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Topic
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We are a 10 unit class B complex in Canberra that until 2020 had a totally disengaged Executive Committee. We have brick buildings, a concrete driveway, brick mailboxes, drains that have never blocked, two lights and no large trees. In 2021 we realised that the Sinking Fund probably had too much money in it ($27k) and we stopped contributing to it. Our new SM is telling us that we need to transfer $4000 from the Admin Fund to the Sinking fund as the Sinking Fund contains less money than the target balances in the Sinking Fund Forecast.
What are the rules in relation to the owners voting at the AGM to:
Ammend the Sinking Fund Plan to reduce the target balances shown against each year
Have less money in the Sinking Fund than is shown in the 2021 Sinking Fund Plan target balancesAs far as I can see the facts are:
We had a Sinking Fund Plan done in 2021 but have become aware that it that it is overcapitalised
The Sinking Fund Plan had over $17000 in forecast expenditure between 2018 and 2024 that was not necessary or spent
The target balances in the Sinking fund Plan do not appear to be related to the forecast expenditure
The Target balances in Sinking Fund Plan show a steady reduction from $27k in 2021 to $16k in 2035Thanks in advance for any advice,
WoodWalker
- This topic was modified 1 month, 3 weeks ago by .
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Replies
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The sinking fund plan can be amended by ordinary resolution at any general meeting. If you have too much money in the sinking fund, you can’t transfer money out but you can stop contributing to it. You are required to review the sinking fund plan at least every 5 years but nothing prevents you from reviewing and amending it at a shorter interval.
As you are class B with little common property to maintain, it is probably not a difficult task to prepare and present an updated plan yourselves that moves some of the expenditure that was anticipated for the past several years out to future years and revises the schedule of anticipated contributions. Put a motion for an ordinary resolution to adopt the updated plan. Then, put a budget motion that has a sinking fund levy consistent with the updated plan.
The bottom line is that the sinking fund plan is a planning tool. It is not a set of annual budgets set in concrete and it can be revised and updated at any time by ordinary resolution.
It might be reasonable to sit on an explicit ‘contingency’ amount that you maintain as an underlaying balance for anything you have not anticipated or could happen but is unlikely. Eg. you probably won’t need to do anything for your drains but there is a possibility that they could collapse. Your two lights probably won’t need any work but you might need to dig up the cabling if some fault occurs.
- This reply was modified 1 month, 3 weeks ago by .
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