An owner’s corporation’s maintenance fund is effectively a deposit which exists to allow an owners corporation to pay for repairs and maintenance of a building, in accordance with the scheme’s maintenance plan.
The money in a maintenance fund can be spent on several different things. Firstly, it can be spent on anticipated capital expenditure, or non-recurrent items. In a large strata scheme, this often includes large or one-off items, such as painting the building or major structural repairs to common property. The maintenance fund can also be used to replace major capital items in a scheme. This might include items such as common property fences, or carpets in a lobby. Maintenance funds can then also be spent on any other reasonable expenses which should be reasonably met from capital, such as pool furniture.
The maintenance fund is raised through three main avenues:
The maintenance fund levy (owner’s contribution), is often kept and administered by a Community Management company such as SSKB, on behalf of a owners corporation.
Certain strata schemes must have a 10 year maintenance plan, and there must be enough money in the maintenance fund to cover the proposed maintenance in the plan.
Every financial year, owners corporations committees must review the maintenance plan at the Annual General Meeting. This is to ensure the maintenance fund has sufficient finances to provide necessary and reasonable spending for the upcoming financial year, or the items listed above. This is also necessary to ensure an amount is reserved to cover likely spending for at least 10 years after the current financial year, for different types of maintenance.
Payments from the maintenance fund for repairs or major expenditure can only be made if there is either a written request for payment in the form of a tax invoice, or written evidence of payment, including a receipt. All payments from the maintenance fund must be made from the financial institution account.
Owners corporations may ask SSKB or Star BMS to prepare a maintenance fund forecast for it, or have a committee or lot owner estimate the likely spending requirements.
If your strata scheme is looking for advice on what a maintenance fund is, and how best to manage it, talk to SSKB. We can provide you with expert advice and tailor it to the details of your individual scheme to ensure you get the best outcome.