Can a strata scheme transfer “excess” funds between the AD & CW accounts without any form of penalty i.e. raising special levy by the receiving account to pay back the source? On whose authority would this transfer be undertaken …
I believe the transfer of money from the Capital Works (CW) fund to the Administration (admin) fund can be approved by the strata committee, provided they have not been constrained from doing so by a vote of the owners corp at a general meeting.
The strata manager doesn’t have that authority unless it is specifically granted by the owners corp. Strata law says the owners corp must “not later than 3 months after the transfer or use, determine the amount to be levied as a contribution to the fund from which the transfer or use was made to reimburse the amounts paid from the fund.”
Some strata managers interpret this to mean that you have to pay the money back by then, via a special levy if need be. Others read the Act differently, saying all that’s required is that the owners corporation, advised by the strata committee, decides how much will be repaid and the period over which that must occur.
For instance, in the latter scenario, you might decide to pay the amount back over two years and reduce the normal levies into the admin fund by the same amount, meaning you have effectively transferred the money permanently. Either way, if large sums are involved, you might want to get advice form an experienced strata lawyer.
It’s one of the quirks of NSW strata law that schemes must have established a 10-year a capital works or maintenance plan, but are not required to fund that by accumulated levies, as some may prefer to use special levies or strata loans.
By the way, as explained in the notes on the Forum home page, it’s not helpful to new strata owners or readers of this website to use initials and acronyms, certainly not in the initial reference.