AGM and financial restrictions

justsaying – in NSW Sect 80A of the Act automatically restricts Executive Committees’ expenditure to Items against which a Budget has been determined at the last AGM, and further restricts any expenditure on any Item that’s in excess of that budgeted amount to 10%.

So at the next AGM, when the compulsory Motion arises about whether or not your Owners Corporation wishes to ensure “that any matter or class of matter is to be determined only by it at a General Meeting”, a simple majority vote NOT to remove the Sect 80A restriction and an insistence on compliance with the provisions of Sect 80B for any proposed expenditure >$30K should get the outcome that you require.

One last modicum of advice – when it comes to budget time try to ensure that catch-all Items such as “General Repairs” into which almost any expenditure can be dumped are avoided. If you know on what specific items expenditure is planned in the coming year, then insist that they’re listed as specific items with a corresponding budget, and if you don’t know at the time when the Agenda is distributed, then find out before the Meeting so it can be nailed-down as an amendment to the proposed budget at that forum.

Justsaying said…. So I’m clear, expenditure <30k needs to meet compliance of the act. Over 30> has to go to GM? Will this stop consultants fees without approval?

I think there’s some confusion about mathematical symbols, so to make it clearer, as your Plan has more than 100 Lots it’s classified as a “large strata scheme” under the Act and therefore, except for defined emergencies such as water/electrical supply failures and glass breakages, your Executive Committee (E/C):

1. is prevented from spending any more than 10% over the amount allowed against any item shown in the budget; and..
2. is required to obtain 2 quotations for any expenditure that’s proposed and is expected to exceed $30,000 on any item shown in the budget; and further..
3. under the terms of a Motion that must be included on the Agenda of every AGM, the Owners Corporation can itself decide by a simple majority vote to further limit the E/C’s spending by requiring that expenditure on specific item/s can only be approved by all Owners at a General Meeting. (Just be careful with the use of this provision lest you end up with multiple Meetings each year instead of the usual one).

Examples:

– If the approved budget for “lawns and gardening” is $5,000 then the E/C can spend up to $5,500 on that item, and if it wants to spend more, then it has to call a General Meeting so that the Owners can make a decision on that additional expenditure one way or the other.

– If the approved budget for “structural rectification” is $50,000 and the likely expenditure on something that comes under that item is estimated at $35,000 then the E/C must obtain 2 quotations before then authorising the expenditure.

– Even though the approved budget for “consultants’ fees” may be $10,000, the Owners can vote to have all proposed expenditure on that item referred to a General Meeting.

justsaying said.… It seems owners are uncertain about general expenditure if a budget is submitted, it’s the lack of specific items that appear to come in under the radar! 

Your Strata Manager will have a list of every type and item of expenditure that’s even remotely possible at a Strata Plan; that’s called a “chart of accounts”. So you and like-minded Owners should ask for a copy of that list, and then select the types and items of expenditure that you want to be shown, budgeted, and tracked for your Plan at and from the next AGM.

As always, as Strata Management should be democratic, you’re allowed to do some lobbying with like-minded Owners so as to explain the need for the style of management that you favour, so that they’re on-side when it come to a vote.