Property glossary
Administrative fund
Also known as: admin fund, operating fund
The body corporate fund that covers a scheme's day-to-day running costs such as insurance, utilities, security and routine maintenance.
Definition
The administrative fund is the account a body corporate uses to pay the ongoing operating expenses of running the common property — insurance premiums, municipal accounts for common areas, security, cleaning, garden services, managing-agent fees and routine repairs. It is funded by the ordinary monthly levies and must be kept distinct from the reserve fund. Its required size is estimated each year in the budget put to owners at the AGM.
In the South African context
The Sectional Titles Schemes Management Act 8 of 2011 (STSMA) requires a body corporate to establish and maintain an administrative fund reasonably sufficient to meet its anticipated operating expenditure, and to keep it separate from the reserve fund. Both funds are typically held in a trust or scheme bank account administered by the trustees or managing agent. The annual budget the body corporate approves sets the contribution each owner makes to this fund.
Example
A scheme budgets R600 000 a year for insurance, security and common-area utilities; that figure forms the administrative fund and is recovered through the monthly levies on the levy roll.
Why it matters
A properly funded administrative fund keeps the lights on, the scheme insured and suppliers paid; underfunding it forces special levies or service interruptions and signals poor financial governance.
Informational only — not legal advice. Confirm specifics against the current Act and your scheme’s rules.
Sources
- STSMA — Sectional Titles Schemes Management Act 8 of 2011 — body corporate must establish an administrative fund for operating expenses, kept separate from the reserve fund