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  • #72078
    Charger
    Flatchatter

      Hi All

      The unit block I live in [ NSW] has water penetration issues. There is 36 units in our unit block. We have a consultant report on the water penetration issues and a ball park figure fix the issues of around $5.5M with repairs being completed in 2 stages with essential works to be completed in stage 1

      Stage 1 :  $3m – with funds suggested to be needed as follows:

      $300k [10%] by April 2024 for Specification and planning
      $1.5m [50%] for January 2025 – Proof of funds to commence construction in Jan 2025,
      $1.2M [40%] before June 2026 – funds estimated to completion.

       

      Stage 2 : $2.5m – with funds suggested to be collected from 1.5 years time / August 2025 onwards [after stage 1 funding is completed/collected], collection over 2.5 years to Jan 2028, stage 2 works would probably start in Jul 2026 onwards finishing in Jul 2028

      It has been suggested Stage 1: $3M should be raised in a special levies over the next 6 quarters/ 18 months, [starting in Feb 2024 to Jul 2025]  with the suggested timeline of construction above in stage 1,

      Not all owners will  have the funds [$83k ave each – $3M stage 1 total]  readily available and will have borrow the funds needed for the special levies or if retired do a reverse mortgage etc., and the owners who borrow won’t be happy to pay the special levies in advance before the funds are actually needed, [paying interest earlier than needed on funds borrowed]

       

      Is there legal requirement to have 60% of funds collected before construction to starts in January 2025 & all funds collected by Jul 2025 with 11 months of works still to be completed  ?

       

      2.  Can the special levy stage 1 be collected over a longer time frame [ ie more than 6 quarters] ?

       

      3. if not, can the normal quarterly capital levies be increased to match the timetable in stage 1 & 2 with construction finishing in Jul 2028 and adjusted as needed  ? [our AGM is in Feb 2024]

       

      Thanks in advance

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    • #72090
      Jimmy-T
      Keymaster

        Is there legal requirement to have 60% of funds collected before construction to starts in January 2025 & all funds collected by Jul 2025 with 11 months of works still to be completed ?

        No legal requirement that I know of, but you may find that the contractor requires a substantial deposit, partly so that they can order materials with reasonable confidence that the strata scheme won’t change its mind.

        2.  Can the special levy stage 1 be collected over a longer time frame [ ie more than 6 quarters] ?

        Yes – it’s up to the owners to agree by a simple majority on the time frame (although you have elected a committee to make these proposals).

        3. if not, can the normal quarterly capital levies be increased to match the timetable in stage 1 & 2 with construction finishing in Jul 2028 and adjusted as needed  ? [our AGM is in Feb 2024]

        What you would need then is a strata loan which spreads the payments over years rather than months, meaning no one is going to have to sell their homes. See the ads on these pages for our sponsors Lannock Finance.

         

        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.
        #72464
        Charger
        Flatchatter
        Chat-starter

          thanks Jimmy for your reply

          Re : Is there legal requirement to have 60% of funds collected before construction to starts in January 2025 & all funds collected by Jul 2025 with 11 months of works still to be completed ?

          We have been advised : “In entering into a contract, an Owners Corporation must demonstrate that they can pay for the works. You will also not be able to establish HBCF insurance for the works without demonstrating this ?” does this mean we have to collected all the levies before works start or just have special levies programmed to be each quarter to cover the cost of the works as completed ?

          The strata loan option from a company like from Lannock Finance [thanks for the tip] has been rejected by the majority of owners in an informal poll we had amongst owners recently

          thanks in advance

           

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