Maintaining a common bank account to hold advance payments for repairs is recommended. This account could be managed by your owners’ association or property manager. Creating a Building Reserve Fund provides a way to save for large future repair projects.
Floats
A float is a small advance payment kept in your maintenance account or by your property manager/factor. A float is usually a few hundred pounds per flat and is used to ensure that money is available to deal with minor repairs quickly, without having to take time to contact each owner.
Maintenance accounts
A maintenance account is used to hold money for specific upcoming repairs. The default rules in the Tenements (Scotland) Act 2004 sets out the rules for setting up and managing maintenance accounts.
They must:
- be held in a bank or building society
- be interest-bearing accounts
- require at least two owner signatures or the property manager’s authorisation for making payments
When a repair is planned, and owners are asked to make an advance payment for a repair, they must be told, in writing
- what the repair is
- why it is required
- the estimates received
- their and other owners’Â shares
- who made the decision to carry out these repairs and when
- a timetable for the work
- refund arrangements if the work does not go ahead
Download our repair notification template letter
Most banks will require a constituted owners’ association before allowing you to open such an account – often banks will refer to these accounts as charity, non-profit, or community accounts. Some banks may allow a ‘trust’ account to be opened for this purpose. We suggest searching online to find a bank that provides an account suitable for your association.
This guide from the Scottish Council for Voluntary Organisations has some useful information about such accounts.
Next steps
Download a document of the rules for running a maintenance account
Legal reference
Building reserve or sinking funds
A building reserve fund or sinking fund is a way of saving for future major repairs. It must be written into your titles as this is the only way to ensure that new owners are obliged to pay into the fund.
The building reserve fund is for major repairs, such as replacing lifts or reroofing. Your maintenance account and float are for minor, day-to-day repairs.
When you come to sell your flat, you will be able to tell prospective buyers of the arrangements for keeping the property in good repair, the amount of money in the fund, and what they need to budget each year for repairs. This will be a positive feature in any sale.
