Transfer of surplus admin funds to underfunded Capital Works funds.... | Levies and Unit Entitlements | Flat Chat Forum: Your Questions Answered




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Transfer of surplus admin funds to underfunded Capital Works funds....
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LawoftheLand
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07/10/2017 - 5:14 pm
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Hi,

is it possible to transfer surplus funds from Admin over to the Capital Works fund? Can you please provide the legislation that either does or doesn't allow this.  

Thank you.

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Sir Humphrey
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07/10/2017 - 7:36 pm
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In the ACT you can transfer from the Admin to Sinking fund with an ordinary resolution of a general meeting (UTMA s.87(c)). You can also amend the sinking fund plan at any time by ordinary resolution. Other states may be different. 

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LawoftheLand
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07/10/2017 - 9:57 pm
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Thank you Sir Humphrey.

We are coming up to our AGM and have been told the following by our Strata Manager:

"The Act doesn't allow money to be permanently transferred from one fund to the other, only 'borrow' from Admin to Capital and vice versa" He further states: "To re-balance your funds, I have proposed that we drastically reduce the Admin contribution for the next 12 mo the to chew up some of the surplus and I've topped up the Capital Works Fund contribution to match the reduction" And then: "Eventually I will need to re-balance the funds again but this is a matter of reviewing and tailoring your budget every year".

The Strata Manager has been asked a few times to point out where it states this in the Act (unsure of which act he is referring to even) but to date he has not.

So can we place this on the agenda as a Motion (to transfer X amount over) and it proceeds as an ordinary resolution at the AGM? There are some major works - painting that need to be done so I understand the importance of having enough money in the C/W for this but I think it's logical to bump up the funds with the major surplus we already have in the admin fund?

I am in NSW, 43 units.

Thank you.

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kaindub
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07/10/2017 - 11:57 pm
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In NSW you cant transfer money from one fund to the other

BUT I think I have a way.

The OC can return money to owneirs from any fund

SO In this order

Propose a motion for special levy for the fund you want the money to go in to.

Propose a second motion to return money to the owners from the fund with excess money. Include in this motion that it relies on motion 1 being passed

The nett result is a transfer of money from one fund to the other

Robert

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JimmyT
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08/10/2017 - 12:30 am
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kaindub said
In NSW you cant transfer money from one fund to the other

BUT I think I have a way.

The OC can return money to owneirs from any fund

WRONG!

Under section 76 of the Act, you CAN transfer funds from one account to the other.  however, under section 77 you CAN'T refund owners without a unanimous vote.

For instance, your admin fund can borrow cash from the Capital Works (sinking) Fund provided it is paid back withing three months. 

Many schemes will re-borrow the funds whenever they are supposed to be paid back. Sooner or later you have to reconcile the amounts but it gives you the breathing space to let you adjust the proportions of levies to bring everything back into equilibrium.

LawoftheLand's strata managers are doing exactly the right thing (apart from explaining the legal basis for this).

One other thing - there are no Stratakops ... unless you are embezzling the funds, no one will be going to jail.  It's all good provided it's all transparent and the Capital Works Fund doesn't end up having less money in it than it ought to have.

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LawoftheLand
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08/10/2017 - 9:54 am
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Thank you JT.

The is no hint of any wrong doing, the Strata Manager is doing his best to rectify the unbalanced monies as there is way too much money in the admin fund - and as you have proposed it should be spent accordingly. 

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Sir Humphrey
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08/10/2017 - 2:30 pm
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If the AGM is not too far away, just propose an admin fund levy which is much less than the admin fund budget. Also propose a capital works levy which is correspondingly higher so that overall this year's levies are not very different from last years. If you worry that part of that might fail, put it all into one budget and levies motion.

[One year we had a rather forceful committee member who seemed to think it was somehow improper for an AGM motion to include the word 'and'. So we had six motions: three budget motions, one for each of a special purpose fund, the admin fund and the sinking fund and then a further three levy motions. The next year I made a point (as treasurer) of proposing the whole lot in a single motion.] 

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