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Sinking funds - In a strata scheme
A sinking fund is set up by the owners corporation to cover the costs of future capital expenses, which include for example, painting the building, driveway refurbishment, replacement of common property items like carpets, roofing and guttering and lift overhauls.
10–year sinking fund plans
From July 2009, all strata schemes are required by law to have a 10-year sinking fund plan in place (Section 75A of the Strata Schemes Management Act 1996 ). This means that owners corporations must plan how they will repair and maintain common property and raise sufficient funds to cover the costs. The amount required for the 10-year plan will vary between schemes, for instance, newer schemes may require relatively less money than the plans for older schemes with more repair work due. Each sinking fund plan should reflect the individual needs of its scheme.
The 10-year plan must be approved by owners at an annual general meeting (AGM) and must be reviewed and adjusted, if required, in the first five years.