As we mentioned in our blog about sales contract seller disclosures, properties that are part of a strata scheme with 10 or more lots are now required to have a 10-year maintenance plan and reserve fund in place. This requirement also applies to schemes with a large replacement cost of $5 million for building/s or improvements on the common property.
This change offers an extra layer of protection for strata owners, both from monetary and community safety perspectives.
We understand that these reforms were introduced as in the past, some strata companies have not set aside enough money to cover foreseeable maintenance, which in some cases caused issues when maintenance arose. This forced owners into the use of special levies, or even caused delays in important maintenance repairs while the strata company acquired sufficient funds to cover the repairs.
The regulations set out the requirements for the 10-year plan and include:
•a list of common property elements that are expected to require maintenance, repair, renewal or replacement in a 10-year period;
•and the estimated cost for the maintenance, repairs and renewal or replacement.
The plan must be revised at minimum every 5 years, and upon revision must cover the next 10 years of maintenance planning.
The Strata Titles Act 1985 will not specify how much money needs to be held in a reserve fund. This amount is to be decided by the strata company who will take historic maintenance repairs, the size of the complex, and the amenities of the complex all into account when compiling the plan.
It’s important to note, if you are selling a strata property with a 10-year maintenance plan in place, it’s now required this plan is included in the disclosure to the buyer.
Our strata team have been working with professional building surveyors to develop the information required to be included in our clients’ 10-year maintenance plans, including seeking guidance on the amount to be held in our reserve funds. They have already implemented these plans for a number of large buildings across our portfolio.
The new laws have sent the industry into a much-needed transformation. And as a series of new laws come into effect, it’s more important than ever to have a trusted, knowledgeable and reliable strata company by your side.
If your strata scheme requires assistance with implementing the reform in relation to the reserve fund and maintenance plan, please get in touch with us today and our experienced team will help guide you through.
You can learn more at www.strata.wa.gov.au/.
The above information is general in nature, please obtain advice specific to your circumstances before acting.