top of page

What is a Sinking Fund? Why am I being charged?

A sinking fund is a legal requirement as set by the South Australian government for Community Titled properties (that is, those properties established under the Community Titles Act 1996) to build funds toward their future maintenance.


The idea of the sinking fund is that the owners of the property contribute over time for the anticipated future maintenance such as painting, roof/gutter replacements, lift and garage door replacements etc over the lifetime of the property rather than keeping levies low and then raising large “special levies” when works are carried out (as was commonly the case in the mid 1990s when the South Australian government was reviewing the successes and failures of the Strata Titles Act 1988 which resulted in the Community Titles Act 1996 which is the legislation that your property is governed by).


A community corporation must establish a sinking fund (for non-recurrent expenditure only) and an administrative fund (for all other expenditure) [ss 116(1)-(2)].


Non-recurrent expenditure is expenditure for a particular purpose that is normally made less frequently than once a year [s 3(1)]. Recurrent expenditure is expenditure for a particular purpose that is normally made every year or more frequently [s 3(1)].


Money received by a corporation, including contributions of lot owners, must generally be credited to the sinking or administrative fund according to the purpose for which

the money will be used [s 116(4)].



The levies for your corporation are determined by the owners at each Annual General Meeting and then set at those levels for the next 4 quarterly payments until the next Annual General Meeting.


While all owners are invited to attend meetings, we recommend attending and being a part of the decision making for your corporation where you will hear first hand what is important to your fellow owners and understand why they have set the levies at the amount they have selected.



Comments


Featured Posts
Recent Posts
bottom of page