We get this question a lot so we made video for you, because you are awesome!
This can be a confusing topic so let’s start with one basic idea for you to get your head around.
Imagine that you want to purchase a property with a partner and you contribute 50% of the purchase price in order to own 50% of the property value.
Well its not that different in a Body Corporate, when you buy a Lot in a Body Corporate it comes with a Contribution Lot entitlement number (also known as contribution entitlements) which is mainly used to divide Body Corporate expenses among owners. For example, you buy a Lot in a Body Corporate where there are a total of 5 Lots. Each lot has 1 contribution entitlement, this means that you would own ⅕ (or 20%) of the total contribution entitlements.
Therefore, when an administration and sinking fund budget is calculated and these budgets are presented every year at the Annual General Meeting, you will be paying ⅕ of the admin fund budget and ⅕ of the sinking fund budget.
In the example we just gave lets say the yearly admin fund budget for this body corporate of 5 Lots is $5000.00 and the yearly sinking fund budget is also $5,000.00 According to your Contribution Lot entitlement you will be contributing ⅕ (or 20%) of the total admin and sinking fund budgets, meaning you contribute a total of $2,000 in levies, per year.
Got more questions about this topic, or want to know where you can find your Lot entitlements, give us a call on 13 000 MY BCM or send us an email at email@example.com we are only a couple of clicks away.
Written by Pedz