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Flat Chat

Not sinking but drowning

Imagine what would happen to our speeding laws if there were no were no speed cameras or, indeed, speeding fines.

The inevitable bloody mayhem aside, that's pretty much the chaotic situation with regulations intended to make strata plans save enough money to cover future wear and tear.

QUESTION: What is the owner's obligation after a sinking fund forecast has been done for their strata scheme? Are owners' corporations required to implement a sinking fund forecast? What are the financial and legal implications if they do not?

Some members of our executive committee don't want to put any more than our current paltry contributions to the sinking fund. Sooner or later we will be up for special levies and these people may not be owners when the money is needed.

Sinking Fast, Sydney

ANSWER: The current law is brilliant in its conception and farcical in its execution. All it says is that you have to have an assessment done and that it has to be revised every five years. You don't have to employ a professional surveyor and even if you do, you don't have to accept - or implement - their assessment.

A member of the executive committee could jot down a few notes on the back of an envelope and get that approved. No one will check if it's accurate or if there's enough money being set aside.

There is a body of opinion that any member of an executive committee who deliberately sets sinking fund levies too low could be sued by future owners.

But there's already a huge problem just trying to get current recalcitrant owners to pay their levies. Hoping to track down former owners to get them to make good on dodgy decisions made years ago sounds like pie in the legal sky.

Perhaps the knowledge that astute potential purchasers will steer clear of under-funded buildings may focus your neighbours' thoughts.

In any case, make sure the minutes clearly record which executive committee members voted against reasonable sinking fund levies. At least that way, the poor saps who end up with too little money in the future, know who to go after in court.

First published SMH July 2007