Special Levy

Under the Building Maintenance and Strata Management Act, an MCST cannot simply spend beyond a certain threshold without owner approval. When a major cost arises that the sinking fund cannot absorb, whether that is emergency structural repair, a shortfall in the building's insurance renewal, or a large scale upgrading project the council wants to undertake, the MCST puts a resolution to a general meeting asking owners to approve a special levy to fund it. It requires the relevant majority of owners to pass, and once approved it becomes a binding obligation on every unit.

A special levy is apportioned the same way as the maintenance fee, according to each unit's share value, but it is usually collected as a lump sum or over a small number of instalments rather than spread out over years the way a sinking fund top up through regular contributions would be. That timing difference is exactly what makes a special levy feel painful compared with a gradual fee increase.

What commonly surprises buyers is that a special levy obligation can attach to the unit's ownership at the point it is voted, not necessarily to whoever eventually pays the bill, and the exact treatment of an outstanding or upcoming levy between seller and buyer is a matter that needs to be agreed and documented at the point of sale, typically with the conveyancing lawyer's input. It is entirely possible to buy a unit, only to discover shortly after completion that a large special levy was voted at an AGM the seller attended but did not disclose informally, even where the transaction paperwork itself is in order. Large scale works, such as major facade repainting programmes, replacing ageing fire safety systems, or costs tied to legal and professional fees during an en bloc attempt that did not go through, are common triggers.

Before buying into any strata development, ask the seller's agent and the managing agent directly whether any special levy has been voted, proposed, or is under active discussion, and request the last two to three years of AGM minutes and financial statements so you can judge the state of the sinking fund for yourself rather than relying on assurances alone.

Winfred Quek is an Associate Marketing Consultant at Crestbrick Pte Ltd (CEA Licence No. L31010886H). CEA R073319H. This page is for general information only and does not constitute financial, investment, or legal advice. Verify current figures with IRAS, HDB, CPF Board, or MAS before making any decision.