#18417
Jimmy-T
Keymaster

    @excathedra said:

    Agreed — but the need for repairs can emerge literally overnight, and liquidity can be an asset in such a situation.  

    True, and I really understand and accept where you’re coming from, but how much liquidity do you really need?  

    I was generally referring to buildings where they cover themselves for every possible eventuality and even then don’t spend the money in case something else comes up.  Your situation is quite different where you have a clear idea of what you are going to need to fix in the near future. 

     

    Regarding issues like your emergency sewage works, all you need is enough money to get the work started and a line of credit with a lender to pay for it when it’s finished.  It would be well worth talking to someone like Lannocks or Macquarie Bank – both of whom offer strata loans – to find out if that really would be any more expensive than keeping the ‘rainy day’ money in the bank.

    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.

    The simple answer to that is that there should be no shocks or surprises.  You give owners the choice between putting the money aside or finding it when it’s needed.  If they go for the latter, you explain the costs involved and then put all the agreements in place so you can trigger the loan when required. Note that neither of these scenarios require special levies.

    It … makes sense to be sure that you are covered for reasonably forseeable expenditure even if a precise time cannot be put to it.

    Define ‘reasonably foreseeable’. I don’t disagree with your natural caution but I think there’s a balance.  In the unlikely event of anyone ever putting me in charge of the finances of a strata plan, I would have part of the sinking fund for work we KNEW we needed, a small emergency fund for things we didn’t know might occur and a line of credit for unexpected major contingencies.

    Like the man said, there are things we know, things we know we don’t know and things we don’t know we don’t know.  For the latter two categories of strata repairs, I’d be tempted to spend money on a parachute rather than a safety net.

     

     

    The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.