The Strata Titles Amendment Act, which came into effect on May 1st 2020, specifies that all Designated Strata Companies (10+ lots or building replacement cost of $5,000,000+) will need to have reserve funds. A reserve fund is a seperate fund created for major capital expenditure or unexpected items that arise.
More information:
- The 10 year maintenance plan (also compulsory for designated strata companies under STAA 2018) can assist strata companies budget for the reserve fund however
- The amount in the reserve fund is self-regulated by the Strata Companies not an external body
- Examples of items which the Reserve Fund may cover (depending on the boundaries of the strata plan) are:
- Painting of the building
- New lifts or lift upgrade
- Re-roofing
- Resurfacing the driveway
- Replacing common property ie new gutters and downpipes, replacement of flooring
- Fence replacements
- Improvements to the common property
- You can create a Reserve Fund Plan or Forecast to assist in allocating funds to the reserve fund. A Reserve Fund Forecast, also known as a Lifecycle Report, is a document that estimates likely capital works around the strata complex, within a specific time frame, and then calculates how much to collect from lot owners to fund the works. You can request this to be undertaken in your 10 year maintenance plan.
