Administrative Fund – contribution entitlements The Administrative Fund covers expenditure required to cover the cost of the daily running and general maintenance of the common property and body corporate assets. This includes all repairs and maintenance that would occur to buildings, plant and equipment, electrical, gardens and grounds, pools, etc. (This applies if it is a building format plan). It would also include contracted fees, such as caretaking fees which are for the building manager to clean and maintain parts of the common property as per the caretaking agreement, a lift maintenance contract and contract for body corporate management.. It would also include community power for the running of pumps, lights, lifts etc. If the body corporate is a lot in another scheme the administrative fund will also include contributions to the other scheme’s administrative and sinking funds.
Sinking Fund – contribution entitlements This is a separate fund to the Administrative Fund. The amount owners contribute is based on a sinking fund forecast. A Sinking Fund Forecast is usually prepared by a quantity surveyor. It is a 10 year forecast of major expenditure, which covers such items as painting the common property (including the exterior of the building), major repairs and refurbishment to lift cars, and other common property items. These items are considered as capital, or non-recurring major expenditure, and therefore need to be contributed to by all owners over a period of time. The purpose of this fund is that, for example, if you owned your lot for 5 years and the re-painting of the exterior of the building is due in year 10, your lot has contributed for 5 years towards the painting of the building. Your individual contribution to the Administrative Fund and Sinking fund is based on your lot’s contribution entitlement and is used to calculate administrative and sinking fund contributions as well as the lot’s share of utility charges not able to be measured.
Insurance Contribution – interest entitlements The “Insurance Reimbursement “is a separate payment for paying the Building replacement and reinstatement insurance premium. Although, in most instances the Insurance premium will be included in the Administrative Fund Budget, some bodies corporate are required to have it as a separate amount when the lots in the scheme have varying interest entitlements. If applicable to your body corporate, your individual contribution to the Insurance Reimbursement is based on your lot’s interest entitlement. Interest entitlements are also used to calculate the unimproved value of the lot and for the purpose of calculating local government rates and charges. Bodies corporate are usually titled in one of two ways, as a Building Format Plan or as a Standard Format Plan. As a Building Format Plan, the body corporate is responsible for the insurance of the building and the common property. As a Standard Format Plan, the body corporate is responsible for insuring common property only. In this instance, individual residences are the responsibility of the owners. In a Standard Format Plan, common property would include any gates, light poles and infrastructure which could be damaged or need replacing under an insurance claim. The cost towards the Public Liability and Office Bearer’s Liability portion of the premium is always included in the Administrative Fund.