This article discusses desktop sinking fund reports, explaining why tick-and-flick desktop CWFPs are inadequate and how proper on-site assessments reduce risk and liability.
Question: Many buildings are simply doing a tick and flick action of obtaining a sinking fund report. How do we ensure these inexpensive desktop approaches are a thing of the past?
Many buildings are simply doing a tick and flick action of obtaining a sinking fund report. What is your recommendation or the industries approach in terms of having a building physically assessed to identify the assets, their condition and the real costs that should be applied to the sinking fund. How do we ensure these inexpensive desktop approaches are a thing of the past?
Answer: If the Committee engages a company who does not accurately or suitably complete a CWFP by not attending site for example, the Owners Corporation will be liable for this decision.
You are quite accurate, many schemes have owners who simply accept a basic template Capital Works Fund Plan (CWFP) to simply meet legislative requirements and then it goes in the top drawer in someone’s desk never to be looked at again for 5 years until the review is due.
It is worth noting that if an owners corporation completes their own CWFP, they will hold all the liability associated with this. If they fail to appropriately budget for capital items, maintenance and repairs then they will be liable for any shortfalls or damages to owners. There have been many cases where an owner has successfully sued an Owners Corporation for failing their legal duty to keep the common property in good order and manage maintenance and repairs. These lawsuits have been in the hundreds of thousands.
Similarly if a Strata Committee engages a company who does not accurately or suitably complete a CWFP by not attending site for example, the Owners Corporation will be liable for this decision. Similarly, if an issue arises such as a shortfall or missed maintenance planning, the company that completed the desktop report would share some liability (hopefully with professional indemnity insurance) but you’re relying on the fact that that company will still be around and able to contribute towards the claim.
Engaging suitably qualified tradesperson and contractors is the responsibility of the Owners Corporation. Just like you would not send a handyman to change your switchboard, you would not send someone inexperienced to complete your CWFP.
To make desktop CWFPs or owner created CWFPs a thing of the past, greater education is needed for owners and committee members on how much liability surrounds the duty to maintain a strata scheme. If owners truly know the liability around taking this onboard themselves, no one would opt to have a basic, poorly created CWFP in their name.
This post appears in Strata News #591.
Dakota Panetta
Solutions in Engineering
E: dakotap@solutionsinengineering.com
P: 1300 136 036
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