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QLD – Each year our admin budget is balanced close to $0.00. When we get excessive emergency works them we need to recover the overspend in the following year. As a consequence our admin levies see saw year on year as we don’t have a crystal ball. This year we look like having a 5 figure surplus as the expected works didn’t eventuate so rather than reduce levies next year we’d like to keep those funds as a contingency and leave levies the same. I believe lowering levies is optional, not compulsory.
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In NSW there is no problem, and I expect the same in Queensland. Strata hasn’t stolen any money, it is shared by the owners. The only situation I would be concerned is if the admin funds became ridiculous.
The only situation I would be concerned is if the admin funds became ridiculous.
Worth remembering that excess funds can only be returned to owners (in NSW) if there is a unanimous vote (as in, no votes against) to do so.
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Worth remembering that excess funds can only be returned to owners (in NSW) if there is a unanimous vote (as in, no votes against) to do so.
That could be a bit of a problem. What I was thinking of was more along the line of with a 50 lot building was to have $20k as a buffer. Having seen plumbing jobs take $10k because of difficulties finding the leak and then diverting the flow and then patching up the places where they gained access, it is better than suddenly needing a special levy.
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You could calculate the unexpected expenditure on repairs (not defects) over the past five years, average it out and add 5 per cent, then factor that into your budgets.
The chairman of a building I know well used to announce at every AGM that “there is no slush fund” until I pointed out he was defaming his predecessors by implying they had been finagling the finances. Also they eventually, inevitably needed an emergency payment. They now have a “contingency” fund which, of course, is a slush fund by any other name.
If you announce your plan at your next AGM, the owners can decide whether or not they want a contingency fund or would rather pay special levies as they arose.
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I think it would be good practice to always have some sort of contingency and not be targeting a $0 EOFY balance. It only takes 1 or 2 units to not pay levies, or pay late , and you are facing not having enough funds for large expenditures (eg insurance) as they fall due.