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  • #62564

    Hi All,

    4 lot Strata which has not made any contributions into Capital Works Fund in 5 years.

    Why ?

    Because majority of Owners would not agree to increase Levies to allow for a steady increase in the Capital Works Fund to match requirements of a professionally prepared 10 Year Capital Works Plan.

    Which as I understand is a plan requiring to be reviewed in Year 5.

    Result : One Owner with property on market is receiving low ball offers because prospective buyers are factoring in their own large contribution when this situation finally hits the Fan.

    I see this as a lose/win/lose scenario. Vendor loses out with a devalued property. Incoming Owner wins with a reduced Sale Price then everyone loses out for the ignorance of the Majority.

    What can be expected if this Matter were brought before the Tribunal ?

    Your comments welcome.


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  • #62593

    The tribunal will usually only take an interest when strata law or a scheme’s by-laws have been breached.

    In your case, Section 74 of the Act says a Capital Works fund must be established.  It doesn’t say how much money needs to be put in it, just that it must exist.

    Section 80 of the Act says you must have a 10-year maintenance plan which must be reviewed every five years.

    Section 81 of the Act says this:

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

    The key words in there are “estimated as needing to be credited”.  If your strata scheme decided it only needs to keep a minimal float in the fund and that they will raise funds as need be either by special levies or through a strata loan, then that is absolutely legal.

    What you could do is use the five-yearly review as a trigger for getting it put on the record exactly what the strata scheme’s intentions are. A motion could read something like:

    This strata plan resolves to either:

    a) contribute money as necessary to meet the anticipated requirements of the maintenance plan reviewed on {date}, as per the terms of Section 81 of the Act, or

    b) fund repairs and maintenance as they arise, either through a special levy or the acquisition of a strata loan, to be determined at the time.

    If nothing else, that might sharpen their thinking, but I think your only recourse to the Tribunal would be if they don’t even have a Capital Works fund set up, as required by law, or if there were significant repairs and maintenance required that they were failing to undertake because they have no money and aren’t prepared to raise it.

    That would fall under Section 106 which requires the owners corporation to maintain and repair common property.




    Thanks for taking the time to respond with such a detailed answer.

    I was expecting to end up paying a lawyer for that advice.




    Thanks for taking the time to respond with such a detailed answer.  I was expecting to end up paying a lawyer for that advice.

    You may yet have to do so … I’m not a lawyer  but thanks for the thumbs-up, anyway.


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