Question: Our sinking fund account is held by our body corporate manager in their own cash management fund. What guarantees do we have that the sinking fund is secure?
We have considerable funds in our reasonably sized scheme’s sinking fund. Our funds are held by our body corporate manager.
These funds are in the name of the corporate manager’s own cash management fund. They say the funds are invested in the Bank of Queensland. What guarantees do the residents of our scheme have that the sinking fund is secure? What happens if the manager’s cash management fund makes some bad investments and becomes insolvent?
Would it be better to have the funds invested in a bank or a similar large organisation in our own name?
Answer: It is quite common for the name of the account to have the manager’s name in it, however, it MUST be in the name of the CTS.
Whilst there is no requirement in QLD for a trust account to be used, it is a legal requirement for the CTS funds to be invested in an account in their name – definitely note the manager’s name as this also has tax implications on the earnings. It is quite common for the name of the account to have the manager’s name in it, however, it MUST be in the name of the CTS.
If this is indeed the case, I would suggest the owners seek legal advice to avoid any future problems.
This post appears in the December 2021 edition of THE QLD Strata Magazine.
Rod Laws TINWORTH & CO E: RodLaws@tinworth.com P: 02 9922 3660