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I own an older unit in a 12 unit complex in Sydney NSW. At our recent AGM, July 2022, our current 10 year capital works plan had ceased and was due for renewal. The strata manager professional who was running the meeting advised that as our complex was less than 99 units, there was no legal compulsion for a new 10 Year Capital Works Plan. Based on this advice the attendees agreed to not proceed with another 10 year Plan.
I wasn’t entirely comfortable with this outcome so have since done my own investigation with detailed reading of The Strata Development Act 2015 and Regulation 2016. I cannot find anything there to support the Strata Managers opinion. In fact I could only find such an exception only exists for Strata developments of 2 allotments and only if both owners agree.
I have 2 questions:
Is the Strata Managers advice correct? Should I be reading some other document?
If the Strata Managers advice is incorrect this means our Owners Corporation (of which I am now a member) is in breach of the Act by not having a current 10 year Capital Works Plan. What are the ramifications of this for the OC and it’s committee?Kind regards for your response.
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Is the Strata Managers advice correct? Should I be reading some other document?
No, the strata manager is wrong. The most puzzling thing about this is why they would give you such erroneous information. You need to have a 10-year capital works plan which must be updated every five years. here’s the law: Strata Schemes Management Act 2015 No 50 – NSW Legislation
If the Strata Managers advice is incorrect this means our Owners Corporation (of which I am now a member) is in breach of the Act by not having a current 10 year Capital Works Plan.
Yes, you are in breach but there are no stratakops so no one is going to jail. By the way, you are automatically a member of the owners corp when you buy a strata unit. Maybe you mean that you are now on the strata committee.
What are the ramifications of this for the OC and its committee?
1. If an owner decides that your building is being badly run and applies for the appointment of a compulsory strata manager, this could be used as evidence of dysfunction and mismanagement (but it wouldn’t fly on its own – there would have to be other defaults).
2. You don’t have a capital works plan. How do you know how much money to set aside for future repairs and maintenance?
3. You have a strata manager who doesn’t know what they are doing. This is probably the most serious concern. What other bad advice are they giving? What else are they doing wrong? You need to get shot of them pronto.
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I think this agent has misinterpreted Section 79 (6) of the Act:
(6) An owners corporation of a large strata scheme must include in the estimates prepared at an annual general meeting—
(a) specific amounts in relation to each item or matter on which the owners corporation intends to spend money, or on which the owners corporation is aware money will be likely to be spent, in the period until the next annual general meeting, and
(b) a note as to any difference between the estimates and the 10-year plan for the capital works fund prepared under this Division and the reasons for the difference.
I think this agent has misinterpreted Section 79 (6) of the Act: (6) An owners corporation of a large strata scheme must include in the estimates prepared at an annual general meeting— (a) specific amounts in relation to each item or matter …
Well spotted. This means only large schemes have to include spending plans but smaller schemes still need to have a maintenance plan in place – they just don’t need to put figures in place.
For instance, this could say that they will need to replace garage doors in an estimated so many years, without necessarily committing to a cost required to do so.
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I think this agent has misinterpreted Section 79 (6) of the Act: (6) An owners corporation of a large strata scheme must include in the estimates prepared at an annual general meeting— (a) specific amounts in relation to each item or matter …
Well spotted. This means only large schemes have to include spending plans but smaller schemes still need to have a maintenance plan in place – they just don’t need to put figures in place.
For instance, this could say that they will need to replace garage doors in an estimated so many years, without necessarily committing to a cost required to do so.
79(6) relates to the budget; not the 10 year plan ‘budget’ as set out in the plan.
A large SP only really needs to have “10 year plan” as an item in its CW budget if it doesn’t care to itemize the plans details. No detail required.
Typical 10 year plan will have what the expected expenditures are for, the specifics. It will to some degree itemize what you are saving up for and when it is expected you execute the spending. That is if you had a ‘professional’ draw it up. And owners should have a copy of it or can at least have access to a copy.