NSW special levies and the capital works fund: a buyer's guide

Most buyers look at the quarterly levy and stop there. The bigger number is the one that isn't on the levy notice yet: the five-figure special levy for the roof, the facade or the waterproofing. This guide explains how NSW strata funds and levies work, how to read the 10-year plan for what's coming, and who pays a levy struck around the time you buy.

The two funds

The Strata Schemes Management Act 2015 (SSMA) requires every owners corporation to keep two funds (with a narrow opt-out for some two-lot schemes):

How levies are set

• At the AGM. The owners corporation estimates how much each fund needs for the year (s 79) and sets the levies at the same meeting (s 81). The capital works estimate must take the 10-year plan into account.
• By unit entitlement. Each lot pays in proportion to its unit entitlement, shown on the strata plan (s 83). A larger or higher lot usually has a larger share.
• With notice. A levy is due at least 30 days after notice, or 14 days for emergency repairs.
• With interest if unpaid. Levies unpaid a month after they fall due earn simple interest at 10 percent a year (s 85). Since 27 October 2025, payment plans of up to 12 months are also possible.

What a special levy is

Under s 81(4), if the funds can't meet an actual or expected expense, the owners corporation can raise an extra contribution at a general meeting. That's a special levy. It's shared by unit entitlement like regular levies and can be payable in one amount or in instalments.

The common causes:

1. A capital works fund that fell behind. Levies were kept lower than the 10-year plan recommended, and the work came due anyway.
2. Defects. Waterproofing, cladding, concrete or fire safety work, sometimes while a claim against the builder is still running.
3. Work the plan didn't foresee. A lift failure, a council order, storm damage under the excess.
4. Insurance and legal costs. A large premium increase or a long dispute.

Fair Trading makes the same point in its guide for buyers: levies kept too low can mean special levies later (buying a strata property).

The 10-year capital works fund plan

The plan is required by s 80. It must set out the work the owners corporation expects over the next 10 years, when it will be done, what it will cost and how it will be paid for. It must be reviewed at least every five years, and since 1 April 2026 new plans use a standard form. For a new building, the first plan must consider the developer's initial maintenance schedule.

The plan isn't binding in the strict sense: the owners corporation follows it only so far as practicable, and can revise it by resolution at a general meeting. That's exactly why a buyer should compare the plan with what has actually happened.

What you can infer from it

Read the plan with the latest financial statements and the minutes next to it.

1. The balance check. The plan forecasts the fund balance year by year. Compare this year's forecast with the actual balance in the financial statements. A fund well below its forecast has been underfunded or spent on something unplanned.
2. The contribution check. Compare the capital works levy the owners actually set with the contribution the plan recommends. In larger schemes the AGM must explain any difference from the plan (s 79). Read that explanation. "Keeping levies affordable" is a common one, and it usually means a special levy later.
3. The big-ticket check. List the items costing more than about 10 percent of the fund balance in the next five years: painting, roof, lifts, facade, waterproofing, car park membrane. Add up what's due and compare it with the balance plus the levies planned to come in.
4. The age check. Is the plan recent, and was it prepared by a specialist (a quantity surveyor or building consultant)? A plan that hasn't been reviewed in five years, or that looks like it was copied from last time, may understate what's coming.
5. The missing check. If the minutes mention a problem (leaks, cracking, a failed fire inspection) and the plan has no line for it, the cost isn't budgeted.

A worked example

A fictional 40-lot building in Parramatta has a capital works fund of $180,000. The 10-year plan, prepared four years ago, forecast $310,000 for this year. The owners have voted to keep capital works levies at 60 percent of the plan's recommendation for three years running, so they now bring in $60,000 a year. The plan shows external repainting and balcony membrane replacement at $620,000 in year two. The last committee minutes record that the strata manager is getting quotes for "balcony leaks, levels 3 to 6".

What a buyer reads from this: the fund is $130,000 behind its own plan, and the big job is close. By year two the fund will hold about $300,000 against a $620,000 job, a gap of roughly $320,000. Spread by unit entitlement, that's about $8,000 for an average lot, and more for a large one. Unless the owners corporation borrows, a special levy is very likely within two years. The leak quotes suggest the job may grow.

None of that appears on the quarterly levy notice.

Who pays a special levy struck before settlement?

This is the question buyers most often get wrong, and the answer comes from the contract, not the Act.

Between the owners corporation and the owners. Any levy unpaid when you become the owner can be recovered from you as well as the seller: a new owner is jointly and severally liable with the previous owner (s 84). The strata information certificate shows the unpaid amounts and, in favour of a buyer, is conclusive as at its date (ss 184, 185).

Between you and the seller. The standard Law Society and REINSW Contract for the Sale and Purchase of Land deals with this in clause 23. The 2026 edition is mandatory for contracts exchanged from 1 June 2026, and its strata rules are the same as the 2022 edition's (2026 contract). In outline:

"Determined" means the resolution was passed, not the date the levy falls due. So a levy voted at an EGM two weeks after you exchange is generally yours, even if it pays for problems that existed long before you bought.

The 1 percent rescission right. Normally a buyer can't make a claim, requisition or rescind over the owners corporation's expenses (cl 23.8). Clause 23.9 makes exceptions. One is where the lot's share of undisclosed special expenses (calculated by unit entitlement, less what the seller has paid) exceeds 1 percent of the price. On a $900,000 apartment, that's $9,000. There are strict conditions and time limits, so if you think it applies, speak to your conveyancer straight away.

What to do with all this:

• Before exchange, look for special levies struck, proposed and likely. The strata report and minutes are where you'll find them.
• If one is proposed, ask your conveyancer about a special condition that makes the seller pay a levy struck before settlement, or about a price reduction.
• If one is struck, make sure the contract discloses it and says who pays the instalments.
• Don't rely on a verbal answer from the agent or the strata manager. Get the amounts and dates in writing.

Contracts can be amended by special conditions, and older contracts still in use may differ. Check with your conveyancer how your contract allocates levies.

Questions to ask before you exchange

1. What's the capital works fund balance today, and what did the 10-year plan forecast for this year?
2. Have the owners set capital works levies below the plan's recommendation? Why?
3. What major works are due in the next five years, and how will each be funded?
4. Are any special levies struck, proposed or being discussed? What would this lot pay?
5. Are there quotes, engineering reports or defect reports the plan doesn't include yet?
6. Has the owners corporation borrowed money, or considered borrowing?
7. Does the contract disclose every special levy, and who pays any instalments after settlement?

Check the numbers with FileAI

A strata report scatters these numbers across the financial statements, the 10-year plan and years of minutes. FileAI's strata report check pulls out every levy, special levy, fund balance, defect, dispute and by-law, each linked to its page. Each area gets a red, amber or green call and comes with questions to ask before you bid. The preview is free with no signup; the full check is A$29 per report (AUD), with a 14-day money-back guarantee. For the rest of the report, see what to check in a NSW strata report.

Sources

• NSW Legislation, Strata Schemes Management Act 2015, ss 73, 74, 79, 80, 81, 83, 84, 85, 184, 185
• NSW Government, Buying a strata property and Levies, finances and insurance
• NSW Government, Changes to strata laws
• Law Society of NSW, Contract for the Sale and Purchase of Land, 2026 edition, clause 23, and summary of changes

This guide is general information, not legal or financial advice. It reflects NSW law and the standard contract as at October 2026. Who pays a levy depends on your contract and its special conditions: check with your conveyancer or solicitor before you exchange.