The Title Conditions (Scotland) Act 2003 (Development Management Scheme) Order 2009

PART 4 FINANCIAL MATTERS

RULE 18 – ANNUAL BUDGET

Duty of manager to prepare annual budget

18.1  Before each annual general meeting the manager must prepare, and submit for consideration at that meeting, a draft budget for the new financial year.

Content of draft budget

18.2  A draft budget is to set out–

(a) the total service charge and the date (or dates) on which the service charge will be due for payment;

(b) an estimate of any other funds which the association is likely to receive and the source of those funds;

(c) an estimate of the expenditure of the association; and

(d) the amount (if any) to be deposited in a reserve fund.

Consideration of draft budget by association

18.3  The association may at a general meeting–

(a) approve the draft budget subject to such variations as it may specify; or

(b) reject the budget and direct the manager to prepare a revised draft budget for consideration by the association at a general meeting to be called by the manager and to take place not later than two months after the date of the meeting at which the budget is rejected.

Rejected budget – payment of service charge

18.4  Where the budget is rejected the service charge exigible under the budget last approved is, until a new budget is approved, to continue to be exigible and is to be due for payment on the anniversary (or anniversaries) of the date (or dates) on which it was originally due for payment.

Revised draft budget

18.5  At a general meeting at which a revised draft budget is considered, the association may approve or reject the budget as mentioned in rule 18.3(a) and (b).

RULE 19 – SERVICE CHARGE

Amount of service charge

19.1  Except where rule 19.2 applies, the amount of any service charge imposed under this scheme is the same as respects each unit.

Service charge exemption

19.2  The association may at a general meeting decide as respects a particular owner and in relation to a particular payment that no service charge (or a service charge of a reduced amount) is payable.

Manager to collect service charge

19.3  When the draft budget has been approved in accordance with this scheme, the manager–

(a) must send to each owner a notice requiring payment, on the date (or dates) specified in the budget, of the amount of the service charge so specified; and

(b) may send to each owner at any time a notice–

(i) requiring payment, on the date (or dates) stated in the notice, of an additional amount of service charge determined under rule 20.1; and

(ii) explaining why the additional amount is payable,

and each owner is liable for that amount accordingly.

Redistribution of share of costs

19.4  Where an owner is liable for a service charge but the service charge cannot be recovered (for example because the estate of that owner has been sequestrated, or that owner cannot, by reasonable inquiry, be identified or found) then that service charge is to be shared equally among the other owners or, if they so decide, is to be met out of any reserve fund; but that owner remains liable for the service charge.

Interest payable on overdue service charge

19.5  Where any service charge (or part of it) remains outstanding not less than twenty eight days after it became due for payment, the manager may send a notice to the owner concerned requiring that person to pay interest on the sum outstanding at such reasonable rate and from such date as the manager may specify in the notice.

Interpretation of rule 19

19.6  In rule 19 references to “owner” are references to an owner of a unit.

RULE 20 – ADDITIONAL SERVICE CHARGE

Additional service charge

20.1  The manager may from time to time determine that an additional service charge, limited as is mentioned in rule 20.2, is payable by the members to enable the association to meet any expenses that are due (or soon to become due) and which could not be met otherwise than out of the reserve fund.

Limit on amount of additional service charge

20.2  In any financial year the total amount of any additional service charge determined under rule 20.1 is not to exceed twenty five per cent. of the total service charge for that year as set out in the budget approved by the association; but in calculating that percentage no account is to be taken of any additional service charge payable in respect of the cost of emergency work (as defined in rule 14.3).

Supplementary budget

20.3  If in any financial year the manager considers that any additional service charge exceeding the percentage mentioned in rule 20.2 should be payable, the manager must prepare and submit to the association at a general meeting a draft supplementary budget setting out the amount of the additional service charge and the date (or dates) on which the charge will be due for payment; and rules 18.3, 18.4 and 19.3(a) apply as respects that draft supplementary budget as they apply as respects a draft budget and revised draft budget.

RULE 21 – FUNDS

Association funds

21.1  Any association funds must be–

(a) held in the name of the association; and

(b) subject to rule 21.2, deposited by the manager in a bank or building society account.

Special treatment of certain funds

21.2  The manager must ensure that any association funds which are likely to be held for some time are–

(a) deposited in an account which is interest bearing; or

(b) invested in such other way as the association may at a general meeting decide.

Reserve fund

21.3  The manager must ensure that any association funds forming a reserve fund are kept separately from other association funds.

RULE 22 – SENDING

Sending

22.1  Where a rule requires that a thing be sent–

(a) to a person it shall suffice, for the purposes of that rule, that the thing be sent to an agent of the person;

(b) to a member and that member cannot by reasonable inquiry be identified or found, it shall suffice, for the purposes of that rule, that the thing be sent to the member’s unit addressed to “The Owner” (or using some other such expression, as for example “The Proprietor”).

Method of sending

22.2  Any reference to a thing being sent shall be construed as a reference to its being–

(a) posted;

(b) delivered; or

(c) transmitted by electronic means.

Date of sending

22.3  A thing posted shall be taken to be sent on the day of posting; and a thing transmitted by electronic means, to be sent on the day of transmission.