{"id":4907,"date":"2025-10-23T14:35:12","date_gmt":"2025-10-23T04:35:12","guid":{"rendered":"https:\/\/theonsitemanager.com.au\/news\/?p=4907"},"modified":"2025-10-23T14:35:14","modified_gmt":"2025-10-23T04:35:14","slug":"committees-need-to-manage-funds-for-the-long-term","status":"publish","type":"post","link":"https:\/\/www.theonsitemanager.com.au\/news\/committees-need-to-manage-funds-for-the-long-term\/","title":{"rendered":"Committees need to manage funds for the long-term"},"content":{"rendered":"\n

Three things to know<\/strong>:<\/p>\n\n\n\n

    \n
  1. Committees must give considered thought to how they spend body corporate money<\/li>\n\n\n\n
  2. Statutory obligations exist to maintain common property<\/li>\n\n\n\n
  3. Committees must take financial decisions with the full strata community in mind<\/li>\n<\/ol>\n\n\n\n

    As lawyers, we\u2019re used to dealing with other people\u2019s money. Usually that sits in our trust account, and we won\u2019t act on it or do anything with it unless we receive specific instructions from our client.<\/p>\n\n\n\n

    A body corporate general account, sinking fund or administrative fund isn\u2019t the same as trust monies, but it\u2019s not far from it.<\/p>\n\n\n\n

    There\u2019s a saying in relation to dealing with other people\u2019s money that you should treat it as if it was your own. I don\u2019t necessarily think that\u2019s the case for a body corporate.<\/p>\n\n\n\n

    How we as individuals deal with our own personal finances might not necessarily be the best thing for a building as a whole.<\/p>\n\n\n\n

    For example, maybe I don\u2019t like repairing gutters; I\u2019m happy to let the water drain onto the ground.<\/p>\n\n\n\n

    But from a body corporate perspective, there\u2019s a statutory obligation to keep gutters in good repair and condition to make sure that they serve the purpose for which they were constructed.<\/p>\n\n\n\n

    In that example, that\u2019s not treating the money like I would myself.<\/p>\n\n\n\n

    The same goes for investing funds.<\/p>\n\n\n\n

    That\u2019s why most body corporate bank accounts are usually lodged on long-term deposits, getting whatever the interest rate of the day might be.<\/p>\n\n\n\n

    They\u2019re not being taken to the casino and put on red or invested in the share market or put in ETFs or Bitcoin. It\u2019s very much a safety-first approach \u2013 which is appropriate.<\/p>\n\n\n\n

    It\u2019s important for committees to step back and understand what it is they raise monies for and to make sure that they also then understand what their statutory obligations are with respect to the spending of it.<\/p>\n\n\n\n

    The administrative fund (in theory at least) should zero out every year. The caretaking remuneration is $50,000, so $50,000 will be spent. From a cash-flow perspective that clearly doesn\u2019t happen that neatly, but there shouldn\u2019t be a big surplus in your administrative fund from an accounting perspective at the end of the year.<\/p>\n\n\n\n

    Contrast that to the sinking fund, which has been raised for long-term capital repair and maintenance; it is there for tiling, for painting, for lift repairs and so on. So, there should be a balance of some description always sitting in there because it covers the capital expenditure required over the next decade.<\/p>\n\n\n\n

    We sometimes see clients trying to cut levies and trying to create a bigger balance in either account and not actually spend the money, but inevitably in ageing buildings this approach is going to lead to long-term consequences. The longer you leave things to repair, the more expensive they get and it\u2019s hard to see labour costs coming down anytime soon in Queensland.<\/p>\n\n\n\n

    From a body corporate perspective, be careful managing the monies you\u2019ve got and make sure that they\u2019re spent prudently and in accordance with the legislative obligations you\u2019ve got as a committee.<\/p>\n\n\n\n

    If there are any questions about how that might be interpreted,\u00a0get in contact<\/a>.<\/p>\n\n\n\n

    Author: Redchip Strata Law<\/p>\n","protected":false},"excerpt":{"rendered":"

    Three things to know: As lawyers, we\u2019re used to dealing with other people\u2019s money. Usually that sits in our trust account, and we won\u2019t act…<\/p>\n","protected":false},"author":1093,"featured_media":4908,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"_mbp_gutenberg_autopost":false,"footnotes":""},"categories":[3,7],"tags":[],"class_list":["post-4907","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-accounting-and-finance","category-general-interest"],"_links":{"self":[{"href":"https:\/\/www.theonsitemanager.com.au\/news\/wp-json\/wp\/v2\/posts\/4907","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.theonsitemanager.com.au\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.theonsitemanager.com.au\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.theonsitemanager.com.au\/news\/wp-json\/wp\/v2\/users\/1093"}],"replies":[{"embeddable":true,"href":"https:\/\/www.theonsitemanager.com.au\/news\/wp-json\/wp\/v2\/comments?post=4907"}],"version-history":[{"count":1,"href":"https:\/\/www.theonsitemanager.com.au\/news\/wp-json\/wp\/v2\/posts\/4907\/revisions"}],"predecessor-version":[{"id":4909,"href":"https:\/\/www.theonsitemanager.com.au\/news\/wp-json\/wp\/v2\/posts\/4907\/revisions\/4909"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.theonsitemanager.com.au\/news\/wp-json\/wp\/v2\/media\/4908"}],"wp:attachment":[{"href":"https:\/\/www.theonsitemanager.com.au\/news\/wp-json\/wp\/v2\/media?parent=4907"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.theonsitemanager.com.au\/news\/wp-json\/wp\/v2\/categories?post=4907"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.theonsitemanager.com.au\/news\/wp-json\/wp\/v2\/tags?post=4907"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}