- This topic has 10 replies, 6 voices, and was last updated 11 years, 7 months ago by .
-
Topic
-
Some of you may remember an earlier post of mine about a friend who sought some advice about his possible purchase of a strata property. To refresh memories, the circumstances were that the Strata Report commissioned by his Conveyancer revealed a significant deficit in the administrative fund, that had been addressed by paying some expenses of that fund from the sinking fund.
This matter and some others of equal significance led me to advise against purchase, but my friend extracted a reduction in the purchase price from the vendor, who obviously wanted out of the whole mess, and then proceeded with his purchase.
Again of the basis of my advice and as the “disbursement” from the sinking fund occurred 8 months ago, my friend has been pushing his Strata Manager to convene a General Meeting so that the Owners Corporation can comply with the requirements under S71(3) of the NSW Strata Schemes Management Act (SCMA) where it has only 3 months from the date of the “disbursement” to devise and implement a plan to recoup that over whatever period of time is considered by the O/C to be acceptable; all things considered (such as not increasing the amount of levies too much).
My understanding is that the amount to be recouped under S71(3) has to be in accordance with S76(1), then the amounts levied need to be paid to the administrative fund; correct?
I’m also of the opinion that the amounts recouped would simply be added to the administrative fund levy as paid by each owner, and that as they’d be additional to whatever amounts had been estimated to cover normal administrative fund expenses, then the resultant surplus would at the O/C’s direction transferred to the sinking fund at year’s end; correct?
Despite my friend’s requests (via me) for the Strata Managers to word the applicable motion around the above, they’ve chosen to put one that seeks the O/C’s consent to recoup the disbursement via a once-off Special Levy!
We’re talking about almost $40K here, and apart from the fact that my friend and no doubt the other Owners will baulk at what’s proposed (≈$1,300ea), I’m of the opinion that under S76(4) a Special Levy is (only) to account for an expense that the O/C cannot then meet from either its administrative or sinking funds, and not to recoup a distribution from one fund to another as that’s not an expense; correct?
Apologies in advance, but I need some clarification here so that I don’t lead my friend up the wrong path (his EGM’s this friday).
- You must be logged in to reply to this topic.