“The sinking fund is not an emergency fund – it’s a repair and maintenance fund.”
Agreed — but the need for repairs can emerge literally overnight, and liquidity can be an asset in such a situation. I am the recent Chairman and current Treasurer of a scheme with a healthy sinking fund on which we have just had to draw for some unexpected sewerage works. We know of a pending need for retaining wall repairs and also have a roof membrane on borrowed time. The statutory review is due this year, and I would rather see a positive conclusion presented to the Owners.
And if there are emergencies, our friends at Lannocks will step up with loans which they say make more economic sense than sinking funds in the first place.
Nothing personal, but sn’t there something of a competing interest here? Loans have to be repaid and, if the EC have sought to make heroes of themselves by keeping levies down to a minimum, there could be a nasty shock at the next AGM as the proverbial chickens come home to roost.
It makes all sorts of sense to spend your sinking fund – that’s what it’s there for.
It also makes sense to be sure that you are covered for reasonably forseeable expenditure even if a precise time cannot be put to it.