Strata Sinking Fund
The client is dealing with a residential property under a strata scheme in New South Wales, where the strata scheme does not maintain a sinking fund. Contributions to the fund are determined by proportional lot size, and there have been disputes regarding its management and use. The client is aware of penalties for failing to maintain an adequate sinking fund, which typically covers expenses like elevators. There are no immediate maintenance issues requiring attention from the sinking fund.
Questions about this case
These answers have been verified by a lawyer in the LEAP networkWhat are the legal obligations for maintaining a sinking fund in a strata scheme in New South Wales?
In New South Wales, strata schemes are legally required to maintain a sinking fund as per the Strata Schemes Management Act 2015. The sinking fund is essential for future capital expenses and must be adequately funded following a 10-year capital works plan that forecasts major expenditure needs.
How is the amount for a sinking fund determined and what factors influence this assessment?
The amount for a sinking fund in a New South Wales strata scheme is typically determined by the strata committee through a forecast of future capital expenses. Key factors include the age and condition of the building, historical maintenance costs, and input from professionals. Contributions are often proportional to lot entitlement, meaning based on property size or value.
Are there any penalties or consequences for a strata scheme if it fails to maintain an adequate sinking fund?
If a strata scheme in New South Wales fails to maintain an adequate sinking fund, it may face penalties imposed by the NSW Civil and Administrative Tribunal (NCAT). Non-compliance can affect the strata scheme’s financial health, leading to increased levies or special levies to cover unexpected costs.
Can owners within a strata scheme challenge the management or use of the sinking fund?
Owners within a strata scheme in New South Wales have the right to challenge the management or use of the sinking fund. This can be done through a motion at a general meeting or by seeking mediation or adjudication through the NSW Civil and Administrative Tribunal (NCAT).
What are the typical expenses that a sinking fund covers within a strata scheme?
Within a strata scheme in New South Wales, a sinking fund typically covers expenses related to major capital works and maintenance of common property, including roof repairs, painting, and significant repairs to shared facilities. It ensures that there are funds available for unexpected repairs and long-term maintenance projects.
