Most strata councils treat the ten year maintenance plan as a compliance task that comes round every five years. The plan is revised, the council notes it, and the document goes back in the file until the next revision falls due. That is a reasonable way to treat it. It is also where the problem starts.
The Plan Is Not Where the Risk Sits
There is no penalty for a ten year plan that has drifted out of date. Section 100 of the Strata Titles Act 1985 creates the duty to have a plan and to revise it, and it attaches no fine to either. We say that plainly, because a council that is told there is a fine and later discovers there is not has no reason to believe anything else it has been told.
The real exposure is financial rather than regulatory, and it is not the plan at all. It is the distance between two records a scheme keeps separately and almost never reads side by side. The ten year plan is a forecast. The reserve fund is a bank balance and a spending history. Nothing in the legislation, and nothing in the ordinary running of a scheme, forces anybody to reconcile one against the other. So they drift, quietly, for years, and the gap only becomes visible when a large item falls due and the money is not there.
What follows is a special levy. A large sum, at short notice, from owners who were not expecting it, resolved at a meeting where the current council is answering for decisions taken years earlier by people who may no longer be on it. The same gap found three years out is not a crisis. It is an ordinary budget line, levied gradually across three annual contributions, and nobody has to find a large sum at short notice.
What the Act Actually Requires
The obligations apply to a designated strata company, which is a narrower group than many owners assume. Since 1 May 2020, when the Strata Titles Amendment Act 2018 commenced:
- A designated strata company must establish a reserve fund for accumulating funds to meet contingent expenses, other than those of a routine nature, and other major expenses likely to arise in the future. Strata Titles Act 1985 (WA) section 100(2).
- It must ensure there is a ten year plan setting out the common property and the personal property of the strata company anticipated to require maintenance, repair, renewal or replacement, other than of a routine nature, together with the estimated costs. Section 100(2A)(a).
- The plan must be revised at least once in each five years and, when revised, extended to cover the ten years following the revision. Section 100(2A)(b).
A designated strata company means a strata company for a scheme with ten or more lots, under section 100(7)(a). The regulations extend the definition to a strata scheme with a scheme building replacement cost of more than five million dollars, and to a survey strata scheme where the replacement cost of the improvements on the common property is more than five million dollars. Strata Titles (General) Regulations 2019 (WA) regulation 79(1). Replacement cost there means the reasonable cost of rebuilding, replacing or repairing the thing to a condition equivalent to or substantially the same as when it was new, and not better or more extensive. Regulation 79(2).
A scheme of nine lots with a modest building is not a designated strata company and carries neither obligation. A scheme of six lots worth more than five million dollars to rebuild carries both.
Check Your Own Scheme in Four Lines
This takes about twenty minutes with the ten year plan and the latest reserve fund statement in front of you. The numbers are your scheme's rather than ours, which is the point of doing it this way.
- From the plan, list every item scheduled to fall due in the next twenty four months and the estimated cost the plan gives for each. Add them up. That is the commitment.
- From the latest statement, take the current reserve fund balance.
- Add the reserve fund contributions the scheme will collect across those same twenty four months at the current levy.
- Subtract the commitment from the sum of lines two and three.
A negative answer is the shortfall, and you have found it while there is still time to levy for it gradually rather than all at once. A positive answer is worth a second question: how many of the items the plan scheduled over the last five years were actually carried out? Every one that was deferred is still coming, and it is probably not sitting in the next twenty four months of the plan either.
What Any Honest Reconciliation Has to Do
Whoever does this work, and whether or not that is us, three things have to happen or the answer is not worth acting on.
- The plan has to be read against what the fund has actually spent item by item, not total against total. A plan and a fund can agree on the total and disagree on every line in it.
- Items the plan scheduled that were never carried out have to be accounted for. A deferred item is a liability that has left the plan without leaving the building.
- The gap has to be translated into a contribution figure per year. A council can act on a levy figure at the next budget. It cannot act on an observation that the fund looks light.
The Reserve Fund Health Check
That is what this service is. We take the scheme's ten year maintenance plan and read it against what has actually been spent from, and held in, the reserve fund since the plan was written. We identify the items the plan scheduled that were not carried out, the items that were carried out and drew on the fund, and the items falling due in the next twenty four months that the current contributions do not cover. We then set out what the council would need to levy, and over how many years, to reach each of those items with the money in place.
It is a desktop reconciliation of the plan, the reserve fund statements and the maintenance history, so the council gets a clear position without waiting on a new inspection cycle. Cameron Facilities writes these plans as building manager, which is how we know where the two records usually part company.
What Your Council Receives
- A written reconciliation of the ten year maintenance plan against reserve fund spending and the current balance.
- A list of items falling due in the next twenty four months, with the unfunded ones marked.
- The gradual contribution figures required to fund each item by the time it falls due.
- A statement of where the plan and the fund have diverged, and which entries the next five year revision should correct.
- A summary written to be read aloud at a council meeting or an annual general meeting.
Common Questions
Is our scheme a designated strata company? If it has ten or more lots, yes. If it has fewer, it still is when the scheme building replacement cost is more than five million dollars, or, for a survey strata scheme, when the improvements on the common property exceed that figure. Replacement cost is the cost of rebuilding to an equivalent condition, not the market value of the lots.
What happens if our plan is out of date? Nothing, in the sense of a penalty. Section 100 does not impose one. What happens in practice is that the reserve fund contributions have been set against a forecast that no longer describes the building, so the shortfall grows without anybody seeing it.
Does the reserve fund have to cover everything in the plan? The Act requires the fund to exist and requires the plan to exist. It does not prescribe a balance. That is a decision for the strata company, which is exactly why the reconciliation matters more than the compliance status.
We have changed strata managers. Does that matter? It is one of the more common reasons the two records drift. Spending history and plan revisions do not always travel intact between managers, and a reconciliation is the practical way to establish where the scheme actually stands.
Do you need to inspect the building first? Not for the health check. It works from documents the scheme already holds. If the reconciliation shows the plan itself is unreliable, that is a finding, and a plan revision is a separate piece of work.
Who This Is For
Strata councils and strata managers in Perth and across Western Australia responsible for a scheme of ten or more lots, or a scheme with a building replacement cost above five million dollars. It suits a council approaching its five year plan revision, a council that has changed strata managers, and a council that wants to know its position before it sets next year's contributions.
Related Building Management Services
- 10 Year Maintenance Planning Perth
- 10 Year Maintenance Plans for Strata Buildings Perth
- Strata Building Management Perth
- Building Condition Reports Perth
- Asset Lifecycle Management Perth
- Strata Facilities Management Perth
- Strata Building Management by Perth Suburb
For the legislation and the guidance behind the reserve fund and the ten year plan, see Landgate resources for strata companies.
Book a Reserve Fund Health Check
Send us your scheme's ten year maintenance plan and its reserve fund statements and we will reconcile them. Request a quote or call (08) 6154 0910.