- This topic has 1 reply, 2 voices, and was last updated 1 year, 2 months ago by .
-
Topic
-
Our building replacement insurance is due for renewal in two weeks. We don’t have enough in the admin fund to cover the cost of the premium. The shortfall is significant – around $9,000.
We could borrow from CWF but then we are obligated to raise a special levy to replace the funds we borrow within 90 days.
This would ordinarily be fine except we just recently voted to raise a special levy for some major common property repairs and the financial burden of a second levy could send some owners to the edge.
When I asked our strata manager about the possibility of premium funding he responded: “That is not recommended as the interest in funding of such works would be too high around 12-15% in addition to the fact that there will be a need to hold a EGM to resolve accepting the funding of which will also mean striking a special levy”
I’m so confused. Why would we need an EGM to take up premium funding and why would we need to raise a special levy to replace these funds???
- This topic was modified 1 year, 2 months ago by .
-
Replies
-
We could borrow from CWF but then we are obligated to raise a special levy to replace the funds we borrow within 90 days.
The Act says in S76 (2) (below), that within 90 days you are obliged to “determine” the amount to be refunded, it doesn’t say you have to refund it within 90 days. It goes on to say that this comes under S 81 (5) which says it can be paid in instalments – it also doesn’t say how large or frequent those instalments should be.
Even if your strata manager says the Act means you have to pay it back in 90 days, who is going to complain if you interpret it a different way? The strata manager is bound to follow the OC’s instructions (within the law) you are not obliged to take their advice.
76 Use of administrative fund or capital works fund for purposes of other fund
(2) The owners corporation must, not later than 3 months after the transfer or use, determine the amount to be levied as a contribution to the fund from which the transfer or use was made to reimburse the amounts paid from the fund. Section 81 (3) and (5) apply to a contribution determined under this subsection.
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.
- You must be logged in to reply to this topic.