SINKING FUNDS & SPECIAL LEVIES – expensive, slow, inefficient

Urgent Works and Future Works

All buildings need upkeep and strata corporations also have legal obligations to ensure safety and living standards. An important part of the duty of care is a Maintenance Plan which reports the likely what and when of anticipated building improvements/repairs. Thinking about how to fund these works is a separate but equally important responsibility.

Then there's the works that need to be done as quickly as possible. What to do? The law requires the owners to maintain the common property and good sense warns that the problem will rapidly deteriorate if left unrepaired. Legal liability, standard of living, increased repair costs and property value are all at risk. Many strata buildings don't have any funds put aside, or only have a small percentage of what's required for those repairs.

Frequently, owners have had only two choices offered as a solution to their needs - a Sinking Fund, or a Special Levy. Here's a quick summary of the built-in disadvantages of each.

Sinking Funds

Almost invariably, sinking funds don't have enough funds accumulated to pay for works when problems arise. While you wait to acquire the shortfall, the problem gets increasingly expensive to fix. On top of that, there are hidden costs - inflation, tariffs and scope increase.  And finally, sinking funds are expensive - almost every owner will have better things to do wtih their hard-earned cash than having it lying dormant in a sinking fund.

Special Levies

Special Levies compel owners to contribute a significant lump sum - which is usually distressing and always comes as a shock, no matter how often the possibility has been raised.  For most owners, a Special Levy creates a big cash flow problem and a lot of anxiety - finding money they just don't have available, or would rather use elsewhere, for works that cannot be avoided.

Waiting is expensive

Meanwhile, your lifestyle and your property value are impaired. For example, your roof leaks - and that's expensive to fix. But imagine how much more expensive it will get if the leak in unit 58 causes a flood in unit 48 and they sue the corporation. Alternately, imagine the cost when untreated concrete cancer makes the balconies unsafe.

The Lannock solution

Lannock can help provide funds very quickly without the cash flow problem, the stress and the ever growing cost caused by waiting. Once the motion has been carried at a General Meeting and the processes completed with Lannock, your owners' corporation can have cleared funds available within a week.