How can we ensure our committee and owners corporation effectively address seemingly serious financial management failings in our strata property? – Frank, NSW

I’m a 3 year Owner and resident of a 15 year old, small (6 stand alone units) strata scheme, with a strata committee (3 long term resident-owners) who have repeatedly declared their determination to manage on a “casual” basis (ie – by non-compliant means). The strata managing agency (long term) supports the strata committee, in spite of the wilful non-compliance. My repeated attempts to engage Committee members in discussions about their legislated obligations have been ignored.

Regarding the new Act’s requirements for 10 Year Capital Works Fund Plan compliance For years the Strata Manager has tabled at each AGM their “Capital Works Fund Budget” which purports to show the end of budget year the accumulated balance in the Capital Works Fund and the amount of the needed levy contribution to be paid in the budgeted year. The budgeted year-end accumulated balance at May 31, 2020 was $78,000 and the levy $5081. In the resulting discussion, Owners objected to the proposed size of both the Administration Levy and the Capital Works Fund Levy. The Strata Manager then proposed amended levies that were substantially below those budgeted:

Below budget levies:

  • Admin Fund below budget by $3000.
  • Capital Works Fund below budget by $1,300.

Our actual Accumulated Capital Works Fund balance, by year-end May 31, 2020, will be about $35,000, less than half of that indicated in the Strata Manager’s “Capital Works Fund Budget”.

Further compounding these concerns was the discovery, three months ago, of a running cracking in one of the Units (apparently due to foundation subsidence), which is likely to amount a substantial cost to remedy – now word yet on the convening of a meeting of Owners to consider action and its cost. My questions of the Strata Manager (copies to Owners) on whether the Strata Manager’s “Capital Works Fund Budget” – unchanged in format and content over the years, complies with the new Acts increased obligations on the Owners Corporation. Given the intransigence of the Committee and the apathy of other Owners, what action is open to me that might require our Committee and Owners to effectively address these seemingly serious financial management failings?

– Frank, NSW

Regarding the capital works budget, you may need to ascertain if the owners corporation has a plan in place and if it was prepared by a properly qualified person such as a quantity surveyor. If so, it could be that the proposed levies are adequate.

Here is an article on levies that may interest you.