can legally be raised, and what your rights are will help you respond calmly and effectively when one arrives.
What is a special levy?
A special levy (formally called a "levy" under the Strata Schemes Management Act 2015 (NSW), though the term "special levy" is widely used in practice) is a one-off, additional contribution raised by the Owners Corporation to fund a specific expense that falls outside the regular budget.
Regular levies are set at the Annual General Meeting (AGM) to cover predictable, recurring costs through the administrative fund and capital works fund. A special levy is different: it is raised between AGMs or at a specially convened general meeting, for a specific purpose, and ceases once that purpose is funded.
| Audience |
Relevance |
Why it matters |
| Lot owners |
Essential |
You must pay special levies like any other contribution. Understanding the process helps you respond effectively and know your rights. |
| Investors and landlords |
Essential |
Special levies are your obligation, not your tenant's, and can be substantial. Monitoring the capital works fund before purchase helps manage this risk. |
| Committee members |
Critical |
You initiate the process of raising a special levy and must understand what is required for it to be legally valid. |
| Strata managers |
Essential |
You advise the committee and OC on the process, draft the notice of meeting, and manage the levy once approved. |
| Prospective buyers |
Very useful |
A history of frequent special levies or a depleted capital works fund is a significant warning sign before purchasing. |
TL;DR: A special levy is a one-off additional charge for a specific expense not covered by regular funds. It is legally binding and must be approved by the full Owners Corporation at a general meeting.
Regular levy vs special levy: the key differences
It helps to understand exactly how a special levy differs from the regular contributions owners receive each quarter.
|
Regular levy |
Special levy |
| How it is set |
Resolved at the annual AGM as part of the annual budget |
Resolved at a specific general meeting called for that purpose |
| Frequency |
Recurring, usually quarterly throughout the year |
One-off, for a specific purpose |
| Purpose |
Covers ongoing, predictable operating and maintenance costs |
Covers a specific, usually unexpected or unbudgeted expense |
| Amount |
Based on the approved annual budget divided by lot entitlements |
Based on the specific cost to be funded, divided by lot entitlements |
| Duration |
Continues until the next AGM sets a new budget |
Ends once the specific expense is fully funded |
| Advance notice |
Owners typically have weeks of notice from the AGM agenda |
Can arise quickly, though proper meeting notice periods still apply |
| Who approves |
Ordinary resolution at the AGM (majority of votes) |
Ordinary resolution at a general meeting (majority of votes) |
TL;DR: A special levy is exceptional rather than routine. It covers a specific, defined cost and ends once that cost is met. It always requires a general meeting resolution.
When can the OC raise a special levy?
A special levy can be raised whenever the OC determines that existing funds are insufficient to meet a specific expense. In practice, the most common triggers are:
Unexpected or emergency repairs
Strata buildings age. Pipes burst, facades crack, roofs fail, and lifts break down. When a major repair is needed urgently and the capital works fund does not have enough to cover it, the OC must raise funds quickly. Emergency repairs are one of the most common reasons for a special levy, and they can arise with very little notice.
Example
A strata scheme's underground car park suffers a significant waterproofing failure after heavy rain. Repair quotes come in at $180,000. The capital works fund holds only $40,000. The OC calls an extraordinary general meeting, resolves to raise a special levy of $140,000 spread across all lot owners according to their unit entitlements, and appoints a contractor to begin works.
Underfunded capital works fund
If a scheme's capital works fund has not been adequately built up over time through regular contributions, it may be insufficient when a major planned expense falls due. This is sometimes called a "sinking fund deficit" and is one of the most preventable causes of special levies. A well-maintained capital works fund plan with adequate regular contributions is the best defence.
Legal costs and disputes
Strata schemes can become involved in legal proceedings: building defect claims against a developer, disputes with contractors, applications to NCAT, or recovery actions against owners who have not paid levies. Legal costs can be substantial and are often not fully anticipated in the annual budget. Where legal costs exceed the administrative fund balance, a special levy may be needed.
Insurance shortfalls
If a building is destroyed or suffers major damage and the insurance payout does not fully cover the cost of reinstatement, the OC may need to raise a special levy to cover the gap. This is one of the strongest arguments for ensuring your building is adequately insured and that the insurance valuation is kept up to date.
Major capital works not in the plan
Occasionally a capital works project arises that was not anticipated in the capital works fund plan: a new fire safety requirement is introduced by legislation, an engineering inspection reveals a structural issue, or the committee decides to undertake a significant upgrade. If the capital works fund cannot absorb the cost, a special levy is required.
Sustainability infrastructure
Some OCs choose to raise a special levy specifically to fund sustainability upgrades such as solar panels, battery storage, EV charging infrastructure, or water-efficient systems. As of 1 July 2025, following changes introduced by the Strata Schemes Legislation Amendment Act 2025 (NSW), these resolutions now only require a simple majority vote (over 50%) at a general meeting. This is a significant change from the previous position, which required a special resolution with a 75% majority, and makes it considerably easier for schemes to get sustainability projects approved.
TL;DR: The most common triggers are emergency repairs, an underfunded capital works fund, unexpected legal costs, insurance shortfalls, and major works not anticipated in the capital works fund plan.
The legal process for raising a special levy
A special levy cannot be imposed by the strata committee alone. It must be approved by a resolution of the full Owners Corporation at a properly convened general meeting. Skipping or shortcutting this process makes the levy invalid and unenforceable.
| Step |
What happens |
Key detail |
| 1 |
Decision to raise a special levy |
The strata committee determines that a special levy is needed, typically on the advice of the strata manager. The committee resolves to convene a general meeting. |
| 2 |
Notice of meeting issued |
A formal notice of meeting must be given to all owners. Under the Act, at least 7 days notice is required for an extraordinary general meeting, though 21 days is required for an AGM. The notice must set out the proposed resolution and the amount of the special levy. |
| 3 |
General meeting held |
Owners attend (in person, by proxy, or electronically) and vote on the resolution. A special levy for ordinary purposes requires an ordinary resolution — more than 50% of votes cast. The same simple majority threshold applies to sustainability infrastructure levies following the July 2025 reforms. |
| 4 |
Resolution passed |
If the resolution is passed, the OC is authorised to raise the levy. The minutes of the meeting record the resolution and the amount. |
| 5 |
Levy notices issued |
The strata manager issues levy notices to all owners for their share of the special levy, calculated according to unit entitlements. The notice will specify the due date and payment details. |
| 6 |
Payment collected |
Owners pay the special levy by the due date. There is a one-month grace period before interest applies. After that, simple interest at 10% per annum applies from the original due date, just as with regular levies. |
| 7 |
Funds applied |
The money is used for the specific purpose approved at the meeting. The OC cannot redirect special levy funds to another purpose without a further resolution. |
Can the committee raise a special levy without a general meeting?
No. The strata committee does not have the power to impose a levy on owners. Only the Owners Corporation, acting by resolution at a general meeting, can do so. The committee can authorise urgent expenditure from existing funds within its spending limit, but it cannot create a new levy. If you receive what purports to be a special levy notice that was not approved at a general meeting, this is a significant procedural issue. Contact your strata manager and, if necessary, seek legal advice.
TL;DR: A special levy must be approved by the full Owners Corporation at a general meeting with proper notice. The committee cannot impose one unilaterally.
How is your share of a special levy calculated?
Your share of a special levy is calculated using exactly the same method as regular levies: your lot's unit entitlement as a proportion of the total unit entitlements for the scheme, multiplied by the total amount to be raised.
The calculation
Your share = (Your unit entitlement ÷ total scheme unit entitlements) × total special levy amount.
Example: Your lot has a unit entitlement of 75 out of a scheme total of 750. The OC resolves to raise a special levy of $120,000. Your share is 75/750 = 10%, so your contribution is $12,000.
The same lot in a scheme with 1,500 total unit entitlements would pay only $6,000 for the same total levy amount.
This means that all owners contribute proportionally. Owners with larger or more valuable lots (higher unit entitlements) pay more. There is no mechanism for some owners to be exempted from a special levy because they did not benefit from the work, or because they believe the cost was caused by another owner's negligence.
Payment in instalments
A special levy does not have to be charged as a single lump sum. The OC may resolve to collect it in instalments over a defined period. For example, a $120,000 special levy might be collected in four quarterly instalments, spread across four quarters. This can ease the financial burden on owners, though it delays the receipt of funds and may affect the timing of works.
TL;DR: Your share is calculated using your unit entitlement as a proportion of the scheme total. The OC can choose to collect the levy in instalments rather than as a single payment.
Your obligations and rights as an owner
Your obligations
Once a special levy has been properly resolved at a general meeting, it is legally binding on all owners, including those who voted against it, were not present, or disagree with the decision.
- You must pay your share by the due date on your levy notice.
- There is a one-month grace period before interest applies. After that month, simple interest at 10% per annum accrues on the outstanding amount from the original due date. Your scheme's by-laws may specify a different rate.
- Any unpaid levy amount makes you an unfinancial owner. If a general meeting notice is issued while you are unfinancial and you do not pay in full before the meeting, your vote does not count (except on motions requiring a unanimous resolution).
- Non-payment can lead to debt recovery action and legal costs being added to your debt.
- You cannot withhold payment because you voted against the resolution or believe the expense was unnecessary.
Your rights
Being subject to a special levy does not mean you have no rights. Owners have meaningful avenues to participate in and challenge the process.
- The right to attend and vote: Every owner is entitled to attend the general meeting at which the special levy is resolved, speak to the motion, and vote. If you cannot attend in person, you can appoint a proxy to vote on your behalf.
- The right to information: You are entitled to see the quotes, reports, or other documents supporting the need for the special levy. Ask your strata manager for the meeting papers before the meeting.
- The right to question the process: If you believe the meeting was not properly convened (for example, insufficient notice was given, or a quorum was not present), you can raise this with the strata manager or committee. A procedurally invalid resolution may be set aside.
- The right to challenge at NCAT: If you believe a special levy was improperly raised, the amount is unreasonable, or the funds are not being used for the stated purpose, you can apply to NCAT for a determination. Mediation through NSW Fair Trading is generally required first.
- The right to request a financial accounting: Once the works are complete, you can ask for confirmation that the special levy funds were used for the approved purpose.
You must still pay while disputing
Even if you believe a special levy was improperly raised or the amount is wrong, you must still pay by the due date to avoid interest and debt recovery action. Pursue your challenge separately through NSW Fair Trading mediation or NCAT. If successful, the tribunal can order a refund or adjustment. Withholding payment while disputing will result in interest accruing on your account after the one-month grace period, regardless of the outcome of your dispute.
TL;DR: A properly approved special levy is legally binding on all owners, including dissenters. You have the right to vote, to information, and to challenge the process through NCAT, but you must still pay while any dispute is resolved.
How to protect yourself from unexpected special levies
While special levies cannot always be prevented, there are practical steps owners and committee members can take to reduce the likelihood of being caught off guard.
Before you buy: due diligence
The best time to assess a scheme's special levy risk is before you purchase. A strata inspection report will reveal the current balance of both the administrative fund and the capital works fund, any special levies currently in effect or resolved but not yet collected, the capital works fund plan and whether contributions are adequate for anticipated works, and the history of expenditure and any known major defects or disputes.
A low capital works fund balance relative to the age and condition of the building is a significant warning sign. If the building is 20 years old, has a rooftop pool and a lift, and the capital works fund has $15,000 in it, a special levy is likely not far away.
As an owner: stay informed and engaged
- Attend AGMs and vote on the capital works fund levy. Consistently voting to keep levies low may feel like a saving in the short term but increases the risk of a large special levy later.
- Read the AGM minutes and financial reports. The capital works fund balance and the capital works fund plan are your early warning system.
- Ask questions of your strata manager if you are unsure about the fund's adequacy.
- Consider standing for the strata committee if you want more direct visibility over financial decision-making.
As a committee member: plan ahead
- Commission and maintain an up-to-date capital works fund plan. From 1 April 2026, NSW requires all schemes to use the mandatory digital Capital Works Fund Planner via Strata Hub.
- Set capital works fund levies at a level that genuinely reflects the 10-year plan, not at the minimum required to avoid owner complaints.
- Conduct regular building condition reports to identify issues before they become emergencies.
- Maintain adequate insurance and ensure the building valuation is reviewed regularly so the insurance sum insured reflects the actual reinstatement cost.
The most effective protection against special levies
A well-funded capital works fund, driven by a realistic 10-year plan and consistently maintained by the committee, is the single most effective protection against large unexpected special levies. Schemes that chronically underfund their capital works contributions to keep levies low end up paying more in the long run, through higher special levies, urgent contractor rates, and the stress of emergency fundraising.
TL;DR: Check the capital works fund health before buying. As an owner, engage with AGM financial reports. As a committee member, maintain a realistic capital works fund plan and set levies accordingly.
Frequently asked questions
I received a special levy notice but I never received notice of any meeting. What do I do?
Contact your strata manager immediately and ask for evidence that a general meeting was properly convened and that a resolution was passed. Request a copy of the meeting notice, minutes, and the resolution. If no meeting was held, or if the meeting notice was insufficient, the levy may be procedurally invalid. You can raise this with your strata manager and, if necessary, seek advice from NSW Fair Trading or a strata lawyer.
The special levy is for a repair I believe was caused by another owner's negligence. Do I still have to pay?
Yes, initially. All owners are jointly responsible for common property through the Owners Corporation, regardless of how damage occurred. However, the OC has the right to pursue the owner or party responsible for the damage to recover the cost. If you believe another owner caused the damage, raise it with your strata manager so the committee can consider recovery action. Your share of the levy is still due in the meantime.
Can the OC raise multiple special levies at the same time?
Yes. There is no limit on the number of special levies that can be active at once, provided each is approved by a resolution at a general meeting and relates to a specific, defined purpose. In practice, multiple overlapping special levies can create significant financial strain for owners, which is why proactive capital works fund management is so important.
I voted against the special levy at the meeting but it passed. Do I still have to pay?
Yes. A properly passed resolution binds all owners, including those who voted against it. This is a fundamental principle of collective ownership in strata. Your recourse is to ensure your dissent is recorded in the minutes, and if you believe the decision was improper or the process was flawed, to pursue it through NSW Fair Trading mediation or NCAT.
The special levy was collected but the works have not been done. What can we do?
The OC is obligated to use special levy funds for the specific purpose for which they were raised. Redirecting funds to another purpose requires a further general meeting resolution. If you believe funds are being misused, raise it in writing with the strata manager and committee. If the issue is not resolved, NSW Fair Trading mediation and ultimately NCAT are available remedies. In serious cases involving potential misconduct, NSW Fair Trading's Strata and Property Services Commissioner may be able to assist.
Can I pay my share of a special levy in advance?
Yes, if the OC's bank account can accept it and the strata manager can allocate it correctly. Paying in advance may be useful if you are selling and want to clear your obligations before settlement, or simply for your own financial planning. Contact your strata manager to arrange this.
We have a tenant in our property. Can we pass the special levy on to them?
No. A special levy is the legal obligation of the lot owner. You cannot require your tenant to pay it, regardless of what your lease says about outgoings. Some owners factor this risk into how they set their rent, but the levy liability remains with you as the owner.
TL;DR: The most important things to know: a special levy must be properly approved at a general meeting; you must pay even if you voted against it; and you have the right to challenge an improper process through NSW Fair Trading or NCAT.
Important
This article provides a general overview based on NSW strata legislation as at the date of publication, including reforms introduced by the Strata Schemes Legislation Amendment Act 2025 (NSW). The process and requirements for special levies may differ depending on your scheme's by-laws and the specific circumstances of the levy. For advice specific to your situation, always consult your strata manager or a qualified strata lawyer. Relevant legislation: Strata Schemes Management Act 2015 (NSW), Section 83 (levying of contributions), Section 85 (interest and payment plans), Schedule 1 (voting rights of unfinancial owners).
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