Sinking Funds Give Strata Property Buyers Valuable Insight Into a Buildings Financial Health 2/08/2009 Anyone thinking of purchasing a property in a building operating under strata title can now do so with greater security thanks to changes to the Strata Scheme Management Act.
The changes, which have been slowly and incrementally introduced over the past several years, are now in place and require strata schemes to plan ten years ahead with a sinking fund to accommodate levies normally set by Owners’ Corporations to cover costs of routine and longer term repairs and maintenance.
Mr Richard Tooker, director of New South Wales Strata Management, one of the states’ largest strata management companies, says this obligation opens a window of opportunity for prospective buyer to see into the future and provide a valuable insight into a buildings financial health.
He says buyers can now act with greater assurance that they will be able to purchase their residence with much less worry that they could be subject to unexpected and unplanned levies.
“The changes have put in place strategies that will protect future owners from unexpected charges and the high costs of legal actions taken without their full knowledge and consent.”
Mr Tooker said New South Wales Strata Management has long been an advocate of an updated Act, saying his company has always prepared detailed budgets for sinking funds.
“Sinking funds, those sums owners are required to pay to cover estimated and actual costs of maintaining and sustaining a building have long been a bone of contention amongst strata property owners.
“Now, strata schemes must plan ahead to provide a sinking fund that will cover the first ten-years worth of funding estimates.
Mr Tooker says this highlights the need for effective strata management.
“Owners’ Corporations have come to understand that it is in their interest to keep a particularly close eye toward obtaining and retaining the best independent expert assistance available.”
In a response to the updated regulations most Owners’ Corporations, he said, use the services of a strata-managing agent for the preparation and administration of sinking fund estimates and for the levying of contributions.
“There are a range of functions that require such services. Amongst the matters included are insurance, records keeping, and the arranging of fire safety inspections.”
Mr Tooker said the amendments to the Strata Schemes Management Act clear the air for many Owners’ Corporations in doubt of where they stood and exactly where their responsibilities begin and end.
“The powers and responsibilities of Owners’ Corporations have been refined considerably, and some corporations now have need for more sophisticated financial record keeping, account management and correspondence mechanisms than were previously used.
“These days access to a more modern computerised system of accountability is a must, and many Owners’ Corporations do not have access to such a system.”
New South Wales Strata Management (formerly Gilmour Strata Management) commenced business in early 1991, as a member of the highly respected J A Gilmour & Sons group of companies. Licensed solely and specialising only in strata management services, the company has steadily grown to become one of the largest such organisations in New South Wales.
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