EC spending limits | Executive Committees | Flat Chat Forum: Your Questions Answered
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Is there a state law or regulation that EC’s need to follow re: spending limits.
At a recent AGM the EC set the limit at $3,000 before an EGM should be called to approve spending above this amount.
However, work has gone ahead for a $5000 quote for a project agreed as necessary at the AGM, but not yet quoted. I am now the worst person for pointing out that only the treasurer had approved the quote when EC should have – work has started and it is cold for people to come out to an EGM
Also, is there a separate approval process e.g. at least 3 members of a 9 member EC for the amount in between $1000 – $2000, anything like that. What usually happens in this gap.
The EC approved the secretary ( our strata managing agent ) can spend up to $1,000 as approved by the chairperson ( also the strata managing agent ).
If you could point me to the clause I would appreciate it as I feel the EC as a whole is responsible and accountable for spending by our agent.
Same thing in my complex. EC has a limit of $4,000. Then I found an amount of $6,000 spent on I don’t know what. Infact no one knows. And even if it was spent on a repair or maintenance we agreed to look at at a meeting, there was no amount that we agreed on or were made aware of.
Owners here just want to know what is spent on what. At AGM/EGM’s our EC wants us to agree to works that haven’t even been quoted on.
The default amount is $12,500 which we left as is at our block.
Your amounts seem on the low and cautious side.
So far this year, we have had to spend the following: and in all honesty, having to call an AGM to spend money to repair a broken hot water boiler ($6K) and replacing the main automatic garage door while waiting on an insurance claim ($9K) would have put the building’s residents at risk.
However, we have 5 on the EC and at least 3 have to agree to the quotes prior to spending and everything is in writing. There is an unwritten rule that the OC is involved from $10K up to $12.5K
In addition, the new WHS rules mean that a lot of items now need to be attended to fairly quickly and the additional steps involved in complying to the laws have added to the costs that a building will incur. By setting the dollar threshold so low, the OC could inadvertantly set itself up to be in a position of breaching laws….
The Act is quite specific on all this – but only, it seems, in relation to ‘large’ strata schemes (schemes with 100 lot or more). There seem to be no spending limitations or rules on schemes with fewer lots in them (apart from when ir comes to taking legal action).
Assuming you are in a large scheme, firstly there’s Section 75 (5)
An owners corporation of a large strata scheme must include in the estimates prepared under this section at an annual general meeting specific amounts in relation to each item or matter on which the owners corporation intends to expend money, or on which the owners corporation is aware money will be likely to be expended, in the period until the next annual general meeting.
Then there’s this …
80A Limit on spending by executive committees of large strata schemes
(1) If a specific amount has been determined as referred to in section 75 (5) for expenditure on any item or matter, the executive committee of the owners corporation concerned must not, in the period until the annual general meeting next occurring after the determination was made, spend on the item or matter an amount greater than that determined amount for expenditure on the item or matter plus 10 per cent.
(2) The owners corporation of a large strata scheme may by resolution at a general meeting remove the limitation imposed by subsection (1) generally or in relation to any particular item or matter.
80B Quotations to be obtained for certain items of expenditure by large strata schemes
An owners corporation of a large strata scheme must obtain at least 2 quotations in relation to proposed expenditure in respect of any one item or matter if the proposed expenditure will exceed an amount prescribed by the regulations for the purposes of this section.
80C Exceptions in relation to emergencies
Sections 80A (1) and 80B do not apply to expenditure undertaken for emergency purposes, including, for example, expenditure to remedy any of the following:
(a) burst or blocked water or sewerage pipes,
(b) serious damage caused by fire or by storm or any other natural disaster,
(c) unexpected electrical or security system failure,
(d) glass breakages that affect the security of any building in the strata scheme or could result in damage to the inside of any such building.
Hope this clarifies more than it confuses
That seems pretty reasonable. If it is urgent-someone could be seriously hurt and the OC liable-the EC can and should spend the money to fix the problem immediately. Even if someone won’t get hurt but the OC is likely to be exposed to some other serious liability the EC should get on with fixing the problem and sort out who should have paid later. If it is not urgent, non-trivial amounts of unbudgeted spending should wait to go on an agenda for approval from a general meeting.
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