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  • #10218
    tiny
    Flatchatter

      I live in a building built @1940, 4 units. For the last 3 years I have requested our sinking fund be set higher. As at 30/09/15 our admin account is overdrawn $1714.15 and sinking funds is $2858.60, total net assets is $1144.15.

      We cannot afford to repair/replace anything- the other 3 lot owners do not support higher levies- what should I do?

      I am not in a position to come up with funds if a special levy was required to pay for a major item.

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    • #24145
      Jimmy-T
      Keymaster

        Under strata law, every scheme is required to have a 10-year sinking fund assessment which they need to review every five years. Does yours?  This is a survey of all the elements of common property, how long they have to go before they will need repair and then how much that will cost.

        Oddly, there is no requirement in NSW to fund that projected spending but failure to have any plan to do so would be one of the elements considered if anyone ever mounted an action to replace the owners corp with a strata manager.

        The other option is that a strata scheme can apply for loans rather than raising special levies.  

        The Admin fund can borrow money from the sinking fund but it has to be repaid within six months (I think), although many schemes get round this by recycling the loan every time is falls due.

        I would put a proposal to your next general meeting that you initiate a sinking fund assessment and that you decide in advance that strata loans will be sought rather than special levies if any repairs are required and there is no money in the sinking fund.

        However, I believe banks are very open to extending your mortgage if you do get hit with a special levy that you can’t pay, as this protects their investment.  

        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.
        #24363

        Tiny, you have to, first ask yourself, why there is no money in the admin fund and sort this issue and ask for receipts from the strata manager, if you have one, before you [raise] sinking fund levies. Some investigation needs to be done in regards to strata finances, rather then pressuring other owners to raise sinking funds which only some strata managers profit from (allegedly)

        Allegedly, some strata managers are making huge profits, charging for things that don’t exist and some make deals to overcharge owners corp.

        #24365
        Jimmy-T
        Keymaster

          @mikobrand96 said:
          Allegedly, some strata managers are making huge profits, charging for things that don’t exist and some make deals to overcharge owners corp.

          I am reminded of that old quote, “never attribute to malice (or dishonesty) anything that can just as easily be ascribed to stupidity.”

          Propose at the next EC meeting or AGM that a sinking fund assessment be prepared, as per the provisions of Sections 75(2), 75A and 76 of the Act (see below).

          If the EC refuses or prepares an assessment that is clearly inadequate, then you can go to NCAT and ask it to order the EC to do so under section 138.

          This is what the Act says:

          75   Estimates to be prepared of contributions to administrative and sinking funds

          (2)  An owners corporation must, at each annual general meeting, estimate how much money it will need to credit to its sinking fund for actual and expected expenditure:

          (a)  for painting or repainting any part of the common property which is a building or other structure, and

          (b)  to acquire personal property, and

          (c)  to renew or replace personal property, and

          (d)  to renew or replace fixtures and fittings that are part of the common property, and

          (e)  to replace or repair the common property, and

          (f)  to meet other expenses of a capital nature.

          Note. Expenses of a capital nature would include expenses in relation to major repairs or improvements to the common property or personal property of the owners corporation, such as painting of a building or replacement of roofing, guttering or fences and the like.

          (3)  When estimating amounts needed to be credited to the administrative fund or the sinking fund the owners corporation must have before it, and take into account, a statement of the existing financial situation of the strata scheme and an estimate of receipts and payments.

          (4)  In estimating amounts to be credited to the sinking fund, an owners corporation that is required to prepare a plan under section 75A is to take into account anticipated major expenditure identified in the plan for the 10-year period to which the plan relates.

          (5)  An owners corporation of a large strata scheme must include in the estimates prepared under this section at an annual general meeting specific amounts in relation to each item or matter on which the owners corporation intends to expend money, or on which the owners corporation is aware money will be likely to be expended, in the period until the next annual general meeting.

          75A   Owners corporation to prepare 10-year sinking fund plans

          (1)  This section applies to owners corporations established on or after the commencement of this section.

          (2)  An owners corporation to which this section applies is to prepare a plan of anticipated major expenditure to be met from the sinking fund over the 10-year period commencing on the first annual general meeting of the owners corporation.

          (3)  The initial plan is to be finalised by the end of the second annual general meeting of the owners corporation.

          (4)  The plan is to be reviewed and (if necessary) adjusted no later than at the fifth annual general meeting of the owners corporation.

          (5)  An owners corporation to which this section applies is to prepare a plan as referred to in subsection (2) for each 10-year period following the period referred to in that subsection and is to finalise and review the plan in accordance with the requirements of subsections (3) and (4) at the corresponding annual general meetings in the relevant 10-year period.

          (6)  An owners corporation may engage expert assistance in the preparation of a plan under this section.

          (7)  The regulations may extend the operation of this section to all owners corporations or to such classes of owners corporations established before the commencement of this section as are specified in the regulations.

          (8)  A regulation referred to in subsection (7) may make necessary modifications to the application of any provision of this section to an owners corporation established before the commencement of this section.

          76   Owners corporation to set levy for contributions to administrative and sinking funds

          (1)  The owners corporation must determine the amounts to be levied as a contribution to the administrative fund and the sinking fund to raise the amounts estimated as needing to be credited to those funds.

          (2)  That determination must be made at the same meeting at which those estimated amounts are determined.

          (3)  The owners corporation must levy on each person liable for it such a contribution.

          (4)  If the owners corporation is subsequently faced with other expenses it cannot at once meet from either fund, it must levy on each owner a contribution to the administrative fund, determined at a general meeting of the owners corporation, in order to meet the expenses.

          (5)  A contribution is, if an owners corporation so determines, payable by such regular periodic instalments as are specified in the determination setting the amount of the contribution.

          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.
          #24390

          I, somewhat. agree with the quote if stupidity relates to the fact that owners are thinking their strata manager is being entirely honest with them they are kidding themselves. Some strata managers are more skilled in the art of manipulation and telling a person what they want them to know then a car salesman.  

          Also, if there is 1 owner that suspects something is going on.  The person is outnumbered by the majority.  As the majority don’t care, not interested, feel satisfied by the service, can’t be bothered as it’s too hard and lastly let down by the Dept of Fair Trading as they can’t see anything wrong.  

          A couple that ran a strata management company in wollongong stole close to 2 million dollars and another woman stole over a million and a man that did the same in sydney.  These were all in the SMH.  Thes are just 3 examples. how many more that are not known or found out.  Strata has been around since the early 1960’s how many managers in the past 50 years stole and got any with it, I wonder and without owners taking a vested interest in where their money is actually going and looking in to the finances of their individual strata scheme. Managers will continue to steal money in one way or another.

          Strata management is the least investigated industry around and this is been taken advantage of and exploited.  

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