This article is about council of owners spending limits and setting the budget.
Question: Who has the final say over the Council of Owners budget and how monies are expended from an administration account?
Does the Strata company have the final say over the Council of Owners on how monies are expended from an administration account with a large surplus that is separate to the maintenance account?
Answer: The Strata Company controls what the budget is, and that’s what gets approved at the annual general meeting, and that’s what the council is required to try and adhere to.
Section 102 of the Act says that the strata company must have a budget for each financial year that must be approved at the annual general meeting of the strata company.
It’s important the budget takes into account the 10 year maintenance plan, and also any bylaws that may stipulate other schedules that may also need to be raised where you’ve got conflicting uses within the scheme.
So yes, the Strata Company approves the budget at the annual general meeting, and then the council of owners has limited capacity to expand outside of that budget. They can identify an expenditure item and go to the strata company and seek approval for additional expenditure.
Alternatively, they do have the ability to spend up to $500 per lot on unbudgeted items as well. So there is a little bit of scope for the Council of owners with regards to expenditure outside of the budget, but without knowing the size of the scheme and what might need to be expended, that spending capacity of the council is hard to determine.
Ultimately the Strata Company controls what the budget is, and that’s what gets approved at the annual general meeting, and that’s what the council is required to try and adhere to.
This post appears in Strata News #511.
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