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Body Corporate Bank Accounts

September 2, 2024

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A body corporate typically needs to maintain a dedicated bank account for managing property-related funds like levies, repairs, and services. This ensures transparency and accountability in its financial management.

This article looks at the details of the body corporate bank account including why they’re required, who can open and manage them, and how the spending is authorised.

Does my body corporate need a bank account?

Yes, most bodies corporate are required to have at least one dedicated bank account with a financial institution, such as a bank, building society, or credit union. This requirement applies to all bodies corporate except those operating under the Two-Lot Scheme Regulation Module.

Why is a bank account required?

The primary purpose of having a separate bank account is to ensure that the body corporate’s finances are managed with transparency and accountability. This account is used to handle all incoming and outgoing funds related to the maintenance and management of the property, including levy collections, payments for services, and funding for repairs.

Who can open the account?

The body corporate itself must give consent to open the bank account. This process is often facilitated by the body corporate manager, who acts on behalf of the owners to ensure the account is set up according to legal requirements and in the best interest of the community.

However, the final decision rests with the body corporate, and it must be recorded in the minutes of a general meeting where owners agree to open the account.

Who controls the body corporate bank account?

The management and control of a body corporate bank account are crucial aspects of financial governance within any community title scheme. The control of the account can be entrusted to either authorised members of the body corporate or a body corporate manager, depending on the specific arrangements agreed upon by the body corporate.

Who can authorise spending?

No one owner within a body corporate has the sole authority to approve spending. Instead, these decisions must go through a formal decision-making process, typically by voting on motions. The type of meeting and resolution required to approve spending depends on the committee’s spending limits and the nature of the expenditure.

Although an authorised member may be responsible for the final transaction, they must first receive the correct approval by the body corporate via through the appropriate voting process.

Does the body corporate need separate accounts for the sinking and administrative funds?

No. A body corporate is not legally required to have separate bank accounts for the sinking and administrative funds. In many cases, a single bank account can be used to manage both, however, some bodies corporate choose to maintain separate accounts to simplify financial tracking and management.

It is important to note, funds from the administrative fund and sinking fund must be managed separately, even if they are held within the same account. Section 167 of the Body Corporate and Community Management (Standard Module) Regulation 2020 generally prohibits transferring money between the funds.

Can the body corporate invest funds in a term deposit?

Yes, a body corporate can invest its funds in a term deposit or similar investment vehicles. According to Section 96(2)(b) of the Body Corporate and Community Management Act and Section 167(4) of the Standard Module, a body corporate may invest funds that are not immediately required for operational expenses. The investment options available to a body corporate are similar to those available to a trustee, meaning that the funds can be invested prudently to earn interest or returns until they are needed.

Investing in term deposits can be a strategic way to ensure that funds allocated for future expenses, such as major repairs or upgrades from the sinking fund, are earning interest rather than sitting idle.

The committee must, however, carefully consider the liquidity needs of the body corporate to ensure that invested funds are available when required.

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