This article discussing taking out a strata loan to pay for painting has been provided by Debbie Barker, StrataLoans.
Question: I live in a complex that needs painting but does not have enough money in the sinking fund. Can the Body Corporate take out a strata loan to get the complex painted?
Answer: The corporation can borrow for many different things as long as it is agreed to at an EGM or AGM and a resolution passed
Yes, a Body Corporate is able to borrow money for painting. The corporation can borrow for many different things as long as it is agreed to at an EGM or AGM and a resolution passed.
- The funds are taken as an unsecured loan and the responsibility of the body corporate not individual owners.
- Money can be drawn as a multi-drawdown facility, which means the body corporate only pays for what they borrow when they borrow it.
- Terms may be as short as one year or as long as 12 years depending on the needs of the body corporate.
Funding has been successfully offered to bodies corporate for over 15 years now and is being used for various needs including:
- To assist when a maintenance fund does not have sufficient money to cover costs but the work needs to be completed now.
- If a body corporate identifies several jobs need to be completed, instead of drawing this process out over time, and causing continual disruption, these works can be bundled together and finance used. This means the work is completed in one go – reducing disruption and often cheaper in the long run.
- When a projects blow out in budget and requires an extra injection of funds so borrowing can fill this shortfall.
- To buy out management rights.
There are many more scenarios, but as you can see it is now a popular and acceptable alternative for bodies corporate to consider when contemplating funding options.
The team at StrataLoans are able to assist with any further queries with regards to funding options in strata.
Have a question about using a strata loan to pay for painting or something to add to the article? Leave a comment below.
This post appears in Strata News #308.
- QLD: Q&A Contingencies and the Sinking Fund Forecast
- QLD: Transferring money between funds (Standard Module)
- Strata Finance: The guide for Owners Corporations
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