By Charlie Brown

Owners Corporation is the modern equivalent of the term Body Corporate. It came into being after legislative changes that were implemented years ago. Many Owners Corporations hire professional services of licensed body corporate management or strata management agencies. While Owners Corporations are at liberty to manage their affairs, owners do not usually have the will, time or expertise to handle this responsibility.

Funding

It begins with finances and an Owners Corporation requires adequate funding that is available to pay for day to day operations and management of the building. Money must also be set aside for the purpose of paying for ongoing repairs and maintenance of the building. It is in the owners’ best interests to ensure that the building is properly maintained and well kept in order for it to appreciate in value rather than decline.

All building owners are expected to cater for strata levies, usually in the form of a quarterly contribution is made to the owners’ corporation. The amount is typically determined each year at the Annual General Meeting.

Levy

The levy generally includes the following components:

– Administration fund
– Sinking fund
– Special Levies

Administration Fund

Administration fund contribution caters for day to day expenses like management fees, replacing light bulbs, gardeners and cleaners. These are usually ongoing operational costs.

Sinking Fund

Sinking fund contribution targets capital investments that are usually beneficial for the building for several years. Examples include repainting the building, roof replacement and lift upgrades. Learn more about body corporate services in Brisbane here.

Special Levies

If the Body Corporate needs to pay for a debt that is not accommodated within the administration or sinking fund, a special levy can be agreed during a General Meeting. When the funds in the Administration or Sinking fund are not enough to cover expenses incurred, a special levy can be raised. Special levies are typically on a short-term basis.

Calculating Strata Levies

Strata managers typically propose draft budgets for the fiscal year. These proposals are reviewed by the Executive Committee before the Annual General Meeting. The draft budget is included in the agenda if the Executive Committee is comfortable with the proposed amount and it is discussed during the meeting.

Owners and their representatives get an opportunity to ask questions and vote on the budget that has been proposed. Owners may suggest another budget or vote against the proposal. After confirming the exact budget, a body corporate manager divides the budget accordingly. With full transparency, the strata manager readily answers all questions that may be asked.

Insurance

– Another essential role of the Body Corporate is the yearly insurance renewal for building and public liability. This is necessary for protecting the building against the financial implications of accidental damage, explosions, floods and fire.
– It may cover emergency repairs and provision for temporary accommodation alternatives in case the unit is uninhabitable after fire or a flood. This type of insurance comes with the component of legal liability and usually covers the building for a specified amount.
– It is important to note that the insurance covers common property, which means that individual owners need to take out insurance for personal content if they want coverage for their own property.

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