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The original owner must provide the proposed Administrative Fund and Sinking Fund budgets for adoption by the body corporate at its first annual general meeting.
The Administrative Fund budget contains estimates for the financial year of spending to cover the cost of maintaining the common property, body corporate assets, insurance and other expenditure of a recurrent nature.
The insurance for the building sum must cover the full replacement value. The original owner therefore must obtain from a quantity surveyor or registered valuer, an independent valuation stating the replacement value of the building.
The Sinking Fund allows for expenditure of a capital nature and major spending, for the financial year and over at least the next 9 years.
The sinking fund is accumulative and is necessary to meet future anticipated expenditure or to reserve an appropriate proportional share.