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Good Morning All,
Just a couple of questions re the above topic.
A special levy has been proposed by the SM to clear a deficit in the admin account. Our sinking fund is quite healthy – can we transfer from the sinking account to clear the admin account deficit?
Are there statutory levels required for the amount of funds contained in the sinking fund?
Regards,
Dudley
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Yes you can, but you have to strike a levy to put the money back within 3 months, so the effect is the same. Refer sections 68 and 71.
There is no mandated level for a sinking fund, you just have to have one, but note the requirement to have a sinking fund plan.
You may wish to seek some particular legal advice on this, but, the act does not prevent the OC to resolve to transfer funds from one fund to the other, and having consideration of current fund balances and the forecast expenses for both funds, not to strike a special levy to reimburse the fund.
the above suggested, I would actually recommend that you transfer the funds by the mechanics of adjusting the apportionment of admin versus sinking fund levies, ie, reduce the sinking fund levies and increase the admin fund levies by what ever proportion you wish to transfer.
it sounds like your strata manager has taken a very by the book approach on this situation, in that they are following the act specifically by the book… However, I bet that they haven’t actually followed the act so precisely, in that they have probably expensed repairs and maintenance from the Admin fund rather than the Sinking fund, being the likely cause of the deficit, (see section 65 of the Strata Schemes Management Act). In the first instance it may not hurt to review past periods expenses to ensure that they have been paid from the correct fund.
I’d add a note of caution: the advice is state-specific. In the ACT the only way to get money out of the sinking fund is to spend it in accordance with the sinking fund plan, which can be amended by ordinary resolution so not that hard to do just before resolving to spend. Still it has to be on one of the things that a sinking fund can be used for. You can not transfer to the admin fund. Transfers are a one-way street here.
However, you can as suggested below. The AGM can resolve to levy more for the admin fund and less for the sinking fund which amounts to the same thing. We just did the same thing the other way around since we had a surplus from last year in the admin fund but had a new expense to cover in the sinking fund.
Yes – those expenses would be attributable to the sinking fund.
Just get the Sec / Chairperson to tell the SM to transfer the funds (remember the SM works for you (the owners) and has to comply with your wishes). If they object you might have to pass a motion by the EC instructing the SM to do this.
Sometimes it’s a bit of a grey area where the money comes from but ultimately it is the EC or OC that makes the decision (under advisement from the SM) not the SM themselves.
The SM is there to work for u ppl …. all u need to do is move the committee. If u want your basics to be clear about what is there in strata living … just click here … the pdf will help u a lot.
The PDF referred to is a document from a company that is not a sponsor of this website and normally I would be suspicious of “backdoor” advertising. However, it’s actually a very good summary of most of the things you need to know about strata living (in NSW) so I’m letting it go – JimmyT
@stratatitle said:
The SM is there to work for u ppl …. all u need to do is move the committee. If u want your basics to be clear about what is there in strata living … just click here … the pdf will help u a lot.The PDF referred to is a document from a company that is not a sponsor of this website and normally I would be suspicious of “backdoor” advertising. However, it’s actually a very good summary of most of the things you need to know about strata living (in NSW) so I’m letting it go – JimmyT
Hi JimmyT,
I appreciate how well you are running this forum site. Advertising was never the intention but helping people by providing the right information was the motive.
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