Let’s continue where we left off. In my previous post, I mentioned that the Owners Association is a legal entity. The Owners Association consists of all owners and at every General Meeting a group of owners will be elected to form “the Board”. The function of the board is basically to manage and maintain the shared areas and facilities , also known as common areas, on behalf of the rest of the owners. The Board consists of minimum 5 and a maximum of 7 members(this number may vary in different countries) . The services of the Board is not paid, it is usually on a voluntary basis. Owners who are elected by fellow unit owners to join the Board can always decline.
In every country, the conduct and role of the Board is clearly defined or spelled out in the relevant laws. In Dubai for example, the law governing this is the Jointly Owned Property Law, in Singapore its called Building and Strata Management Act.
Every Owners Association will collect service charges from all owners to raise funds to manage and maintain the property. The funds collected are categorised into General Fund and Reserve Fund. The General Fund will be used to fund the day to day operations of the estate like paying for cleaners, utilities charges,landscape contractors, paying for repair and replacement works so that the shared areas, facilities and equipments in the estate is maintained and are in good working order. The Reserve Fund on the other hand, like its name suggest, are funds reserved for carrying out repair/replacement or maintenance for long term capital items.
The amount of service charges levied from each unit owner is derived based on the share value or ‘unit entitlement’ which is in turn proportionate to the floor area of the unit. Each country has a certain criteria to follow when assigning share value or unit entitlement to a unit.This ensures an equitable distribution.
Apart from overseeing or ensuring that the common areas and facilities are in good working order, the Board is also given the task to ensure that the community rules are being abide by. This usually the more challenging role as it is not easy to ensure that everyone living in the building follow the rules.
Sounds like a lot of work for a volunteer you might say, well sadly it is true, however the Board can choose to delegate their duties to an Owners Association Management. We will elaborate more on Owners Association Management in the next entry.