Body Corporate Finances

In the Q&A section of the No Agent blog we include questions that we receive from our subscribers and we answer them ourselves if we feel we have the relevant knowledge. In some instances, we refer them on to a finance, legal or other relevant expert.

Question

In the Close I reside in which consists of 8 units we have an elected Chairman and a Trustee. My questions here is the owners that does not reside there and a former owner with ex Wife and the property is registered in a different name to the person that keeps been getting proxied in as a trustee in which a cross pollination of 3 to 4 owners is that comes with the Property for several years. To be exact 30 + years seems to be the only ones that makes these decisions in conjunction with the now newly appointed Managing Agent since 2014 as there were way to many questions asked by one of the owners about usage of funds i.e levies. Can people that don’t live there have that much say and don’t even pay the Close a visit and don’t have the Property in their name be a Trustee? The one tenant complaint bitterly about no upgrading of the property he is renting, and the rental keeps increasing diligently by 10% annually also one that just send in the proxy via mail every year from the same Clan that gets elected and does nothing! Its seems all to strange and not acceptable! It’s almost like an organised Clan that will not allow fresh blood in good decision makings in the interest of upgrading the Close. How do you go about drawing up a budget? Who is supposed to draw up the budget? The trustees or the managing agent?

Answer

Budgets are normally done by the managing agent and sent to the trustees to debate. The most important point when looking at increasing your levies; you need to look at the budget. You can’t assume to increase your levies by 5% or 10% and think that will be enough. You need to understand the financial years upcoming expenses with regards to municipal increases, maintenance concerns and possible staff increases. If you get your budget wrong, you will be on the back foot for that year. Also, if you understand the budget, you can justify the increase at the AGM. If you have the facts, owners normally understand when the increase is substantial.