Question: What happens to the capital works fund if the strata is terminated as part of a collective sale? Do the funds get redistributed to owners, or does the purchaser keep the fund as part of the purchase?
Answer: It would ultimately depend on the negotiated outcome agreed to by the owners corporation and purchaser.
It would ultimately depend on the negotiated outcome agreed to by the owners corporation and purchaser (developer) and settlement price therein.
Under section 77 of the Strata Schemes Management Act 2015 (NSW), there is the option for the owners corporation to distribute funds from the administrative or capital works fund. This would require a unanimous resolution by the owners corporation in a general meeting. The funds would be distributed back to the owners in accordance with their unit entitlements.
Tim Sara Sara Strata E: tim@sarastrata.com.au P: 04 8500 7960
This post appears in the September 2023 edition of The NSW Strata Magazine.