A decision by the Body Corporate to not act is still a decision, and it has costs of its own. If remediation projects are delayed – the inevitable further deterioration of the strata property will lead to extra costs. If a quote expires, you can bet the new quote will be greater.
Strata managers and the Body Corporate often need to consider new urgent work requiring attention at the same time as existing works. Is urgent work going to be unnecessarily delayed because lack of immediate funds delays decision making?
Obtaining additional funding to that raised by levies can help owners find alignment. This is where Lannock Strata Finance can help. We provide funding that can be used across several projects, not just for a solo project, and can fund invoices for separate projects under the umbrella of a single loan.
It’s important to remember that the committee can also consider a funding mix to include money that may be in the maintenance fund. If an item needing repair is included in the maintenance fund, then it is best to use it. If the item is not in the sinking fund, then the committee may need to think more critically about whether they are setting the Body Corporate up for a bigger problem down the track by taking money out of the sinking fund to pay for this project. (It is important to note that states and territories operate under slightly different legislation).
Lannock recommends the Body Corporate should consider the following for every funding decision:
• What are the options? (Sinking Fund, Special Levy, Strata Funding)
• Should they use one method, two methods, or all three?
• Will the special levies be hard to recoup from owners? If they are hard to recoup, should they just focus on the finance option? Or money in the bank? Will this delay the project?
• Will the price increase while trying to collect levies?
• Is there an opportunity cost to striking a special levy? Will an owner sacrifice a wedding, holiday, or retirement fund?
• Will some owners carry debt beyond ownership of their lot? (because they may have put their share on a credit card, personal loan or other forms of personal funding)
• Will some owners sell and need to reduce the sale price at settlement to account for outstanding special levies?
• What is the quickest way to show proof of funds to the contractor?
The three options that should always be considered are the Sinking Fund, Special Levy and Strata Funding. Strata Funding can be tabled as a “contingency” at every general meeting – so the Body Corporate has prompt access to funding should it be required.
Every option should be put to the committee at the same time, prompting the crucial questions, and inviting suppliers (funding provider, contractor, lawyers) to attend committee meetings. Placing all options on the table at the beginning of your decision-making will increase the likelihood of the Body Corporate finding alignment.
In the best interest of passing the special resolution, it is crucial that the Body Corporate then decides on the right funding mix and which funding provider will best support that mix.
As the pioneers of strata funding, Lannock Strata Funding supports Strata Companies making informed funding decisions and will always provide someone to speak to your Body Corporate.
Jason Triplett
Business Development Manager - QLD
P 0467 777 272
E jason@lannock.com.au
W lannock.com.au
