I think the issue of repairs imminent versus a lack of a sinking fund might deter potential buyers, especially if there are any doubts over the non-selling lot owners’ willingness to contribute to repairs and maintenance.
It sounds like you could use a professional survey and a financial plan (which is basically what a sinking fund is for).
And reading the Act, it looks to me like you do need a sinking fund unless the two lots are physically separate. The same applies to insurance.
Regarding differences in strata law for 2 lot schemes, I have extracted a few sections (below). FYI: you have the same requirement to keep minutes and records of all decisions made if and when you have EC meetings. Have a look at the Act HERE.
Meanwhile, here are some sections specific to your situation:
69 Sinking fund to be established
(1) An owners corporation must establish a sinking fund.
(2) However, an owners corporation for a strata scheme comprising 2 lots need not establish a sinking fund if:
(a) the owners corporation so determines by unanimous resolution, and
(b) the buildings comprised in one of those lots are physically detached from the buildings comprised in the other lot, and
(c) no building or part of a building in the strata scheme is situated outside those lots.
83 Owners corporation to insure building
(1) The owners corporation for a strata scheme for the whole of a building must insure the building and keep the building insured under a damage policy with an approved insurer in accordance with this section.
(2) The building is to be insured for at least the value of the building indicated by the last valuation obtained for the building in accordance with this Division.
(3) The damage policy is to be in the name of the owners corporation.
(4) This section does not apply to an owners corporation for a strata scheme comprising 2 lots if:
(a) the owners corporation so determines by unanimous resolution, and
(b) the buildings comprised in one of those lots are physically detached from the buildings comprised in the other lot, and
(c) no building or part of a building in the strata scheme is situated outside those lots.
107 Auditing of accounts and financial statements
(1) An owners corporation may determine that the accounts and financial statements of the owners corporation are to be audited.
(2) However, the owners corporation of a large strata scheme must ensure that the accounts and financial statements of the owners corporation are audited before presentation to the annual general meeting.
(3) Any auditing of the accounts and financial statements of an owners corporation under this section must be carried out in accordance with the Australian Auditing Standards, unless the strata scheme concerned comprises not more than 2 lots.
Provisions relating to constitution of executive committee
1 Constitution of executive committee for strata scheme with 2 lots
(1) This clause applies to an executive committee for a strata scheme comprising 2 lots.
(2) The executive committee is to consist of:
(a) the owner of each lot that has only one owner, and
(b) one co-owner of each lot owned by co-owners, and
(c) the company nominee of each lot owned by a corporation.
(3) The co-owner of a lot is a member of the executive committee if the other co-owners have consented to that co-owner being the member or, in the absence of consent, the co-owner is the co-owner first named on the strata roll.