When we provide the developer with a budget for disclosure, it will always be accompanied by an engagements schedule. This schedule outlines each lot’s:
- Annual Contribution to the;
- Administration Fund
- Sinking Fund
- Any contract the Body Corporate has entered
- Total weekly contribution in $, and,
- Their Contribution and Interest Entitlements
In short, contribution entitlements are used in determining owner’s contribution to most body corporate expenses and the value of a lot. Whereas, interest entitlements are used to calculate owner’s share of common property, the amount of any contribution to insurance premiums.
How do we determine the amount of entitlements each lot receives I hear you ask?
Under the legislation which provides the basic concepts, the view is that a contribution schedule should provide for equal contributions by apartment owners, except insofar as some apartments can be shown to give rise to particular costs to the body corporate which other apartments do not. This requires an analysis of the demand made by each apartment on the services and amenities provided by a body corporate, or the apartments cause of the costs incurred by the body corporate. More general considerations of amenity, value or history are to be disregarded.
Our methodology provides for the equitable distribution of the costs. Usually the contribution lot entitlements will be calculated after sharing costs by some or all of the following factors, in varying degrees:
- Costs shared equally by all lots,
- Costs shared based on the support and shelter provided by the building to each lot,
- Costs attributable to particular lots because of by-laws,
- Costs shared based on the number of occupants in lots.
The interest lot entitlement of each apartment is calculated by assessing the relative market value of each apartment at the time the assessment is made and expressing each as a portion of the overall value. A little less complex than calculating contribution entitlements.
If you require Body Corporate consultancy or have any general queries about your development, please do not hesitate to get in touch on the below details.
0411 352 409
0438 318 565
0403 465 153