Question: Should the strata managing agent or committee notify owners when the administration fund is in deficit? Does using capital works fund money to cover the shortfall require a meeting?
At what point does a strata managing agent or committee need to advise the owners corporation that the administration fund is in deficit? Does using capital works fund money to cover payments require a committee meeting? Is this covered under any NSW law?
Answer: There is no specific legal requirement to notify owners of an administration fund deficit, but transferring money between funds triggers a mandatory general meeting resolution within three months.
There is no specific requirement for the strata managing agent or committee to advise the owners corporation that the administration fund is in deficit.
However, if an owners corporation has expenses it cannot meet from its administrative or capital works fund, it must levy on each owner of a lot in the strata scheme a contribution determined at a general meeting, in shares proportional to the unit entitlements of their respective lots, to meet the expenses — see section 81(4) of the Strata Schemes Management Act 2015 (the Act).
To use the money from the capital works fund, the committee should determine whether the payment for work is for repair and maintenance, or improving or enhancing common property:
- For repair and maintenance of common property: the committee can decide by a majority of strata committee or general meeting to approve the payment (subject to spending restrictions imposed by the owners corporation).
- For improving or enhancing common property: this requires a special resolution from the owners corporation at a general meeting to specifically authorise the taking of the particular action proposed.
If the owners corporation uses funds from the capital works fund for the administration fund (or vice versa), the owners corporation must, within 3 months of the transfer or payment, determine by resolution at a general meeting whether the payment of part of the money should be reimbursed to the correct fund.
If the owners corporation resolves to reimburse the fund, it should also determine the amount to be reimbursed and whether it is to be levied or transferred from the other fund — see section 76 of the Act.
This post appears in the July 2026 edition of The NSW Strata Magazine.
Matthew Jenkins Bannermans Lawyers E: enquiries@bannermans.com.au P: 02 9929 0226
