Question: Some committee members would like a pre-approved amount they can spend for emergencies. Is it common for committees to have pre-approved emergency funds?
A recent proposal from the strata committee chair and secretary in our community title scheme has sparked some debate. They’ve proposed a motion for the committee to pre-approve a set amount they could spend without needing approval.
The justification for this is to allow for a quicker response in emergencies. However, some owners feel strongly that all spending decisions, regardless of urgency, should be discussed and voted on by the committee.
Is it common practice for strata committees to have pre-approved emergency funds? Would the motion be valid?
Answer: Contingency fund, rainy day fund, slush fund – there is no provision for any of it.
What is being described here sounds like a contingency fund. Others may call it a rainy day fund, while the cynics may refer to it as a slush fund.
Regardless of the name, there is no provision for any of it. Spending, as you suggest, is highly regulated in a body corporate, whether it be spending by the committee or spending approved by all owners at a general meeting. Personally, I think there is some merit in changing legislation to allow for contingency funds or contingency spending. That’s just my opinion, though.
On the issue of ’emergency’ spending, while I can appreciate the intent, spending must still go through a correct approval process. There is scope under Qld’s legislation to obtain an emergency spending order from an adjudicator. I have seen such orders made in a matter of hours. I would caution though, what is and is not an ’emergency’ is carefully considered by adjudicators. Put it this way: if something has been known for some time and not attended to, such as an item of maintenance, then by definition, that could never be an ’emergency’. A genuine emergency is something like a flood, storm, earthquake or the roof blowing off.
So yes, I see problems with the suggested motion.
This is general information only and not legal advice.
This post appears in the June 2024 edition of The QLD Strata Magazine.
Chris Irons Strata Solve E: chris@stratasolve.com.au P: 0419 805 898