A real estate agent friend of mine recently told me that when he first started in the industry he thought a “sinking fund” referred to the money that had been set aside to deal with apartment buildings sinking or subsiding into the earth below.
He had just started in real estate when he heard other agents discussing the sinking fund at one of the high-rise residential buildings at Mackay Harbour.
My friend probably thought the sand must go pretty deep at the harbour.
I’m not sure what sort of amounts the other agents were bandying about when discussing the sinking fund but engineers don’t come cheap and a disappearing building can’t be easy to fix.
Look at the Leaning Tower of Pisa, now there’s a structure that would need a decent sinking fund. Of course, we could take the Italian approach and let our buildings sink a little bit and turn them into a tourist attraction.
Shortly after my friend heard about the sinking fund for the harbour building, he came across the term again.
This time he was with some agents at one of our modern river-side apartment blocks and, again, they were talking about the sinking fund.
My friend thought, “What the hell is going on with the buildings in this town? Why are they all sinking?”
But the penny soon dropped and he realised he had misunderstood the terminology.
The good news for Mackay Harbour and riverside unit owners is that a sinking fund has nothing to do with building subsidence and everyone can rest easy.
A sinking fund is the money set aside by body corporate managers, and paid in instalments by the property owners, to cover maintenance, repairs and other work that is expected to be required for the strata title complex in the years ahead.
Money gets set aside in the sinking fund, for example, for when planned painting of a unit complex is required so that owners don’t suddenly have to find tens of thousands of dollars to pay the painters.
My friend’s sinking fund story reminded me that there is a lot of terminology and jargon used in the industry that normal people don’t use and often don’t understand.
I often have to check myself, slow down and remind myself to explain terminology to buyers and sellers when I realise I’m spitting out terminology that ordinary punters don’t come across in their daily activities.
Whether it’s a CMA, a disclosure statement, cooling off period or finance clause, the terms all have a meaning and need to be understood for a buyer or seller to feel comfortable with what’s going on.
It’s part of an agent’s job to explain it all just in case you think the apartment you are buying is in a building that is sinking into the harbour.
