Responsibilities of the owners corporation - Levies, Administrative and Sinking Fund.

The owners corporation must levy (charge) owners in the strata scheme to raise enough funds to carry out its duties. All levies must be worked out in proportion to the unit entitlements of each lot.

Administrative fund

The administrative fund is for day-to-day recurrent expenses. The amount in it must be enough for the owners corporation to pay its expenses:

for the cost of looking after common property and personal property of the owners corporation
for the payment of insurance premiums
for any other recurrent expenses other than amounts covered by the sinking fund or by a special levy.

Sinking fund

The sinking fund is to cover future capital needs. The amount in the fund must be enough to cover all the owners corporation’s expenses:

for painting of common property
for obtaining personal property of the owners corporation (eg. mowers or washing machines)
for renewing or replacing any fixtures on the common property and any personal property owned by the owners corporation
to replace, repair or make good the common property
for any debts, other than amounts covered by the administrative fund
for other capital expenses.

Ten year sinking fund plans

All schemes are required to have a ten year sinking fund plan for the life of the scheme. The plan has to be reviewed at least every five years.

Transfer of money between funds

The owners corporation can transfer money from one fund to the other, or make a payment from one fund that should have been paid from the other. But the owners corporation must make a levy to repay that fund within three months after the transfer of monies.

Setting levies

Levies must be set at each AGM. When a levy is to be set, a budget must be given, showing the existing financial situation and an estimate of receipts and payments. The budget can be given out with the notice of the meeting or at the meeting before voting on the levy motion.

The motion to set the levies must show the amount for each fund and be approved by a majority vote.

The owners corporation may decide to allow payments by instalments.

After the levies are set, the Treasurer must write to the owners and tell them the amount to pay and the date to pay. This notice only has to be given once.

Extra levy

If the owners corporation has to pay a debt that was not budgeted for in the administrative or sinking fund estimates, a levy must be set at a general meeting and the amount collected paid to the administrative fund.

Interest and discounts on levies

An unpaid levy gains interest at the rate of 10% simple interest a year if not paid within one month after it is due. The owners corporation cannot increase or decrease the interest but it can make a special resolution to charge no interest. Unpaid levies, including interest, can be recovered by the owners corporation as a debt in court.

An owners corporation may make a special resolution to give a 10% discount where a levy is paid before the day it is due. Payment made on the day it is due does not attract the discount.