We recently received a request for information about how to set up a fighting fund to pay for legal advise about building defects only affecting individual lots. We thank Christopher Kerin, Kerin Benson Lawyers for providing a response.
Question: If we set up a fighting fund to pay for legal advice about repairing strata defects only affecting individual lots, are we able to get our strata manager to assist?
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I live in a strata complex in the ACT and we have formed an interest group in relation to defects with tiles in the kitchen and bathrooms. We are looking at seeking legal advice in relation to these defects as the response from the builder/developer to repair etc. has been poor.
If we set up a so called fighting fund to pay for this legal advice, are we able to get our strata manager to assist with setting up this fund for lot owners? If not, would you be able to provide advice as to how we could set up such a fund?
Answer: If it is only the lot owners who are involved in the dispute, then the owners corporation and strata manager should not be involved.
If it is only the lot owners who are involved in the dispute (because it is only lot property that is defective), then the owners corporation and strata manager should not be involved.
The owners corporation is only responsible for common property and its funds should only be spent on common property issues. That is, none of the administrative, special purpose or sinking funds addressed in the Unit Titles (Management) Act 2011 can deal with moneys to be used for disputes in relation to lot property. Further, the strata manager is engaged to provide management services to the owners corporation (not individual lot owners).
So the answer to your first question is “No”.
However, there is nothing preventing the lot owners from establishing a bank account dedicated to dealing with funds to be used to pay for lot property issues. The bank approached can assist with any security issues which can be put in place to safeguard such moneys (for example, the requirement of multiple signatories to the bank account before money can be withdrawn).
Alternatively, if Kerin Benson Lawyers were retained, the lot owners could deposit moneys into our trust account. However, we would require that anyone depositing moneys do so by a particular date and as a lump sum (rather than in piecemeal fashion). Further, the lot owners would need to notify Kerin Benson Lawyers of the deposit at the time of making the deposit.
This post appears in Strata News #154
This article is not intended to be personal advice and you should not rely on it as a substitute for any form of advice.
Are you interested in more about setting up a fighting fund, strata building defects or information particular to ACT legislation? Visit our FactSheet: Strata Building Defects OR FactSheet: Australian Capital Territory Strata Legislation