Part 5 Financial management

(1) An owners corporation for a units plan must—

(a) open and maintain an account with 1 or more authorised deposit-taking institutions; and

(b) pay all amounts it receives into the account; and

(c) pay all amounts it spends out of the account.

Note 1 An authorised deposit-taking institution is an institution (eg a bank, credit union or building society) that is authorised under the Banking Act 1959 (Cwlth), s 9 (3) (see Legislation Act, dict, pt 1).

Note 2 An owners corporation may open and maintain more than 1 account. Words in the singular number include the plural (see Legislation Act, s 145 (b)).

(2) An owners corporation for a units plan with only 2 or 3 units may, by unopposed resolution, exempt itself from subsection (1).

(1) An owners corporation may invest its money as it considers appropriate, subject to any direction by special resolution.

(2) However, an owners corporation must not invest in a mortgage of land.

An owners corporation may, if authorised by a special resolution, do 1 or more of the following:

(a) borrow amounts required for the exercise of its functions;

(b) secure the repayment of amounts borrowed by it and the payment of interest on amounts borrowed by it.

Note Section 20 (2) prevents the owners corporation from taking out a mortgage over the lease in the common property to secure repayment.

(1) An owners corporation must not carry on business except in the exercise of its functions.

Note An owners corporation that receives income from subletting the common property or operating sustainability infrastructure is not carrying on business (see s 20 (5) and s 23 (4)).

(2) If an owners corporation contravenes subsection (1), each executive member of the corporation at the time of the breach commits an offence.

Maximum penalty: 50 penalty units.

(3) It is a defence to a prosecution for an offence against subsection (2) if the defendant proves that—

(a) the defendant took reasonable steps to ensure that the contravention did not happen; or

(b) the contravention happened without the defendant’s knowledge.

In this division:

administrative fund—see section 73.

expected sinking fund expenditure—see section 83 (1).

general fund, of an owners corporation, means the corporation’s administrative fund or a special purpose fund.

general fund budget—see section 75 (1).

sinking fund—see section 81 (2).

sinking fund contribution—see section 89 (1).

sinking fund plan—see section 82 (2).

special purpose fund—see section 74 (1).

total general fund contribution—see section 75 (2) (a) (i).

total sinking fund contribution—see section 82 (3) (b).

An owners corporation for a units plan must establish a fund for the general administration of the corporation (an administrative fund).

(1) An owners corporation for a units plan may, by special resolution, establish funds for particular purposes (a special purpose fund).

(2) The purposes for which a special purpose fund may be used may only be changed by special resolution of the owners corporation.

(1) At each annual general meeting of an owners corporation, the corporation must, by ordinary resolution, approve a budget (the general fund budget) for the administrative fund and each special purpose fund for the financial year in which the meeting is held.

(2) The general fund budget must state for the financial year in which the annual general meeting is held—

(a) an estimate of—

(i) the total contributions (the total general fund contribution) to be paid into the general fund by the owners corporation’s members; and

(ii) if there is a special resolution under section 78 (2) (b)—the general fund contribution payable by each unit owner, or unit owner in a particular class; and

(b) an estimate of any other amounts to be paid into the general fund; and

(c) an estimate of payments to be made out of the general fund including an estimate of payments necessary—

(i) to maintain in good condition on a day-to-day basis the common property and any other property held by the owners corporation; and

(ii) to pay for insurance premiums; and

(iii) to pay for any costs incurred in getting information for a unit title rental certificate; and

(iv) to pay for recurrent expenses.

Examples—par (b)

1 the proceeds from the sale of any personal property of the owners corporation

2 fees paid to the owners corporation for inspection of its records and the provision of information and certificates relating to its records

Examples—par (c) (i)

carpet cleaning, lawnmowing services, minor expenses relating to maintenance of the common property

Examples—par (c) (iv)

utility service charges, accounting fees

(3) A payment out of a special purpose fund may only be included in the budget if the payment is for the purpose for which the fund was established, unless the proposed payment is authorised by special resolution.

(4) The amount mentioned in subsection (2) (c) must not include transfers to the sinking fund.

(5) An owners corporation is not required to obtain approval for the general fund budget in the time mentioned in this section if—

(a) the annual general meeting is for an owners corporation of a retirement village; and

(b) a copy of the general fund budget for a financial year is given to the residents of the village at the same time as the proposed annual budget under the Retirement Villages Act 2012, section 159 (Proposed annual budget) is given to the residents of the village; and

(c) the owners corporation by ordinary resolution, approves the general fund budget in the time mentioned in the Retirement Villages Act 2012, section 162 (6).

An owners corporation for a units plan must pay the following amounts into its general fund:

(a) general fund contributions paid to the owners corporation;

(b) any income received from subletting any part of the common property under section 20 (3);

(c) the proceeds of the disposal of any personal property of the owners corporation;

(d) any fees paid to the owners corporation for inspection of its records and the provision of information and certificates relating to its records.

An owners corporation for a units plan may only make payments from a general fund if the payments are—

(a) approved in the general fund budget; or

(b) authorised by ordinary resolution.

(1) An owners corporation for a units plan may, from time to time, determine a contribution (a general fund contribution) required from its members for the corporation’s general fund.

(2) The general fund contribution payable for each unit is—

(a) the proportional share for the unit of the total general fund contribution; or

(b) a proportion of the total general fund contribution worked out in accordance with a method set out by special resolution.

(3) A resolution under subsection (2) (b)—

(a) must be fair, taking into account—

(i) the structure of the unit plan; and

(ii) the nature of the buildings that are part of the units or common property of the unit plan, including the features and character of the units and common property; and

(iii) the purposes for which units are used, including the likely impact of that use on the common property; and

(iv) the extent to which the change imposes a burden on a unit that is commensurate with the use of that unit; and

(b) may provide that only stated unit owners, or unit owners in a stated class, are required to pay a particular contribution, or a contribution of a particular kind.

(4) A resolution under subsection (2) (b) may only be amended or revoked by—

(a) a special resolution; or

(b) an order of the ACAT.

Note 1 A unit owner may apply to the ACAT for review of a special resolution under s (2) (b) about a method for working out general fund contributions (see s 127).

Note 2 A special resolution is taken to be an alternative rule of the owners corporation (see s 108 (5)).

(1) An owners corporation for a units plan must give notice of a determination of general fund contributions to each unit owner.

(2) The notice must include the following information:

(a) the general fund contribution payable for the unit;

(b) the general fund contributions payable for each other unit;

(c) the general fund for which the contribution is required, the proportion of the contribution to be paid into each fund, and the total amount to be paid into each fund;

(d) the proportion of the total general fund contribution payable for the unit and how the proportion is worked out;

(e) the date when the contribution is payable, if paid in full (which must be not later than 28 days after the date of the notice);

(f) if the contribution is payable by instalments—the dates when the instalments are payable;

(g) how the contribution may be paid;

(h) details of any discount for early payment decided by the owners corporation under section 93;

(i) details of interest payable for late payment under section 94.

A general fund contribution is payable by a unit owner—

(a) if paid in full—on the date stated in the notice; or

(b) if payable by instalments—on the dates stated in the notice.

(1) This section applies if there are 4 or more units in a units plan.

(2) An owners corporation for the units plan must establish and maintain a fund (the sinking fund).

(1) This section applies to an owners corporation for a units plan if the corporation is required to establish and maintain a sinking fund.

(2) The owners corporation must approve, by ordinary resolution, a plan for the sinking fund (a sinking fund plan) for the 10-year period beginning on the first day of the financial year following the approval.

Note A sinking fund plan of an existing owners corporation that was current immediately before the commencement of this division is taken to be a sinking fund plan under this Act (see s 157 (2)). The day the existing sinking fund plan is approved for this Act is the day the existing sinking fund plan was approved by the owners corporation for the Unit Titles Act 2001 (see s 157 (3) and (4)).

(3) The sinking fund plan must state—

(a) the expected sinking fund expenditure for at least the 10-year period of the plan; and

(b) for each financial year of the plan—the total contributions (the total sinking fund contribution) required from members of the owners corporation necessary to—

(i) meet the expected sinking fund expenditure for the financial year; and

(ii) reserve an appropriate amount necessary to be accumulated to meet expected sinking fund expenditure over at least the remaining years of the plan; and

(c) if the owners corporation has made a special resolution under section 89 (2) (b)—the sinking fund contribution required from each unit owner, or unit owner in a particular class, for each financial year of the plan.

Examples

1 An owners corporation for a units plan estimates that the expected sinking fund expenditure for the 10-year period of its sinking fund plan is $220 000. The expenditure includes expenditure of $10 000 for each year and a ‘one-off’ amount of $120 000 in the 8th year of the plan. The owners corporation approves a total sinking fund contribution of $25 000 for each financial year of the plan to meet the expected sinking fund expenditure and to provide for a balance of $30 000 in the fund.

2 In preparing its first sinking fund plan, the owners corporation for a units plan of recently constructed townhouses estimates that the expected sinking fund expenditure for the units plan is $70 000 for the 10-year period of the plan, made up of $7 000 expected sinking fund expenditure for each financial year. Additionally, the owners corporation estimates that internal roads in the units plan will need resurfacing in 15 years time at an estimated cost of $120 000. The owners corporation decides it is necessary, in the first 10-year plan, to accumulate $80 000 to meet the expected sinking fund expenditure for the resurfacing. The owners corporation approves a total sinking fund contribution of $15 000 each year of the plan, made up of $7 000 to meet the expected sinking fund expenditure for each financial year and $8 000 to meet the expected sinking fund expenditure for the resurfacing.

(1) For this division, expected sinking fund expenditure means expenditure for the following purposes that the owners corporation reasonably expects will be necessary to maintain in good condition the common property and any other property it holds:

(a) the painting or repainting of any building (or any part of a building) that forms part of the common property;

(b) the acquisition of new property or renewal or replacement of property that it holds;

(c) the renewal, replacement or repair of fixtures and fittings that are part of the common property;

(d) the renewal, replacement or repair of anything else on the common property;

(e) for a building containing class A units—any purpose mentioned in paragraph (b), (c) or (d) that relates to defined parts of the building;

(f) for a building on a class B unit—any maintenance mentioned in paragraph (b), (c) or (d) that is authorised by a special resolution under section 24 (1) (g);

(g) any other capital expenses for which the corporation is responsible.

(2) In this section:

defined parts, of a building containing class A units—see section 24 (4).

property includes sustainability or utility infrastructure.

(1) The owners corporation for a units plan must approve a sinking fund plan not later than—

(a) if the corporation is established after the commencement of this division—12 months after the day of the corporation’s 1st annual general meeting; or

(b) in any other case—12 months after the day this division commences.

(2) If the owners corporation has approved a sinking fund plan under this Act, the corporation must approve a new sinking fund plan not later than 12 months before the end of the 10-year period to which the existing plan relates.

An owners corporation for a units plan must review its sinking fund plan—

(a) not later than 4 years after the plan is first approved by the owners corporation (the first review); and

(b) not later than the end of each 5-year period after the first review.

An owners corporation for a units plan may at any time, by ordinary resolution, amend its sinking fund plan to ensure that—

(a) the plan reflects expected sinking fund expenditure; and

(b) the total sinking fund contributions are sufficient to meet the expected sinking fund expenditure stated in the plan.

Example

An owners corporation for a units plan approves a sinking fund plan that sets a total sinking fund contribution of $15 000 for each year of the plan. Three years after approving the plan, the owners corporation finds out that major work is required to water and sewerage pipes in the common property at an estimated cost of $60 000. The owners corporation, by ordinary resolution, amends the sinking fund plan to include the additional expected sinking fund expenditure and require additional contributions of $10 000 a year for the remaining years in the plan. The total sinking fund contribution for each financial year after the amendment is $25 000.

An owners corporation for a units plan must pay the following amounts into its sinking fund:

(a) sinking fund contributions paid to the owners corporation;

(b) any amount received by the owners corporation that is not required or allowed to be paid into a general fund;

(c) any amount authorised by an ordinary resolution to be transferred from the administrative fund to the sinking fund;

(d) any amount to be transferred from a special purpose fund to the sinking fund—

(i) in accordance with the purpose of the special purpose fund; or

(ii) that is authorised by a special resolution.

An owners corporation for a units plan may only make payments from its sinking fund if the payments are consistent with the sinking fund plan.

Note 1 An owners corporation may at any time, by ordinary resolution, amend its sinking fund plan to ensure that the plan reflects expected sinking fund expenditure and the total sinking fund contributions are sufficient to meet the expected sinking fund expenditure stated in the plan.

Note 2 Expenditure from the sinking fund for the purpose of installing sustainability or utility infrastructure must be provided for in the sinking fund plan (see s 23).

(1) An owners corporation for a units plan may determine a contribution (a sinking fund contribution) required from its members for the corporation’s sinking fund.

(2) The sinking fund contribution payable for each unit for a financial year is—

(a) the proportional share for the unit of the total sinking fund contribution for the financial year; or

(b) a proportion of the total sinking fund contribution worked out using a method set out by special resolution.

Note Total sinking fund contribution, for a financial year—see s 82 (3) (b). Expected sinking fund expenditure—see s 83 (1).

(3) A resolution under subsection (2) (b)—

(a) must be fair, taking into account—

(i) the structure of the unit plan; and

(ii) the nature of the buildings that are part of the units or common property of the unit plan, including the features and character of the units and common property; and

(iii) the purposes for which units are used, including the likely impact of that use on the common property; and

(iv) the extent to which the change imposes a burden on a unit that is commensurate with the use of that unit; and

(b) may provide that only stated unit owners, or unit owners in a stated class, are required to pay a particular contribution, or a contribution of a particular kind.

(4) A resolution under subsection (2) (b) may only be amended or revoked by—

(a) a special resolution; or

(b) an order of the ACAT.

Note 1 A unit owner may apply to the ACAT for review of a special resolution under s (2) (b) about a method for working out sinking fund contributions (see s 127).

Note 2 A special resolution is taken to be an alternative rule of the owners corporation (see s 108 (5)).

(1) An owners corporation for a units plan must, within 1 month after an annual general meeting, give notice to each unit owner of the determination of sinking fund contributions for the financial year when the meeting takes place.

(2) The notice must include the following information:

(a) the sinking fund contribution payable for the unit;

(b) the sinking fund contributions payable for each other unit;

(c) the total sinking fund contribution for the financial year;

(d) the proportion of the total sinking fund contribution payable for the unit and how the proportion is worked out;

(e) the date when the contribution is payable, if paid in full (which must be not later than 28 days after the date of the notice);

(f) if the contribution is payable by instalments—the dates when the instalments are payable;

(g) how the contribution may be paid;

(h) details of any discount for early payment decided by the owners corporation under section 93;

(i) details of interest payable for late payment under section 94.

A sinking fund contribution is payable by a unit owner—

(a) if paid in full—on the date stated in the notice; or

(b) if payable by instalments—on the dates stated in the notice.

(1) This section applies to a general fund or sinking fund established by an owners corporation for a staged development if the development has not been completed.

(2) A contribution to a fund is not payable by the owner of a unit if the unit is in an uncompleted stage of the development.

(3) The owners corporation must not pay an amount from a fund in relation to an uncompleted stage of the development.

(1) An owners corporation for a units plan may, by ordinary resolution, decide that a stated discount applies to an amount owing to the corporation by a unit owner if—

(a) the amount is paid to the corporation before the date it becomes payable; or

(b) for contributions payable by instalments—if the contribution is paid—

(i) in full on or before the date stated in the notice of the contribution for payment in full; or

(ii) in another way stated in the resolution.

(2) In this section:

contribution means a general fund contribution or a sinking fund contribution.

(1) If an amount owing to an owners corporation by a unit owner is not paid on or before the date it becomes payable, unless otherwise decided by ordinary resolution, the amount bears simple interest until paid—

(a) at an annual rate of 10%; or

(b) at an annual rate of less than 10%, if decided by special resolution; or

(c) at an annual rate of more than 10% and not more than 20%, if decided by special resolution.

(2) Interest on an amount owing to the owners corporation is payable into the fund into which the amount owing is payable.

(1) If an amount owing to an owners corporation is not paid on or before the date it is payable, the corporation may recover the amount as a debt from the unit owner, together with interest under section 94.

(2) If the ownership of a unit changes after an amount owing to the owners corporation becomes payable, the owner at the time the amount becomes payable and each subsequent owner are liable both separately and together for the amount, together with interest under section 94.

(1) If an amount owing to the owners corporation is unpaid after it becomes payable, the corporation may declare that a charge is to be imposed over the lease of the unit to secure payment of the amount.

(2) The declaration must—

(a) give details of the lease of the unit to be charged; and

(b) state the unpaid amount owing to the owners corporation.

(3) After making the declaration, the owners corporation must—

(a) lodge with the registrar-general a copy of the declaration, certified as a true copy by the executive committee; and

(b) give a copy of the declaration to the unit owner and anyone else who has an interest in the unit.

(4) On registration of the copy of the declaration, the amount stated in the declaration, together with interest on the amount under section 94, is a charge over the lease of the unit.

(5) A registered charge under this section does not give a power of sale over the lease of the unit.

(1) This section applies if a charge declared under section 96 has been registered, and—

(a) the entire amount for which the charge was declared is paid, together with interest on the amount under section 94; or

(b) the owners corporation considers that the charge is no longer required.

(2) The owners corporation must—

(a) revoke the declaration of the charge; and

(b) lodge with the registrar-general a copy of the revocation, certified as a true copy by the executive committee; and

(c) give a copy of the revocation to the unit owner and anyone else who has an interest in the unit.

(3) The discharge under this section of a charge takes effect on the registration of the revocation of the charge.

(1) This section applies if—

(a) a unit is owned by 2 or more part-owners; and

(b) an amount is recoverable by the owners corporation from the owners.

(2) The part-owners are liable separately and together for the payment of the amount.

(3) As between themselves, each part-owner is liable for a part of the amount proportional to the value of the part-owner’s interest in the unit.

(4) If a part-owner pays a part of the amount that is more than the part-owner’s proportional liability, the part-owner may recover the excess from the other part-owners.

In this division:

building, on the land—

(a) includes—

(i) any improvements and fixtures forming part of the building; and

(ii) any improvements and fixtures, including site improvements, consisting entirely of common property; and

(iii) anything prescribed by regulation as forming part of a building; but

Examples—site improvements

landscaping, paved areas

(b) does not include—

(i) paint, wallpaper and temporary wall, floor and ceiling coverings; or

(ii) fixtures removable by a lessee or sublessee of a unit at the end of a lease; or

(iii) anything prescribed by regulation as not forming part of a building.

land means—

(a) land subdivided by a units plan; and

(b) for a staged development—the whole of the land in the completed stages of the development.

(1) The responsible entity for a units plan must insure and keep insured all buildings on the land for their replacement value from time to time against all of the following risks:

(a) fire, lightning, tempest, earthquake and explosion;

(b) riot, civil commotion, strikes and labour disturbances;

(c) malicious damage;

(d) bursting, leaking and overflowing of boilers, water tanks, water pipes and associated apparatus;

(e) impact of aircraft (including parts of, and objects falling from, aircraft) and of road vehicles, horses and cattle;

(f) anything prescribed by regulation.

(2) The responsible entity must also insure against the costs incidental to the reinstatement or replacement of the insured building, including the cost of removing debris and the fees of architects and other professional advisers.

Note If the responsible entity is an owners corporation and a developer is the only member of the owners corporation, the developer must on behalf of the owners corporation take out insurance under s (1), unless exempted under s 101.

(3) A regulation may make provision in relation to an insurance policy under this section including for the following:

(a) combining the policy with other insurance policies;

(b) notification requirements by unit owners in relation to improvements made to units;

(c) the proportion of the premium payable for the policy by particular unit owners by way of a general fund contribution;

(d) valuation of the insured buildings.

(4) For all purposes related to any insurance taken out by it under this section, a responsible entity is taken to have an insurable interest in the buildings on the land to the extent of their replacement value.

Note 1 The owners corporation must produce its insurance policies for inspection at the request of an eligible person (see s 118).

Note 2 The executive committee of the owners corporation must give certain details about the corporation’s current insurance policies at each annual general meeting (see sch 2, s 2.3).

(5) In this section:

building management committee—see the Land Titles Act 1925, section 123F (1) (a).

responsible entity means—

(a) if the units plan is part of a building the subject of a building management statement—the building management committee established under the statement; or

(b) in any other case—the owners corporation.

(1) This section applies to an insurance claim made in relation to a building on the land in relation to a units plan.

(2) The responsible entity for the units plan must—

(a) lodge the insurance claim; and

(b) pay any excess payable in relation to the insurance claim.

Note An expense incurred because of a wilful or negligent act or omission, or a breach of an owners corporation’s rules, by a member of the owners corporation or an occupier of the member’s unit, may be recoverable from the member as a debt (see s 31).

(3) In this section:

responsible entity—see section 100 (5).

(1) If the replacement value of all common property buildings (or parts of buildings) on the land is less than an amount prescribed by regulation, the owners corporation may, by unanimous resolution, exempt itself from the requirement to take out building insurance under section 100 (1) for any risk stated in the exemption resolution.

(2) An owners corporation for a units plan containing only class B units may, by unanimous resolution, exempt itself from the requirement to take out building insurance for any risk stated in the exemption resolution for all buildings (or parts of buildings) that are on the class B units.

(3) An exemption resolution—

(a) under subsection (1)—has effect from the date of the annual general meeting when it is passed until the date of the next annual general meeting; or

(b) under subsection (2)—takes effect on the registration of the resolution and continues until the day another unanimous resolution amending or revoking the exemption resolution is registered.

(4) An exemption resolution under subsection (2) or a resolution amending or revoking the exemption under subsection (3) (b) must be lodged under the Land Titles (Unit Titles) Act 1970, section 27B within 3 months after the day the resolution is passed.

(5) If an exemption resolution under subsection (2) or a resolution amending or revoking the exemption under subsection (3) (b) is not lodged within 3 months after the day the resolution is passed, the resolution is taken to have never been made.

Note An exemption resolution under this section does not affect the requirement for an owners corporation to take out and maintain public liability insurance (see s 102).

(1) An owners corporation for a units plan must take out and maintain public liability insurance in relation to all of the following events happening in relation to the common property:

(a) death, bodily injury or illness of anyone;

(b) loss of, or damage to, the property of anyone.

(2) Public liability insurance under subsection (1) must be for a total amount of liability of not less than an amount prescribed by regulation.

Note 1 The owners corporation must produce its insurance policies for inspection at the request of an eligible person (see s 118).

Note 2 The executive committee of the owners corporation must give certain details about the corporation’s current insurance policies at each annual general meeting (see sch 2, s 2.3).

(3) However, the owners corporation need not comply with a requirement of this section if—

(a) the units plan is part of a building the subject of a building management statement; and

(b) the requirement is satisfied by insurance taken out and maintained under the building management statement.

(1) If an owners corporation for a units plan receives insurance money for damage to, or destruction of, any building on the land, the corporation must, without delay, apply the insurance money to rebuilding and reinstating the building.

(2) Subsection (1) applies subject to this Act, other territory laws and any order of a court.

Example—other territory law

If it is necessary to obtain building damage orders from the ACAT approving a building damage scheme for rebuilding and reinstating the building (see Unit Titles Act 2001, div 10.3), the owners corporation may not apply the insurance money to the rebuilding and reinstating before obtaining the orders.

This division does not limit the right of an owners corporation to take out additional insurance.

This division does not limit the right of a unit owner to insure against damage to, or destruction of, the unit to the extent of its replacement value.