Stories of unit blocks having no money in the bank when they need repairs are legion. There has long been a culture in strata of leaving repairs to “the next guy.”
So it’s unusual to come across a building that has a stack of money in its sinking fund but won’t spend it and, in this case, plans to ask owners for even more.
“Our lovely Executive Committee intends to impose a large special levy on the humble owners in our building,” writes Tracer on the Flat Chat Forum. “We don’t disagree with the purpose of the levy (building repairs) – however there is a significant amount of unallocated money sitting in our current sinking fund.
“I suspect the EC wish to keep these funds for some pet cosmetic projects they are always gabbling about.
“I understood that uncommitted funds in both the sinking and admin funds must be taken into account with a special levy only used to make up the shortfall. But searching the NSW strata Act, I can find no reference.”
The reason you can’t find it is that it doesn’t exist. Quite rightly, owners corporations are allowed to make their own financial arrangements, within reason, as long as everyone knows what’s going on.
It may be, for instance, that money that has been set aside for a future project may still be required when more pressing work needs to be done. That said, special levies are possibly the least efficient way of raising the money to get work done.
Two financial institutions, Macquarie Bank and Lannock, offer loans for strata projects and these can be viable options especially in buildings where some people don’t have lazy money lying around to pay a special levy.
In any case, the Executive Committee can’t just issue a demand for a special levy. Financial plans like that have to be presented at a General Meeting and that’s where all the owners decide how they want their money spent, and how they want to raise any shortfall.
The credits and debits of strata loans versus levies are being discussed HERE on the Forum.