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Topic
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Are there rules for a Strata Manager dealing with dedicated levies? We were levied, 2 years ago for carpet installation in the common areas.
We have been recently levied again, for the same amount, $5000, for the same carpet..it has never been purchased and laid.
The Strata Manager said that she used the previous levy funds to pay bills. No executives were informed or asked about using the dedicated carpet levy money.
Are there any rules for Strata Managers re the spending of dedicated levies?
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There are some rules; particularly if you are in a large SP (100+ units).
For normal SPs the following may assist. s68 and 71, parts 2 and 3, may be relevant.It depends what fund the money was in originally as to which section applies and if it was replaced according to the requirement.
That the money was spent without anyone knowing is not a very transparent action; especially from an agent.
68 What money can be paid out of the administrative fund?
(1) An owners corporation must not pay any money from its administrative fund except for the purpose of:
(a) payments of the kind for which estimates have been made under section 75 (1), or
(b) payments made in accordance with this Division on a distribution of a surplus in the fund, or
(c) payments to a member of the executive committee in accordance with this Act, or
(d) other payments in connection with carrying out its functions under this Act or the by-laws, except payments of a kind referred to in section 71 (1).
(2) However, an owners corporation may pay money by transfer from its administrative fund to its sinking fund or by meeting from its administrative fund expenditure that should have been met from its sinking fund so long as the owners corporation complies with subsection (3).
(3) The owners corporation must, not later than 3 months after the disbursement, make a determination under section 76 (1) of an amount sufficient to recoup the amount of the disbursement.
71 What money can be paid out of the sinking fund?
(1) An owners corporation must not pay any money from its sinking fund except for the purpose of:
(a) payments of the kind for which estimates have been made under section 75 (2), or
(b) payments made in accordance with this Division on a distribution of a surplus in the fund.
(2) However, an owners corporation may disburse money by transfer from its sinking fund to its administrative fund or by meeting from its sinking fund expenditure that should have been met from its administrative fund if the owners corporation complies with subsection (3).
(3) The owners corporation must, not later than 3 months after the disbursement, make a determination under section 76 (1) of an amount sufficient to recoup the amount of the disbursement.
mrsmaker said:
Are there rules for a Strata Manager dealing with dedicated levies? We were levied, 2 years ago for carpet installation in the common areas.
We have been recently levied again, for the same amount, $5000, for the same carpet..it has never been purchased and laid.
The Strata Manager said that she used the previous levy funds to pay bills. No executives were informed or asked about using the dedicated carpet levy money.
Are there any rules for Strata Managers re the spending of dedicated levies?I fear we may be getting a wee bit off topic. The stuff from BB (previous posting) is interesting but it’s essentially about transferring money from the sinking fund to the admin fund and back. If the carpet money went into the sinking fund, then, yes, that would be relevant but I’m not sure it did.
The question is, was the Strata manager right to spend money specifically raised to replace the carpet on other stuff. I don’t think there are specific regulations that cover that except an umbrella principle that the strata manager should only do what the Owners Corporation or Executive Committee has asked them to do.
However, one of the things that the OC asks the strata manager to do is pay the building’s bills and it sounds as if there was a shortfall in the budget that required those carpet funds to be used for other purposes. That could be caused by anything from a sudden rise in costs to an unexpected drop in revenue (with more residents than usual getting behind on their levies) or both.
At the very least, there seems to be a failure of communication and the strata manager should have made it clear where the carpet money was going and why, at the time it was spent. There also seems to be an urgent need to review the building’s accounts.
If you are running your admin and sinking funds so dry that your sinking fund doesn’t even have enough in it to pay $5000 for a carpet, you may have much more serious problems that a non-communicative strata manager.
Do you have a ten-year sinking fund plan in place (as required by law)? Is it being adequately resourced?
Sounds like it’s time your executive committee and strata manager had a long chat about the finances of the building, where the money is going, where it’s coming from and a few more financial facts of strata life.
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I was feeling that the money was being spent because one of the funds was exhausted.
Jimmy T is right; my original post is about transferring money to make up a shortfall in one of the funds. This may not be the case as Jimmy notes.