The document discusses the importance of establishing a reserve fund for strata and commercial buildings. It provides 4 case studies as examples of issues that arose when buildings did not have adequate reserve funds. Case Study 1 describes a complex with numerous maintenance issues due to being unmaintained for 20 years. Case Study 2 discusses power pole damage that was mismanaged, costing $5000 to replace. Case Study 3 highlights lift repairs costing $500,000 that were not planned for. Case Study 4 details an asbestos roof replacement costing $50,000 required by the insurer. The document stresses that a reserve fund can minimize financial impacts on owners when unexpected costs arise.

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Reserve Fund Management
For Strata and Commercial Buildings

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What is a Reserve Fund
Definition
A detailed and comprehensive estimate of the councils corporate’s
sinking fund expenditure for the scheme’s 10 financial years that
must include an estimate for the repainting of common property
and of buildings that are Councils corporate assets.
Thoughts
Think of it as a servicing schedule for your car, with services in
years rather that kilometres.

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Why Have a Reserve Fund
The Purpose of the Reserve fund in to minimise a impact of a
special levy being raised on the owners of the complex.
We have compiled a number of case studies that highlights the
importance of a reserve fund.
Some of the replies we had from some of the owners were that we
are not going to live for ten years so why should we do one now, or
we have been living here for years and have had no problems.

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Case Study 1
The Complex 56 Units
Not Maintained for 20 Years
Building Cracking and Needs Repair
Complex under insured
Complex needs painting,
Pool Needs attention
Retaining walls falling down
Pipework issues

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Case Study 2
The site was a Industrial Complex, no reserve fund was in place.
There was a maintenance issue with the common power pole that has white
ant damage. The committee took over 4 years to decide to plan to replace the
pole.
The owner of a unit sold and a new owner came into the complex.
The new owner was concerned about the power pole and contacted the Strata
Manager. The Strata Manager sent out a electrician to investigate the problem.
As part of the duty of care of the electrician, issued a critical defect and
reported it to the power company.
The Power was turned off to the building and would not be reinstated until a
new pole was installed at a cost of over $5000.
Ten days later the power was restored, from mismanagement of the committee

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Case Study 3
A site was refurbished by a developer and then was strata titled and then on
sold to the new owners.
The outside of the building was repainted and looked quite presentable.
The only problem that there were lift in the building that was not refurbished.
This cost the new owners was over $500,000.

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Case Study 4
A Unit Complex had a Asbestos Roof and went to get their insurance restated.
The insurance company declined to re insure the building until the roofing was
replaced.
The Cost to the Owners was over $50,000.

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Independent Inspections /FWR Group Pty Ltd
Independent Inspections Pty Ltd
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Mr. Peter Greenham
Qualifications:
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Assessment
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