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Urgent major work is required that would normally be paid for by a special levy as there are insufficient funds in the capital works fund. We still have owners who have not yet paid for our last special levy so one of the committee members is proposing we accept a five year payment plan from the contractor and pay for the work by increasing the capital works levy to cover the future payment instalments. The likely levy increase would be $1000 to $2000 a year and would be more palatable than a sudden $5000 to $10000 special levy .
Is this legal? We are effectively moving an urgent CURRENT Capital works cost into a fund that normally provides for FUTURE capital works.
Is there anything in the NSW Strata Laws which says you cant do this?
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We are effectively moving an urgent CURRENT Capital works cost into a fund that normally provides for FUTURE capital works.
Future works become current works at some point. The simple answer would be to take out a strata loan. By the way, is the person who hasn’t paid being charged the mandatory interest on their debt?
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You are effectively taking a loan from the contractor. Nice if you can get it. Check how much extra you’ll be paying and compare that with the cost of borrowing from the bank. It seems like an effective way of handling owners who are unable to come up with a special levy, but who are able to pay quarterly levies. You might look at putting those owners on a payment plan for those outstanding special levies. It’s not fair that everyone else is covering their share. Don’t let it go on too long as they are (or should be) accruing interest. Also consider raising levies so that your OC builds up a bit of a buffer against urgent capital works. And make sure that “urgent” work is actually capital in nature and not maintenance that should be covered by the admin fund.