Sinking fund forecasts have been something of a joke to date.
It’s something you’ve had to have, and you’re required to think about them when setting levies but there’s been no sanction for ignoring them. So when the admin fund budget goes up, in the never-ending quest to keep levies the same as last year, the balancing amount has been the sinking fund levy. It comes down a bit, and hey presto the figures work.
Well that’s about to change. The tiger now has teeth.
Capital works plans, as they will be known, must be implemented, so far as practicable.
This brings us to our friends in the USA where similar provisions have led to new owners suing the owners corporation for not implementing the plan when funds have not been saved progressively for replacements and renewal.
The proviso, ‘so far as practicable’, will be used in defence but it won’t cut it when the reason is to keep the levies the same as last year when the price of just about everything else in the world is going up.
The first to be bitten might just be strata inspectors who fail to notice that difference between the amount in the capital works fund and the recommended closing balance in the study.