Body Corporate Admin Fund: A Comprehensive Guide for Sectional Title Owners
Sectional title ownership comes with the responsibility of maintaining and managing the common property within the scheme. This shared responsibility falls under the purview of the body corporate, an organization elected by the owners to oversee the shared property’s upkeep.
This includes preparing a 10-year maintenance, repair and replacement plan to ensure that the property remains in good condition and to identify potential issues before they become costly problems.
In order to fund this plan, along with the reserve fund, which is intended to cover the maintenance, repairs, and replacements costs of the scheme’s major capital assets, the body corporate must also allocate sufficient contributions to their administrative fund, which is used to cover the day-to-day operational expenses.
Body Corporate Admin Fund - Frequently Asked Questions
A body corporate's admin fund refers to a dedicated financial account that is established to cover the day-to-day operational expenses and ongoing maintenance costs of a sectional title scheme.
This fund is collectively funded by the owners of the units within the property through regular contributions or levies. The admin fund typically covers expenses such as
- utility bills
- insurance premiums
- common area cleaning
It also serves as a reserve for future maintenance and unexpected expenses.
Proper management and allocation of the admin fund are important to ensure the financial stability and sustainability of the body corporate.
The purpose of a body corporate is to manage and govern the common property of a sectional title scheme on behalf of its owners. The body corporate is responsible for making decisions, enforcing bylaws, maintaining the common areas, and ensuring the overall well-being of the property.
The admin fund is directly linked to this purpose as it provides the necessary resources to cover the body corporate's day-to-day operational expenses and administrative costs. By collecting regular contributions from owners, the admin fund ensures that there are sufficient funds available to manage and maintain the property effectively.
A body corporate admin fund operates by collecting regular contributions from the owners of individual units within sectional title property. These contributions are typically in the form of levies, which are determined based on the body corporate's budget and the anticipated expenses for the property.
The admin fund is used to cover various expenses related to the day-to-day operation and maintenance of the common areas and serves as a central pool of funds that enables the body corporate to efficiently manage the property and ensure its ongoing upkeep.
The funds collected in the admin fund may also be allocated towards building reserves to cover future maintenance and unexpected expenses, ensuring the long-term financial stability of the body corporate.
The body corporate admin fund covers various day-to-day operational expenses, such:
- Insurance premiums
- Utility bills
- Cleaning and maintenance services
- Administrative costs
- Management fees
The admin fund is important to ensure the ongoing management and administrative operations of the body corporate's scheme.
Calculating the body corporate admin fund involves several steps. Firstly, the body corporate prepares an annual budget that outlines the estimated expenses for the upcoming year. This budget includes items such as:
- Insurance premiums,
- Utility costs,
- Cleaning services,
- Maintenance, and
- Administrative expenses, including salaries
To determine the contribution for each unit owner, the total budgeted expenses are divided among the owners based on their individual unit entitlements. The unit entitlement is usually determined by factors such as the size, location, or value of the respective units.
Once the individual contribution amount is calculated, it is typically divided into regular periodic payments, such as monthly or quarterly levies, to ensure a steady flow of funds into the admin fund throughout the year.
It's important to note that the specific calculation method may vary depending on local regulations and the bylaws of the body corporate.
Done with the questions?
Learn how to create a 10-year maintenance plan
The reserve fund, admin fund and levies all play an important role in creating a successful and sustainable 10-year maintenance, repair and replacement plan for bodies corporate and homeowners’ associations. The admin fund is used for day-to-day expenses such as repairs and maintenance, while the reserve fund is set aside for major expenses that are expected to occur in the future, such as roof replacements or paving projects. The levies are fees charged to each owner in order to fund these two accounts.
Manage your 10-year plan on the Mirfin Dashboard
The Mirfin Dashboard is free to use for property managers, insurance brokers, auditors, body corporate trustees, HOA directors and homeowners. For certain Dashboard features to be fully available, a property valuation or 10-year maintenance plan must be active.
