As finances become tight during COVID 19, it is important that bodies corporate and body corporate managers ensure costs are properly managed. That includes complying with body corporate spending limits. There are a number of spending limits and restrictions on bodies corporate, including the:
- Committee spending limit.
- Two quote limit.
- Improvement limit.
In addition to these spending limits, the body corporate cannot expend funds unless the cost has been budgeted for through striking a levy on owners either through the budget approved at the annual general meeting or by a special levy.
Committee spending limit
The committee can spend body corporate funds if the cost is less than $200 for each lot in the scheme (including any lots in a subsidiary scheme).
There are some exceptions allowing the committee to spend more than this amount, including if:
- The body corporate has previously changed the $200 limit at general meeting and the spending is below this new limit.
- All owners have provided written consent to the spending.
- An adjudicator has authorised the spending in an emergency.
- An order requires the body corporate to carry out the spending.
If none of these circumstances arise, an ordinary resolution is required.
Two quote limit
Irrespective of whether the spending is considered at a committee or general meeting, the body corporate requires two quotes to be considered as motions with alternatives if the spending is more than either of these amounts:
- $10,000; or
- $1,100 for each lot in the scheme,
There are some exceptions allowing the body corporate to only need one quote, including if:
- the body corporate has previously changed the $10,000 limit at general meeting and the spending is below this new limit.
- There are exceptional reasons that it is not practicable to obtain two quotes.
If the spending is in relation to making an improvement to the common property, there are additional approval thresholds to the major and committee limits to consider for the body corporate, including:
- If the spending is less than $300 for each lot in the scheme – the committee can authorise the spending (but only if the committee spending limit is not reached).
- If the spending is less than $2,000 for each lot in the scheme – an ordinary resolution can authorise the spending but only once each financial year.
- If the spending is more than $2,000 for each lot in the scheme or the body corporate has already passed an ordinary resolution to authorise improvements – a special resolution is required.