10-Year Sinking Fund Plans

From July 2009, all strata schemes are required to have a 10-year sinking fund plan (Section 75A of the Strata Schemes Management Act 1996)

The 10-year plan must be approved by owners at an annual general meeting (AGM) and must be reviewed and adjusted, if required, in the first five years.

The NSW Office of Fair Trading has produced a guide to the steps that are repeated during each 10-year cycle following the development of the first plan.

AGM Year
Year One	Appointment of a person or organisation to prepare a sinking fund plan for 10 years from the date of the AGM.
Second Year	Present the 10 year plan to the AGM Use the plan as the basis for determining sinking fund contributions
Years Three & Four	Use the plan at subsequent AGMs to determine contributions
Year Five	The plan must be reviewed and adjustments made. The sinking fund plan continues to be used for calculating contributions at subsequent AGMs
Year Ten	Appoint someone to prepare a new 10 year plan and repeat the cycle

What is contained in a plan?

1. A list of all common property

2. A schedule for maintenance & repairs

3. An estimate of costs

4. How funds for expenses will be raised to inform owners and prospective purchasers of their future liabilities

There are no legislative penalties for not developing a plan however any owner can apply to the CTTT for an order instructing the owners corporation to meet its obligations.

For more information go to: www.fairtrading.nsw.gov.au/Tenants_and_home_owners/Strata_schemes/The_owners_corporation/Sinking_funds.html