Sinking Fund Plans
What Happens if the Levies Are Set Too Low?
The person who sells first before major expenditure effectively steals from the Owner’s Corporation or Body Corporate.
The Sinking Fund Report
New South Wales
10-year sinking fund plans
From July 2009, all strata schemes are required by law to have a 10‑year sinking fund plan in place (Section 75A of the Strata Schemes Management Act 1996).
This means that owner’s corporations must plan how they will repair and maintain common property and raise sufficient funds to cover the costs. The amount required for the 10‑year plan will vary between schemes, for instance, newer schemes may require relatively less money than the plans for older schemes with more repair work due. Each sinking fund plan should reflect the individual needs of its scheme.
The Act states that the Sinking Fund Budget must allow for raising a reasonable capital amount to provide for both the necessary and reasonable spending from the sinking fund for the financial year and also to reserve an appropriate proportional share of amounts necessary to be accumulated meeting anticipated major expenditure over, at least the next 9 years.
The Body Corporate and Community Management Bill 1997 became law in Queensland on 13 July 1997. This legislation makes it mandatory for every body corporate to prepare a sinking fund forecast as a basis for their annual sinking fund budget. The forecast must be for a minimum of ten years. It means that all Queensland strata title buildings will now have sufficient funds for good maintenance management.
The Sinking Fund Budget is based on estimates of spending of a capital nature or non-recurrent nature and must allow for raising the necessary capital amount to provide necessary and reasonable spending for major works in the present financial year and create a reserve for anticipated major expenditure for the next 9 years. (total of 10 years)