Budgets must be prepared annually for the administrative and sinking funds: ss. 75(1) and 75(2).
Administrative fund budgets estimate how much money the owner’s corporation will need for Actual and expected expenditure:
Recurrent expenses includes regular expenses such as insurance excesses, water charges, electricity, carpet cleaning, lawn mowing and minor expenses relating to maintenance of common property. In budgeting for administrative expenses, strata managers need to keep track of any likely abnormal increases in expenditure. Recent examples include the exorbitant
The sinking fund budget is required to estimate how much money the owner’s corporation will Need for actual and expected expenditure for:
In estimating amounts to be credited to the sinking fund, an Owners Corporation must take into account anticipated major expenditure identified in the 10-year sinking fund plan required by s.75A. The idea of the 10-year plan is to force owners of the day to pay progressively for their use of the common property. The Act permits the owners corporation to engage expert assistance in the preparation of the plan but does not oblige the owner’s corporation to use an expert. A recent study has shown most owners do not use experts: Where plans are prepared externally and an Owners Corporation decides not to levy in Accordance with the recommended plan, there should be a good reason. Many sinking funds are underfunded and it is possible that a new member of an owner’s corporation might sue the owners corporation for not having properly funded their sinking funds before their period of ownership. Strata managers might be liable on this account as well.
Thank you TEYS Lawyers for this Article
One of the basic responsibilities of an owners corporation is to raise and manage fees and to Keep track of its finances. A strata manager has an important role in assisting the owners corporation to budget for their expenses, levy contributions, collecting levies, spending the funds in an authorised way and accounting to the general […]