10 Year Sinking Fund Plan

 

It is a legal requirement that ALL Strata Plans have a Sinking Fund Plan in place over the next few years so that they can adequately budget for the maintenance that will be required. It is also a legal requirement that all properties are maintained in a safe, structurally sound and to an acceptable standard as well as retaining a reasonable appearance. The Owners Corporation owes a duty of care to the lot owners as well as visitors to the property.

A Sinking Fund Plan must identify building defects as well as typical maintenance issues in the common areas. That can cover a wide range of issues ranging from waterproofing of balconies, concrete spalling issues (concrete cancer), painting, dampness, water entry and replacement of carpets in common areas. Other issues may be not so evident, but obvious to a competent consultant. An example of this includes deterioration of brickwork, roof tiles and windows in a salt environment. A Sinking Fund Plan must first identify the condition of a building and then provide an estimate in time and money for those repairs.

Specialist building consultants with a wide range of expertise are the best people to assist a Strata Manager or an Owners Corporation in completing a Sinking Fund Plan. These experts can identify and ensure that a suitable product, or contractor, is selected to complete the works to the required standard. It has been the usual practice in the past to obtain 3 to 6 quotes for the required works and to select the cheapest price. Previously there has been no expertise input as to the required works or suitability of the quotations for the required repairs. Hence the cheapest quote gets the job irrespective of suitability. A Strata Manager may have some understanding of the need or requirement in obvious areas, but their expertise in building defects is limited. With a professional Sinking Fund Plan the Owners Corporation can assess the problems and defects within a building and make informed decisions on the need for works, timeframe and budgets.

Older unit buildings especially have the need for specialist expertise in assessing the suitability of materials in the proposed repairs. Older buildings will to varying degrees not comply with current standards. For example, the roof framework may not be adequate for new roof tiles, but be typical for buildings of its age. If the building requires new tiles or waterproofing then all options should be considered given the requirements of the Owners Corporation.

A Sinking Fund Plan provides a spreadsheet with timeframes and estimates for works in those timeframes. From this spreadsheet, owners can budget in advance for repairs and reduce the need for expensive special levies.

We suggest you view www.sinkingfundplan.com.au for further information.

August 2007 ©