Should we lend the OC money to get work done?

I would say ‘no” … this would be very unwise.

A Special Levy can only be approved at a general meeting. If the committee was to fund this personally  and then expect to be repaid via a Special Levy then  that would be creating an expectation  that the OC would approve this by way of an Ordinary Resolution.

What happens if the OC doesn’t approve it? Then the committee members will be personally out of pocket.

It is very important to put a lot of thought into creating a relevant budget. Unfortunately I see situations where many committees just rubber stamp previous budgets without consideration of what projects need to be undertaken over the coming year. Then there is a shortfall.

The Sinking Fund forms part of the value of a Lot. Having a very low Sinking Fund budget may seem to be ‘helping’ keep costs low, but it actually does a disservice to lot owners, particularly in older buildings with inevitable maintenance issues.

I agree agree with LP in the case of low funds. What if the OC does not approve the funding later and you are out of pocket?

The OC really should bite the bullet and have an adequate sinking fund plan, including a levy each year to fund the plan, and the plan should have a substantial contingency component. Plan for both the known expenses and the likelihood of some unknown expenses. Build up a comfortable buffer and it will be no big deal if some expense is required earlier than anticipated in the plan or something else turns out to be more expensive than anticipated.

Unless your tree presents an immediate, urgent, serious threat that demands immediate action, I would suggest that you just call the meeting with proper notice and get the levy approved and get on with the tree after perhaps only a month or so of delay. Putting hazard cones around or roping off the area would underline the importance of getting the approval.

Paying levies in advance may be the cleanest way to do this.  The owners could pay the levies in advance and receive a statement from the treasurer/strata manager acknowledging this.  Subsequently, each levies notice would contain the amount of the levies and a statement of the positive outstanding balance.  However, you’d have to work out how long it would take to recoup the money by this method.

That said, a much better plan might be to get a short-term strata loan that could be paid off by a special levy at the next AGM.  That, however, would require agreement at a general meeting.

And on that note, if you make this a private loan, make sure you don’t fall foul of Section 100 of the Act, which requires agreement at a General Meeting.

There is nothing preventing owners from paying levies in advance, and if an expense then arises the OC using the funds available to meet that expense. Where an owner pays in advance, the strata records will show that – for example if you pay a year in advance your levy notice should show:

– levies payable for that quarter
– amount paid by the owner to date
– amount if any payable by the due date – where paid in advance it will show nil

You may not need to strike a special levy, it depends on the circumstances. The thing is, if the expense has been incurred then you can’t reverse it – note that you can’t enter into a contract unless you have the funds to pay for it at that time.

More generally – if a strata scheme has funds that are so low that they cannot proceed with a maintenance item such as tree removal (which is not that expensive) then I suggest it is not setting the budget appropriately, and the levies are too low. What are you going to do if something really serious arises? Basically I am repeating what Sir Humphrey has said – you need to plan for both known and unknown expenses – we have done this for a long time now, and it has seen us through some major issues including replacement of the hot water system and major work on the sewer pipes.