Brisbane apartments are managed and ruled by its Body Corporate or Owners’ Corporation. Owners of units in the building or townhouses in the complex automatically become members and qualified to vote and be elected officers. Members of the corporation are entitled to all rights and liable to all responsibilities stated in its existing by-laws.
Here is the second part of Queensland’s guiding rules and regulations for apartment owner’s corporations covering the financial management of an owners’ corporation.
Budgets and Funds
Owners’ Corporation of Brisbane apartments are required to prepare annual budgets. These are based on forecasted expenditures for the incoming year. A corresponding levy – or the amount to be collected from the members. Budgets are presented in the annual general assembly and must be approved by the majority of the voting members present. Any member can dispute a portion or the entirety of the budget or the levy. Authorisation of the body corporate is a must to all funds spending.
The administrative fund is one of the required budgets of an owners’ corporation. It is used to pay regular expenses in running the corporation and maintaining common properties. Expenses covered by the administrative fund include insurance, maintenance and housekeeping, electricity, and administrative expenses. The other required budget is the sinking fund. This covers all major expenditures of the corporation such as roof repair, fence upgrades, and exterior re-painting are covered by a sinking fund. Funds should never be transferred between the two budgets.
Spending Limits and Authority to Spend
Spending is authorised if it is within set limit, the expense is provided in the budget, and if the money is available. A committee can authorise spending up to a certain limit. Limits are decided by a general meeting resolution. If no limits are set, body corporate committees of apartments in Brisbane are allowed to spend up to $200 for every lot/unit. GST should be incorporated into the spending. Large projects can be divided into smaller segments so as not to go over the spending limit.
Large expenditures that go over the spending limits and cannot be broken down into smaller segments should be approved at a general meeting, and should not go over $1,100 per lot/unit or $10,000 whichever is lower. For higher spending limits, at least two quotes from reputable providers should be presented in the meeting.
Lot entitlements is the system of dividing and assigning common assets, earnings, voting rights, and expenditures among all members of the owners’ corporation. Shares or lot entitlements are presented in two schedules. The contribution schedule contains the calculation of the share in costs, and vote value of each owner. The interest schedule includes the share of each owner in the assets of the corporation and its value. The lot entitlements is originally set by the developer.
Accounts, audits and contributions
All owners’ corporation of Brisbane apartments are required to have at least one bank account under its name. Accounts of the body corporate are entrusted to the manager, an authorised associate, or anyone authorised by the corporation. Accounting records should be prepared annually showing the income, contributions, and expenditures of the corporation. Financial statements reflecting the assets and liabilities of the body corporation should also be prepared. Audit of the accounts is decided on the annual meeting. If the body chooses to audit, an external auditor is appointed.
It is best to orient yourself with the basic corporate administration of apartments when deciding to move into a Brisbane apartment unit or townhouse. Learn how apartments are ran and know what you’re getting into. Click here for more details on the financial management of owners’ corporation.