Why Shared Buildings Defer

A major capital item, a roof, a facade, lifts, a waterproofing programme, benefits the building over decades. It is paid for now, by whoever owns a lot today. An owner planning to sell in two years carries the cost and gets little of the benefit. An owner planning to hold for twenty years sees it differently. Every vote balances these interests.

Add competing priorities, limited information and the discomfort of a large special levy, and the easiest decision is usually to patch and wait. Each individual deferral is rational. Together they let the building decline.

Reserve and sinking funds are meant to solve this by collecting money steadily for future works. Many are set too low, because higher contributions are unpopular and because the forecast of future works is weak or out of date. When the major item arrives, the fund cannot cover it.

Regulators have responded. Australian states require various forms of long-term maintenance or capital works planning for owners corporations, with obligations that differ by state and scheme size. In Britain, service charge regimes and professional guidance govern reserve funds in leasehold buildings. In the United States, the 2021 collapse at Surfside in Florida led that state to introduce mandatory milestone structural inspections and structural integrity reserve studies for condominium buildings of three or more habitable storeys.

Several jurisdictions have responded to deferral in shared buildings by prescribing how far ahead owners must plan and save. The requirements differ widely.

None of these rules guarantees adequate funding. A ten-year plan can be optimistic, and a reserve can be set to the minimum the law allows. What they do is make the gap visible, which is the first condition for closing it.

The Surfside collapse in June 2021 made the cost of collective deferral visible. The legislative response is instructive for owners anywhere. Buildings of three or more habitable storeys must now have a milestone structural inspection by a licensed engineer or architect at a prescribed age and every ten years after, and a structural integrity reserve study every ten years that visually inspects the roof, structure, fireproofing and other critical components and states their remaining useful life and the reserves needed. Owners can no longer vote to waive those reserves, although 2025 amendments allow funding to pause for up to two budget years after a milestone inspection while repairs are paid for. Prospective buyers are entitled to the inspection reports and the reserve study.

Strip away the Florida specifics and three principles remain: inspect the structure on a schedule tied to age; forecast the capital for critical components on a fixed cycle; and make both visible to buyers. Those principles translate directly to commercial strata in Australia and leasehold blocks in Britain, whatever the local law requires.

For a buyer of a lot or a unit, the common property is part of the purchase. The useful reading has four parts. The fund balance against the forecast of works. The age of the forecast and who prepared it. The minutes, which show what has been raised, deferred and disputed. And the building itself, read as any other: roof, facade, lifts, fire services, car park structure, hydraulics. A low levy with a thin fund and an old forecast is a signal, not a saving.

Strata offices, medical suites, industrial units and small retail lots are common in Australian markets in particular. Their owners are often owner-occupiers or private investors with limited technical support. The building’s common property, roof, facade, lifts, fire services, carparks, depends on the same collective process, and the same deferral logic applies.

For a buyer of a lot in a shared building, the condition and funding of the common property are part of the asset. A low levy can be a warning rather than a bargain.

The most effective remedy is a clear, credible capital plan that every owner can understand: what the building needs, why, roughly what it will cost, and when. It turns abstract warnings into specific decisions, lets the fund be set sensibly, and makes it harder for deferral to pass unnoticed.

That is the same instrument we argue for in single-owner buildings. In shared buildings it does one more thing: it gives a group of people with different interests a common, evidence-based picture to decide from.