Sinking fund contribution for a house

balkanhawk

Hi all,
I have a query that you may be able to help me with. I own a house in a fairly big mixed unit development. I received notification of management fees due for the coming year. There is a sinking fund contribution required which i have no problem with as it is inline with the MUD act.

My issue is that my sinking fund contribution is the same as an apartment and duplex owner even though i am a house owner. shouldn't my contribution be in proportion to my exposure to common areas?

Our management fee bill is divided into budget A and B. Apartment and duplex owner pay a proportion of both while i pay a portion of B only. Are there any house owners in a mixed estate who pay a sinking fund contribution lower than the apartments?

wexford12

There are pros and cons regarding the MUD act. The sinking fund was ment for apartments for common areas and fire alarms, painting etc.
We have this problem on our estate as its all houses so what do or can we use the sinking fund for but still we need it.we are going to use it for planting which really comes under our budget for the landscape contractor. So all in all sinking fund for houses just don't work

Lantus

The SF can be applied as an aggregate across the whole estate or proportionally between dwellings.

If you are paying a proportional service charge amount already as a house owner (just PI and landscaping and other basic admin costs) then the SF should in theory also be proportional to the long term non recuring damages you would expect to be liable for over the course of the estates lifetime. And not for an apartment owners lift which you dont own.

Write to the OMC and inform them that you dont believe the SF should be applied evenly across the estate and needs to be applied proportionally between houses and apartments as per the service charge. Get other house owners to do this as well. Request that this be undertaken or at the next AGM you and you fellow householders will not vote in the next budget until it is revised to better meet the wishes of the shareholders.

Obviously the apt owners wont like this much as their fees will go way up. if there are more houses that apt's then you should be able to vote against this. If not then it's a straight argument to ensure the current directors make this change.

My understanding would be that if the lease specifies a proportional breakdown of service fee then you shouldn't pay an aggregate SF. It could be argued that all charges should be proportional. You may need to take legal advice on this matter.

Houses have virtually no requirement for a sinking fund as the entire structure is the responsibility of the owner unlike an apartment.

The SF for common areas is 'a bit silly' as it's hard to predict the wear and tear on large open areas of grass and what you'd expect to pay to replace then in however long you'd expect them to last (is there even any data on this?)

athtrasna

It all depends on how your management fees are calculated. In the case of a house, you will need to check your deeds and see what your obligation is.

In our development the sinking fund is a budget item and leases/deeds specify that different size units pay a different percentage of the budget. So whether it's a 2 bedroomed house, own door apartment or shared entrance apartment, they pay the same fees. This is of course unfair as the shared entrance apartment gets the most services but these are the deeds we signed when we were innocent celtic tiger buyers.

In later phases of the greater development, fees are calculated based on services received so the three examples I gave you would pay different fees with the houses being the lowest - this is because their leases/deeds are revisions of ours once the problem became apparent. We have taken legal advice over and over again but we can't change ours.

Even in the new phases the sinking fund is even applied to all units. It's not just blocks that need repair, there are gardens, roads, car parks and structures such as bin sheds. We have just spent 12k on our car park surface, and all units benefit from this. So I think it's reasonable that all sinking fund contributions are equal. Better to build up a sinking fund than have to levy units at a later stage to pay for costs like this.

balkanhawk

Our service charges are calculated using two budgets. As a house owner I only pay a % of Budget A while the apartments/Duplexes pay a % of Budget A & B so my service charge is a lot less than the apartments. I will write to the OMC and seek clarification on the apportionment of the charge.

Cheers.