"If you have money invested in a strata scheme, you'll want to make sure your investment is protected at all times through proper care and regular maintenance of your building.  Here's a guide to caring for your strata investment."

To identify, correct and maybe even avoid deterioration of your valuable asset, a preventative maintenance program should be discussed amongst owners or with your strata managing agent.  The main way funds are raised to pay for all the scheme's expenses is through the quarterly levy payment system.  Portion of levies received should be directed towards the sinking fund.  The purpose of the sinking fund is to provide sufficient funds to meet expenses of a capital nature, like common property painting, carpet replacement in the stairwells, guttering replacement, landscape upgrading, etc.  Without enough money in the sinking fund the building will ultimately deteriorate negatively affecting the value of every owner's property.

Even the location of a building can often cause certain areas to deteriorate quicker than usual.  Two simple examples are where concrete surfaces are located near the ocean and where stained timber windows face the west.  Be very aware of these types of situations.

Sinking Fund Assessment
A Sinking Fund Assessment should be prepared by a suitably qualified professional, such as a quantity surveyor, so an accurate estimate can be made of future anticipated expenditure.

A poorly maintained building can create 'unpopular' problems in the future.  Things like:

• when works are needed, if sufficient funds have not been allocated over past years, the present owners may not be in a position to contribute to a special levy and the work remains outstanding possibly causing even bigger problems in the future
• when you plan to sell your unit, there may be a number of maintenance issues the Owners Corporation has not attended to creating 'doubt' in the mind of the prospective purchaser
• a prospective purchaser may ask you to reduce your sale price to compensate for any special levy they may be asked to pay in the future for outstanding works
• it may be difficult to sell your unit as the overall appearance of the complex may not be as attractive as other well-maintained complexes in the area

To help avoid all these the Owners Corporation should make sure they plan for the future!  As an owner in a strata scheme you have a very valuable asset that needs to be regularly maintained and improved.

Strataman's comment: "  Can you believe there are some schemes I have come across that don't collect anything for their sinking fund in the quarterly levies?  Now that's really crazy!"

Remember:  Preventative maintenance is always much better (and usually a lot cheaper in the long run) than doing major repairs when they eventually appear - and they will appear but, it needs to be carefully programmed and planned.  Consult with your strata managing agent (or the Executive Committee) to ensure sufficient sinking fund levies are being collected to cover projected and emergency expenditure.

Initial Sinking Fund Assessment Timetable

Since February 2005, changes to the Strata Schemes Management Regulations 2005(NSW) have introduced a compulsory timetable for strata schemes to obtain their first sinking fund assessment as follows:

• Schemes numbered 50,000 or greater must obtain an assessment by 1st July 2006
• Schemes numbered 30,000 to 49,999 must obtain an assessment by 1st July 2007
• Schemes numbered 10,000 to 29,999 must obtain an assessment by 1st July 2008
• Schemes numbered less than 10,000  must obtain an assessment by 1st July 2009

A qualified professional can prepare a detailed preventative maintenance program to suit your building along with a sinking fund assessment advising you what sinking fund levies should be paid ensuring sufficient funds are available when work is needed.  The usual time frame for these assessments covers a 10-year period with a review to be done every 5 years.

If you don't already have a Preventative Maintenance Programme in place, it would be wise to engage the appropriately qualified professional to firstly carry out a Building Audit which provides a report on the present condition of the building.  The report wil also advise on any defects or necessary repairs.  A Building Audit becomes very important if the Owners Corporation needs to determine the defects in a building (which may need to be addressed to the builder) or to make any insurance claim under the Home Building Regulation 2004(NSW).

Safety Audit Report

The provisions of the NSW Occupational Health & Safety Legislation require that the Owners Corporation provide and maintain the common property so that it's safe and without risks to health of contractors and others who use the common property and to undertake ongoing risk management assessment to identify and eliminate such risks.  One way to undertake such risk management is to have an independent expert inspect the common property and report to the Owners Corporation any identified risks.  Once notified, the Owners Corporation should address the risk and repair the common property if necessary.  The regular and ongoing assessment of risk is also necessary to provide evidence to public liability insurers of the proper management of the common property in the event of a claim.