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We may have to raise a special levy for remedial works on our strata that might be 2 years down the track. How can we ensure that this money is ONLY used for the purpose intended? Can we put it in a fund that is not touched all except for the works specified? This would be in additions to Cap Works
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This is something I would also like to know about as it's a matter that has come up in my building too.
Actually that is the default. The motion to raise the special levy should specify the purpose, and the amount raised can only be used for that purpose. So ensure that the wording of the motion is accurate.
However, be cautious of being too specific, as the remedial works may spread to unexpected tasks, when the work commences. For example, raising a special levy “to replace and upgrade the balconies, including the balustrades, by installing a water-proofing membrane and re-tiling the balcony floor”, seems good. But when the owners ask to have the walls re-painted, that does not fall within the wording. And what if one of the owners asks to install new lighting on the new balcony? Also not covered. It also depends on the owners. If all are happy with the project then there are unlikely to be any one objecting if the funds are spread to related features (but not to un-related tasks!). But if some owners are skeptical about the project, then you should ensure the wording covers exactly what you may be spending the money for.
If the project does not cost the full amount raised in the special levy, then the money left over can be re-assigned to another task, by making, passing and documenting this in a motion at a general meeting.
Put a motion to the Strata Committee Meeting agenda requesting that your Strata Manager places the funds into a term deposit & the motion is to include instructions that the funds are to be used for the Special Levy works.
This will separate the funds from the “Cash at bank”. Earning interest, ensuring the funds are not available for regular expenditure.
Put a motion to the Strata Committee Meeting agenda requesting that your Strata Manager places the funds into a term deposit
That could create a problem if your scheme is in the habit of declaring zero income to the tax office. Term deposits will attract interest, which will have to be declared, which will require input from your strata manager and an accountant, which may cost more than you get from the interest. I’d think the simplest solution would be for the OC to instruct the treasurer to a) list the special levies money as a separate line item in the accounts and b) not permit its use for any other purpose.
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