Budget Time?

The responsibility for the management and control of the strata schemes common property rests with the owners corporation.

The responsibility of funding the strata scheme are all owners of all lots in the scheme, who must contribute to the administrative fund and capital works fund.

The administrative fund is used from which payment is made principally for the reoccurring day to day expenses of the owners corporation, such as common property electricity, water, maintenance, insurance premium etc.

The Capital Works Fund is used from which payments are made for major long term works such as repairing and painting the building, garage door replacement, renew carpets, replacement of the common property etc.

At each Annual General Meeting (“AGM”), the owners corporation must estimate how much money it will need to credit to its administrative fund and capital works fund to be levied as a contribution to be raised from all lot owners.

Each owner is liable to pay the contribution once the owners corporation has determined the budget at the AGM.

While our office will prepare a budget for consideration, the owners present personally, by proxy or by ballot make the decision as to what the budget is set at and subsequently the levy contributions.

Q: Who set’s the budget for the forthcoming year?

The budget is determined by the owners by way of an ordinary resolution (majority vote). The budget may be amended by majority vote at the meeting. The capital works fund budget will be proposed in accordance with the Capital Works Fund Plan.

Q: What if I did not agree with the budget as voted, do I still have to pay my levies?

Yes. Every owner has the right to vote on any motion as long as they are financial (not outstanding contributions/fees) but if the majority of the owners entitled to vote pass the resolution to set the budget, the budget is therefore set and contributions levies as due and payable to the owners corporation.

Q: What if our expenses exceed the amount we have budgeted?

Our advice will always be is that you have to at least budget to an amount of what you anticipate your expenses to be. The Act also deals with this, as an owners corporation cannot in a position whereby it cannot service it current expenses.

In the event that the owners has insufficient funds to service its expenses or if either fund is in deficit our office will have to arrange a general meeting to raise a special levy(s) to service the expense or the deficit.

Q: When will our budget be determined?

The budget is determined at the AGM for your owners corporation. When this is held is dependent on your owners corporations financial year end, which can be any of the 12-months throughout the year.

The AGM is generally held approximately 6-weeks after your building’s financial year end.