Can the reserve fund only be used to fund common property repairs and maintenance?
Our new strata manager said our reserve fund can only be used for common property, not the proposed painting of all six lots in our small complex. Our previous strata manager said this was allowed. Is this correct?
We have very little common property and would not have accumulated $9000 in our reserve fund if we knew it could only be used on common areas.
The reserve fund covers anticipated major capital expenses for the maintenance, repair, renewal, or replacement of common property.
Under the Strata Titles Act 1985 (WA), the reserve fund is intended to cover anticipated major capital expenses for the maintenance, repair, renewal, or replacement of common property. Generally, it cannot be used for work on private lot property, even if all units carry out repairs or maintenance.
If the proposed painting works include common property elements, such as external walls or shared structures that are classified as common property, the reserve fund may be used. However, if the work is within individual lot boundaries, those costs would typically fall to the lot owners and not be covered by the reserve fund.
Given your concerns about previous advice, we recommend reviewing:
- Your strata plan – to confirm what is and isn’t classified as common property;
- Your scheme by-laws – these may include specific provisions around maintenance responsibilities;
- Previous meeting minutes – to identify any decisions about how to use the reserve fund.
If the painting project involves lot property, you may consider funding it through a special levy raised by agreement of all lot owners.
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