QLD Lot owners are wondering how much money they should have in their sinking fund plus what to do if the amount is not enough to carry out necessary maintenance on the building.
Table of Contents:
- QUESTION: We do not have enough in our sinking fund to carry out much needed painting. Can I demand the building be painted, stating it must be done otherwise we are in breach of the legislation?
- QUESTION: Can the sinking fund be placed into a term deposit without our permission?
- QUESTION: Is $57,000 a good amount to have in a sinking fund for 6 units including 2 ground floor units with courtyards in Brisbane?
Question: We do not have enough in our sinking fund to carry out much needed painting. Can I demand the building be painted, stating it must be done otherwise we are in breach of the legislation?
We pay low levies which have not increased since I’ve been an owner. The sinking fund balance is low. When I purchased 5 years ago the building needed painting. This has never occurred.
Painting has been discussed again but the lot owners all say we cannot afford the expense. Can I demand the building be painted, stating it must be done otherwise we are in breach of the legislation? I’m worried the building will suffer structural damage if the painting is not done.
Answer: The ‘sinking fund forecast’ would or should have indicated when repainting was due.
William Marquand, Tower Body Corporate:
If the property needed repainting when you bought it 5 years ago, enquiries should have revealed whether there would be sufficient funds in the ‘sinking fund’, and the ‘sinking fund forecast’ would or should have indicated when repainting was due.
To take this matter further, you may need to seek independent legal advice – which we can’t provide in this forum.
Chris Irons, Hynes Legal:
So it sounds like what you’re saying is that the motion to approve levies for repainting keeps getting defeated. Assuming that’s right then yes, you can challenge that outcome through the Commissioner’s Office. You’d need to demonstrate why the decision to decline is unreasonable. Do you have, for example, a report that shows that the painting is necessary?
One thing you can do before you take that step is to communicate with other owners to say that you intend doing this. That might motivate them to think differently on levies in future. If the next general meeting is yet to take place and the repainting issue is again on the agenda, you can also do some lobbying before the meeting to impress upon everyone why it should pass.
I find that the hip pocket approach generally works well. Impressing upon the other owners that their property values will suffer without repainting (assuming that’s the case) might be a good thing for you to communicate also.
This post appears in Strata News #431.
Question: Can the sinking fund be placed into a term deposit without our permission?
Could our sinking fund have been placed into a term deposit to get interest without our permission?
Previously we’ve been charged $220 in bank fees for an amount of $2000 in our sinking fund. The only explanation from the body corporate manager was that the amount was for bank fees but we think it may have been a fee to cancel a term deposit and withdraw funds out early.
We thought the sinking fund was for the repair and maintenance of the building. How can we find out what has occurred?
Answer: It is usual practice to put the sinking fund monies into an interest bearing account if not needed immediately.
The sinking fund typically includes:
- owners’ contributions to the sinking fund
- interest received from the fund’s investments
It is usual practice to put the sinking fund monies into an interest bearing account if not needed immediately – otherwise, it’s ‘dead money’.
There is probably a small fee involved in moving money into or out of an investment account, but your first question should probably be whether your committee (assuming there is one) authorised such an investment and if not, whether your body corporate manager has maintained a proper record of the fees reasonably incurred on behalf of the body corporate.
This post appears in Strata News #403.
Question: Is $57,000 a good amount to have in a sinking fund for 6 units including 2 ground floor units with courtyards in Brisbane?
Answer: If there is no sinking fund forecast, a good starting point would be to obtain one in order to both determine whether there are sufficient savings
There is not really enough information on which to base an answer.
For example, what is the age and condition of the complex and has a sinking fund forecast been prepared? If the savings are in keeping with a sinking fund forecast, then the amount is probably ok. If there is no sinking fund forecast, a good starting point would be to obtain one in order to both determine whether there are sufficient savings and most importantly, to plan for the future maintenance needs of the complex and owner levies.
This post appears in Strata News #395
Have a question about how much money should be in your sinking fund or something to add to the article? Leave a comment below.
Looking for strata information concerning your state? For state-specific strata information, try here.