This article is about body corporate bank accounts has been supplied by the Commissioner for Body Corporate and Community Management.
One of the general functions of a body corporate is to administer the common property and body corporate assets for the benefit of owners of lots in the scheme. This includes maintaining common property and, in some circumstances, taking out insurance policies.
The funds to finance insurance or maintenance are from owner contributions. But who is authorised to access a body corporate bank account and spend the funds?
This article will address these questions and more.
Which regulation module applies?
It depends on which regulation module your scheme falls under. In Queensland, there is an Act, but there are also five subordinate pieces of legislation (regulations). Only one of these regulations will apply to your body corporate.
The Community Management Statement (CMS) for your scheme will indicate which regulation module applies. If you do not have a copy of your CMS, you can request a copy from Titles Queensland.
Two-Lot Scheme Regulation Module
If your scheme is registered under the Body Corporate and Community Management (Specified Two-lot Schemes Module) Regulation 2011, it is optional for the body corporate to have a bank account in its name.
If a bank account is going to be opened, that decision should be made by lot owner agreement. At least one owner should be authorised to operate the account.
All other regulation modules
The following information is relevant to schemes that fall under any of the following regulation modules:
- Body Corporate and Community Management (Standard Module) Regulation 2020
(“the Standard Module”) - Body Corporate and Community Management (Accommodation Module) Regulation 2020
(“the Accommodation Module”) - Body Corporate and Community Management (Commercial Module) Regulation 2020
(“the Commercial Module”) - Body Corporate and Community Management (Small Schemes Module) Regulation 2020
(“the Small Schemes Module”)
Does my body corporate need a bank account?
All bodies corporate, except for those under the Two-Lot Scheme Regulation Module, must have at least one account with a financial institution such as a bank, building society or a credit union.
The account can only be opened with the consent of the body corporate. This can be a committee decision.
Who controls the account?
The account can be run by either:
- authorised members of the body corporate; or
- a body corporate manager or an associate of the manager who is authorised by the body corporate to operate the account.
Who is an authorised member?
Authorised members are members of the committee that the body corporate has chosen to manage the account. There are usually two members of the committee authorised to manage an account, although community titles scheme registered under the Small Schemes or Two-Lot scheme modules require only one authorised member.
Can an authorised member approve spending?
To approve any spending, the body corporate makes decisions by voting on motions. This can be done at a committee meeting, a vote outside of committee meeting, or general meeting. The type of resolution required to approve the spending will depend on the committee’s spending limit and other things like if the spending is on an improvement.
Whilst an authorised member is usually the person who has the authority to allow funds to exit the body corporate’s bank accounts, they do not have sole decision-making power when it comes to spending in a body corporate. Before agreeing to access the bank account funds, the authorised member needs to ensure the body corporate agrees to the spending.
What if an authorised member is no longer on the committee, or the body corporate manager is terminated?
If an authorised member has sold their lot, or alternatively is no longer on the committee, the body corporate should take immediate steps to pass relevant motions to appoint a new authorised member while having the outgoing member sign any relevant forms with the financial institution to pass over authorisation.
A BCCM Form 2 can be issued to the financial institution to advise that the body corporate has changed body corporate managers. This should prevent the outgoing manager from accessing the accounts.
It is common practice for body corporate managers to close the bank account and give a cheque to the body corporate. However, the bank account should not be closed if a body corporate manager’s engagement ends. The adjudicator in Ocean Resort Village (No 1) [2021] QBCCMCmr 159 noted that:
The body corporate should give notice to the financial institution in the approved form [BCCM Form 2], which sets out the signatories for the account. The institution should then cease to allow the BCM [body corporate manager] to operate the account and the account will be taken to be operated by the persons in the notice.
What if the outgoing authorised member or body corporate manager does not do as requested?
The bank account and its finances are a body corporate asset. The body corporate can request that its asset be returned by a previous body corporate member or body corporate manager.
To request the asset be returned, the committee will need to:
- Pass a resolution requiring the person to return the property to a specific committee member or the body corporate manager (the committee should ensure this motion is very specific in naming the outgoing member or body corporate manager that is to return the asset, the asset or records that need to be returned, and the person and place it should be returned to); and
- Serve the minutes of the motion to the outgoing member.
The outgoing authorised member or body corporate manager has 14 days to comply. It is an offence to not comply with the notice and fines may be imposed by a court.
You can read more about the return of records and assets on our website.
Case examples:
In Pinetree Pocket [2004] QBCCMCmr 644 a body corporate manager was ordered to take steps and do all things necessary to ensure that the signatories to the body corporate bank accounts include two voting members of the body corporate committee where the body corporate manager was the sole authorisation on the account.
In Sunny-Lea [2016] QBCCMCmr 253, a lot owner, who was previously a committee member, was ordered to return all body corporate property, including access to the bank accounts, to the incoming body corporate manager. The body corporate had previously issued the lot owner with a prescribed notice directing the property to be given to the new body corporate manager, but the lot owner had failed to comply.
In 23 Woodstock [2008] QBCCMCmr 140 a lot owner who was the authorised member over an account was ordered to facilitate the closing or dealing of the account (as decided by the body corporate).
Does the body corporate need separate accounts for the sinking and administration funds?
No. One bank account is sufficient. Some bodies corporate, though, will have separate bank accounts for each fund and that is okay too.
There are rules on how to manage the administrative and sinking funds. For example, funds cannot be transferred between the administrative and sinking funds (Standard Module, section 167). Be mindful, that if a body corporate only has one bank account, it needs to ensure that it can appropriately track the funds.
Can the body corporate put funds in a term deposit?
Yes. Section 96(2)(b) of the Act and section 167(4) of the Standard Module state that a body corporate may invest funds – that are not immediately required, in the same way, a trustee may invest funds.
Information Service Freecall 1800 060 119
Commissioner for Body Corporate and Community Management
This post appears in Strata News #691.
Have a question about body corporate bank accounts or something to add to the article? Leave a comment below.
Read next:
- QLD: FAQ – Accessing body corporate records
- QLD: Q&A Body Corporate Financials, Audits and Tax
- QLD: Q&A What is a sinking fund in a body corporate
This article has been republished with permission from the author and first appeared on the UOAQ website.
Visit Strata Committee Concerns OR Strata Legislation Queensland
Looking for strata information concerning your state? For state-specific strata information, try here.
After a free PDF of this article? Log into your existing LookUpStrata Account to download the printable file. Not a member? Simple – join for free on our Registration page.
Leave a Reply