Amendments to the Strata Schemes Management Act will
make it easier for the owners' corporation to claim
compensation from an original owner, if levies and funds charged
from lot owners are not adequately set.
The Strata Schemes Management Act Amendments will take effect 30
November 2016. These amendments will affect the many residents of
New South Wales, currently living in a strata dwelling, all Owners
Corporations and Strata Committees as well as developers and
builders who plan on erecting a strata building.
New laws regarding levies
Currently there are two ongoing funds managed and maintained by
the owners' corporations on behalf of all lot owners - the
Administrative Fund and the Sinking Fund. Under the new legislation
the "Sinking Fund" is to be renamed to the
"Capital Works Fund".
Administrative Fund –The purpose of the
Administrative Fund, as its name suggests, is to be used for the
day-to-day administration of the strata scheme. Some examples of
the Administration Fund expenditure are costs relating to cleaning,
gardening and general maintenance.
Capital Works Fund (previously the Sinking Fund)
–The purpose of the Capital Works Fund remains the same;
namely to be used for large expenditure required for the repair and
the upkeep of the building.
Each owner of a lot in the strata scheme will have a levy
(usually due quarterly) which they must pay which will contribute
towards the Capital Works Fund and the Administrative Fund.
Developer's duty to accurately estimate
If it is found that the levies, as prepared by the estimates given
by the developer, during the Initial Period are
insufficient to meet the expenditure of the owners'
corporation, the developer may be found liable. The new amendments
to the strata laws allow an owners' corporation to apply to the
Tribunal for an order requiring the developer of the strata scheme
to pay compensation to the owners corporation.
The Initial Period commences on the date the
owners' corporation is established and ends on the date on
which at least one-third of the units are owned by people other
than the developer.
Owners' corporations will have 3 years from the last date of
the Initial Period to make a claim in the Tribunal.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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