QLD: Q&A Appointing a Body Corporate Manager

If you want to change body corporate managers, it is important to consider all costs and qualities of any alternative management companies.

There isn’t a specific quote request template or an assessment format. What works for one scheme may not work for the next. Any search will depend on what you value from a manager. This will dictate how you conduct your search.

As a manager, I have seen many individual schemes create templates. As LookUpStrata is a participatory forum, I encourage any readers who have created their own to share their examples in the comments.

Below, I have created a table that might help you consider some of the cost and value comparison points for managers. If you use a template like this, ask managers bidding on your scheme to complete it.

Most body corporate contracts are a mixture of fixed fees plus additional costs for individual services required by the scheme.

The fixed fees cover what is known as the agreed services. These should be specifically outlined in your contract. Typically, the agreed services are for things like arranging the AGM, managing your financials, issuing levy notices and the general work required to run a body corporate.

The additional service fees are charged per item or for the time taken – usually at the hourly rate for a manager or strata team member. Again, the contract should list these fees. Professional service fees can be applied for anything that is not an agreed service. This could be helping with maintenance issues, issuing by-law breach notices, assistance with caretakers, additional meetings and extending to any legal request that the scheme asks the body corporate manager to undertake.

Unfortunately, body corporate contracts can be tricky to read, and it can be hard to determine the actual costs. This isn’t an accident – many companies don’t want you to know what they are really going to charge. As a manager, I find that many of the contracts we see are difficult to read, and I imagine owners have the same problems.

If you are comparing companies, perhaps the most useful question to ask is what is the total amount of all fixed fees? This isn’t just the managerial fee plus the disbursements, but it would include fees for insurance and BAS filings, fees for software provision and anything else the body corporate company will definitely charge you. This includes fees for line items such as communications charges or WHS fees that some companies like to hide in contracts to inflate the real costs you pay. Take that total and divide it by the number of lots, and that’s your real cost per lot for the agreed services.

Regarding costs for additional professional services, this isn’t something body corporate owners should be afraid of. Many owners seem to think that paying the manager for these services is a waste of money, but if you need help and the manager provides it, that’s a fair trade. The question is not how much you pay but whether your manager is helping you with your scheme. Are they making things easier for you? Are they available when you call, or do they reply promptly to your mail? If the answer to these questions is yes, you are probably getting good service and value for money. If the answer is no, that’s probably a good reason why you are looking for a new manager.

In making this value assessment, think realistically about how much time it takes to manage your scheme. Some schemes have low additional costs. Others contact their manager every day, and costs will be high. Be realistic about the demands of your scheme and expect managers to charge for that. Price those costs into your budget, and if you want to bring them down, discuss strategies with the manager about how to do that.

That said, what you need to watch out for in the additional services are inflated costs that add to the body corporate’s bottom line but don’t improve your scheme. Paying a manager for 30 minutes of their time to help you issue a professional by-law breach notice is fine. But if the management company charges you say $50 for a welcome pack that’s just a PDF they created years ago, it is probably a waste of money. How about an insurance certificate – it might take the manager 30 seconds to send one through to you. Many companies will bill $30-$100 for this. Are you happy with that? Consider your scheme’s needs and ask the manager what costs are included.

In your evaluation, you must also consider the costs of any insurance commission paid to the manager. Commissions are usually a percentage of the premium, and as premiums are rising, so are the commissions. There is truth to the argument that if the commission were not applied, body corporate contracts would increase in other areas or that inclusions would be cut, but still, you may be surprised by the total of the commission paid and considering this amount in any comparison is imperative. The commission is a real amount of money that you pay, so you need to add it to your calculations.

Lastly, be wary of judging on costs alone and remember that it costs good body corporate companies good money to provide good services. If a company offers you a low price, think about why – maybe they have a lot of hidden additional fees, or maybe their managers are overloaded and won’t have time to give you service.

Ultimately, any proposals you receive will only tell half the picture, and plenty of people can put together a flashy presentation that makes their company look great. Turning that into a reality is much harder than it looks. It’s a good idea to interview the company and chat with them about how they work. Plenty of good companies are out there offering fair offers that people overlook by considering costs alone. You might have to pay a bit more for a good company, but those companies will bring your scheme savings over time by using their industry knowledge to help you make the right decisions. Remember it is OK to ask questions – if the body corporate can give you a straight answer, that’s a good thing. If they can’t, it’s a warning sign. Speak to the people at the company and get a feel for if they are the right fit for your site.

Management comparison chart

Download your FREE management comparison charts: Fixed Fees + Additional Professional Services

Fixed Fees:

Additional Professional Services

For additional fees, note that if you are comparing against your current manager, you should be able to get an exact amount from them or your financials for fees charged over the past 12 months. A new manager may be able to list their costs, but they can’t know the total charges. It will depend on your scheme and the amount of help you need. Be realistic about the amount of time it takes to manage your site. If you need a lot of help, that’s OK, but it won’t be for free.

William Marquand
Tower Body Corporate
E: willmarquand@towerbodycorporate.com.au
P: 07 5609 4924

This post appears in Strata News #681.

Question: Can our committee, as a corporate decision, terminate our body corporate manager?

Our committee has sent an email to our body corporate manager requesting to terminate the management agreement based on a ‘commercial decision’.

The body corporate manager was appointed by a majority of owners at the last AGM. Is termination possible?

Answer: It is concerning that the committee are looking to override the authority of the body corporate.

The Committee can’t unilaterally decide to end the contract.

However, there is some leeway for them to discuss the contract with the body corporate managers and perhaps negotiate an exit that could be voted on by owners.

In this case, you state that the committee have requested the current managers take action to end the contract. The managers could do this by terminating the contract themselves – they will probably have a termination clause in the contract that allows them to do this within a specified period of days – and in that case, the body corporate would have no say over the matter. The agreement could also be ended by mutual termination. Still, in that instance, the committee would need authority for this action from the body corporate via an ordinary resolution on a motion at a general meeting.

However, all of this depends on the manager’s agreeing to end the contract, which is not something that happens too often. Here, you say that the request has been made based on a ‘commercial decision’, but that decision is presumably one by the committee in what they see as the interests of the body corporate. It is hard to see the managing agency agree to this, as giving up business is probably not in their commercial interests. Most likely they would point out, as you have done, that a majority of owners appointed them, and they will serve in their capacity until a majority votes them out.

At a wider level, I think you are right to raise some concerns about the committee taking this action – even if they are unsuccessful, it is concerning that they are looking to override the authority of the body corporate. Perhaps there is a good reason for this, but if so, they should communicate with the body corporate why and what they want to do. As an owner, you might look to table a letter of complaint at the next committee meeting or file an owner’s motion. If the matter is serious enough, you may need to consider if the committee needs to be replaced – or at least needs some fresh representatives.

William Marquand
Tower Body Corporate
E: willmarquand@towerbodycorporate.com.au
P: 07 5609 4924

This post appears in the November 2023 edition of The QLD Strata Magazine.

Question: Does our three year agreement with our body corporate manager automatically dissolve on the third anniversary of its commencement date?

We would like to terminate our current body corporate managers.

Does an agreement with a three year term automatically dissolve on the third anniversary of its commencement date?

Copy of terms below:

7. 7. Ending this Agreement
   
   • 7.1 This Agreement continues after the Initial Term for a successive term each equal to the initial Term until termination.
   • 7.2 This Agreement may be terminated at any time by the mutual consent of both Parties.
   • 7.3 The Body Corporate: may ‘…..’ by giving at least three (3) months written notice prior to the end of each Term, of a resolution passed at a General Meeting which has been convened and conducted in accordance with the Act.

Answer: After the three years, the person cannot continue to be a body corporate manager without a new agreement.

Section 129 of the Accommodation Module (139 of the Standard Module) is clear on this position, which relevantly provides:

1. The maximum term including any renewal or option periods is 3 years;
2. If the agreement states it goes for longer than 3 years – it is treated as ending after 3 years; and
3. After the 3 years, the person cannot continue to be a body corporate manager without a new agreement.

Todd Garsden
Mahoneys
E: tgarsden@mahoneys.com.au
P: 07 3007 3753

This post appears in Strata News #656.

Question: Our strata manager wants to add a gallery vie variation to their contract. What is a gallery vie variation? Why should we agree, and what are the benefits to owners?

Answer: A gallery vie clause limits the rights of the body corporate to terminate the agreement in some very specific circumstances.

It would be unusual for a strata manager to want to include a gallery vie clause in their administration agreement.

However, a gallery vie is a clause that limits the rights of the body corporate to terminate the agreement in some very specific circumstances – which primarily benefits the other party to the contract and their financier.

It is usually not a controversial decision to agree to the clause as it will allow the other party to more readily secure finance to purchase the business related to the agreement. If the clause was not agreed to, the potential pool of managers would be limited. It may not provide for a quality manager (who would also be under pressure from their financier and financing terms).

Todd Garsden
Mahoneys
E: tgarsden@mahoneys.com.au
P: 07 3007 3753

This post appears in the July 2023 edition of The QLD Strata Magazine.

Question: Our body corporate manager is retiring and would like to transfer the agreement to another strata manager. They have asked the committee to vote on the proposition. Can the committee of four vote on the decision, or should the matter go to an EGM for all 13 owners to vote?

Answer: Yes, the committee can approve this.

Section 143 of the Standard Module (equivalent provisions of other Modules) provides for transfers of engagement, including engagement as a body corporate manager. It provides this can be given by resolution of the committee. The only exceptions would be if something like this is a restricted issue or if, for example, the committee decides to make it a decision of all owners (and then it would be by an ordinary resolution).

So, in your scenario, yes, the committee can approve it. If you have only four committee members, at least three would need to vote ‘yes’ to the proposed transfer (as a two-two vote would be a failed motion).

If you have some reservations about the transfer, it is fine to raise them and try to discuss it with the committee or other owners. It would always be preferable if any reservations you had were based on some factual information about the transfer rather than, say, not being a fan of it on principle.

This is general information only and not legal advice.

Chris Irons
Strata Solve
E: chris@stratasolve.com.au
P: 0419 805 898

This post appears in Strata News #650.

Question: Can a 7-person committee for a 30 lot strata complex appoint a new strata manager without consulting owners?

Due to unpleasant behaviour from some committee members, our strata managers quit. The committee has now appointed a new strata manager without consulting with the owners. The committee has not provided any information concerning the decision making process for choosing the strata manager.

Answer: A body corporate manager must be appointed at a general meeting of owners.

The legislation clearly states body corporate managers must be appointed at a general meeting of owners.

Every body corporate manager will know this so it would be a surprise if you had a manager acting on the committee’s appointment only – and this would be a significant red flag. The manager may be advising the committee on a pro bono basis to help get to the point where an EGM can be called so an appointment can be confirmed. If so, that’s not a bad thing.

If your previous managers have resigned, there is no timeline to appoint a new manager. There is no obligation to have a body corporate manager. Many schemes, particularly smaller sites, self-manage. Effectively, the committee are the managers of your site in the current circumstances.

A scheme of your size will most likely want to have a professional body corporate manager and that means calling an EGM to appoint someone. It would be normal for the committee to lead this process. It sounds like they have been talking to at least one company that can be nominated. The committee are not obliged to tell you how they selected a company, but good communication makes for good schemes so it makes sense for the committee to tell owners about the selection process. To be considered for appointment, the body corporate management company will need to submit a motion and contract proposal to all owners. If you are unhappy with the proposal, you can vote no. An appointment is by a majority in an ordinary resolution. If more owners vote no than yes, the proposal is rejected.

As an individual owner, you have the option of seeking your own quote from a management company and submitting that for inclusion on the next EGM notice. You can include explanatory notes about why you selected the company. If a majority of owners vote for that company, they will be appointed.

You can also call an EGM by arranging for 25 per cent of owners to call for the meeting in writing. If this happens, the committee is obliged to hold a meeting within six weeks of receiving the notice.

If the body corporate manager and the committee are both behaving as if the manager is appointed and not taking any action to call an EGM, this is a more serious situation. You may need to seek an urgent order from the Commissioner’s office to stop this but that would be an extreme circumstance.

Perhaps most of all, your scheme needs to gather as many owners as possible and talk to each other. It sounds like chaos at the moment. If things are going to get better, you will need the consensus of the owners. If you can participate in a collaborative process, things can improve. If not, you are all going to face some difficult problems.

See the BCCM website for more detail on calling an EGM:

Calling an extraordinary general meeting

William Marquand
Tower Body Corporate
E: willmarquand@towerbodycorporate.com.au
P: 07 5609 4924

This post appears in Strata News #647.

Question: We’d like to terminate our body corporate manager, however, there are issues with the vote count from the AGM. How do we resolve this?

At our AGM, a motion was submitted to terminate the services of our body corporate management company.

The outcome was two YES, two NO and one abstain. After the AGM, four of the five unit holders wish to terminate the management company’s services. Are we able to do this considering the vote at the AGM?

The issues with the current body corporate manager are due to:

• a misrepresentation of vote counts leading to multiple amendments
• a charge of $100 to issue a copy of our insurance policy to a lot owner generally, and unanswered emails.

How do we resolve this?

Answer: Hold a new meeting to confirm the position of the owners and proceed with the termination.

Votes can’t be changed after the fact. The best thing to do may be to hold a new meeting to confirm the position of the owners and proceed with the termination.

You don’t need to involve your current manager in the meeting. The secretary can issue the meeting notice and provide the minutes. The chair can run the meeting. The meeting itself can be very straightforward – just a motion to confirm the previous minutes – which you can vote no to if they are in dispute – and a motion to terminate the contract of the current body corporate manager.

If you are looking to appoint a new company, they would probably help you organise and run the meeting and provide you with a further motion for their appointment.

You will need to check the termination clauses in your current contract to see if there is any financial penalty for terminating the existing agreement. Probably, the current company would look to be paid any fixed fees remaining on the rest of the contract. There may also be an exit fee for arranging the books and records.

It’s concerning that you have issues with voting counts – five votes aren’t many to count or verify. You may not be able to change it now, but for future votes, it might be worth having owners submit their voting papers in writing so that there is a record. You can do this even if you vote from the floor. Mark the voting paper as you vote and submit it at the end of the meeting for the record.

Charges for the provision of your information will depend on your contract with the body corporate, so that may be legitimate. However, providing information like this will probably take the body corporate about a minute to access the file and send you an email. If you are planning to appoint new managers, read through the small print of the contract and ask questions about this kind of fee. Many owners only look at the headline fees of the base costs and choose the cheapest company on that basis. They end up paying a lot more when all the additionals are considered.

William Marquand
Tower Body Corporate
E: willmarquand@towerbodycorporate.com.au
P: 07 5609 4924

This post appears in the March 2023 edition of The QLD Strata Magazine.

Question: As an owner, I put up a motion to review the Strata Manager’s contract. The Strata Manager deleted my motion and said this was more of a committee issue. Is this correct?

Prior to the AGM, I put up a motion to review the Strata Manager’s contract, due for renewal in 3-4 months. The Strata Manager deleted my motion and said this was more of a committee issue.

Is this the case? While not currently a committee member, I have shortly held the position of treasurer previously. In this position, I had the opportunity to approach a number of Body Corporate Managers and the information I received indicated to me that this is an AGM matter.

Answer: If an owner requests that a motion be included on the next meeting notice, that motion has to be included and considered by the Body Corporate.

If an owner requests that a motion be included on the next meeting notice, that motion has to be included and considered by the Body Corporate. The Body Corporate Manager, who in this case is a delegate of the Secretary, has no right to make unilateral decisions over what is included.

From your end, you need to make sure that the motion submitted was valid in terms of the timelines for a submission and the content of the motion.

If the AGM has already been held and your motion wasn’t included, you may consider making a formal complaint about this – start with the Committee but the Commissioner’s office could be the next port of call.

If you wanted a more definite outcome than just a review, you might look at putting forward an alternative management company for consideration – that is certainly a matter for a general meeting. However, maybe you are not at that stage yet and all you really want is some discussion about where things stand. There are limited forums for this kind of thing and the AGM may be the best one for your site. Bear in mind that motions to review or discuss something are fine, but they don’t have a definite endpoint. It’s hard to really say what constitutes a review or discussion. Sometimes they can be productive and other times not so much.

Any response you get from owners may depend on your scheme. If most owners show up to the AGM in person or online it seems like a pretty good place to have a discussion. If most just send in an advance vote, the discussion might not go very far. For these reasons, I can understand the idea that the matter may be best left for a Committee Meeting, but it depends on the circumstances and the Body Corporate Manager doesn’t have the authority to deny your request.

As a next step, you might advise the manager of the requirement to list your motion. You could also communicate with the Committee over the matter and see what support there is for your proposal. If you are correct about the manager misadvising you, it is an obvious point of concern if the Manager is not following due process.

For more on submitting motions see the BCCM website: Submitting motions

William Marquand
Tower Body Corporate
E: willmarquand@towerbodycorporate.com.au
P: 07 5609 4924

This post appears in the November 2022 edition of The QLD Strata Magazine.

Question: Our Body Corporate Management contract states that the contract amount is subject to increases. This may either be a rate % or CPI increase every 12 months. How does this work?

Answer: The increase will be either by a certain percentage or CPI – whichever is higher.

Where body corporate contracts apply an automatic increase, it is usually with the notation that it raises either by a certain percentage or CPI – whichever is higher. You can confirm this with your company and they may be happy to negotiate with you if appropriate.

If you only have a twelve month contract it is worth noting that this clause doesn’t apply. The contract is for twelve months and at the end of it new terms can be negotiated and agreed. They may be in line with the clause but not necessarily.

William Marquand
Tower Body Corporate
E: willmarquand@towerbodycorporate.com.au
P: 07 5609 4924

This post appears in Strata News #601.

Question: I am a lot owner of a Triplex. We are self-managed. There are so many issues that I just don’t know where to start.

I am a lot owner of a Triplex. We are self-managed. They were operating under a standard format plan but I found out that it should have been Building Format Plan. Also, the survey plan doesn’t reflect the buildings layout. 

There are so many issues that I just don’t know where to start. I suggested that we enlist the services of a strata company to get us back on track and I was outvoted. We pay a quarterly amount into an account that the other 2 lot owners have access to and when I asked to be added to the account my request was ignored. We are having an AGM at the end of of the month and motions need to be submitted 4 days prior to the AGM. 

Answer: You might look at seeking a Part 5 agreement, which is where a manager is appointed to manage the site, although that is rarely a desirable outcome.

As a start point you should make sure you are fully informed and have as much correct information as possible. Do you have access to the key documents for the scheme such as the CMS? The other owners should be able to provide these if they are acting as the committee – you are entitled to access to the books and records – but if it was proving difficult you could obtain copies of some documents from council. You can also request an updated financial statement from the body corporate so you can get a clear picture of where things stand – this may be a slightly different request from having immediate access or control over the accounts.

Once you have gathered the information you should contact the other owners and advise them of your findings and that the plan needs to be run on a legal basis. If they are refusing you have the option of taking the issues to the Commissioner’s office and perhaps entering a mediation process with the other owners. In the worst-case scenario, you might look at seeking a Part 5 agreement, which is where a manager is appointed to manage the site, although that is rarely a desirable outcome.

It’s worth remembering that even if you gained a legal victory the other owners would still be the owners and you will have to maintain a relationship with them. This can be quite difficult and you are entitled to assert your legal rights but so far as possible, you need to engage in a dialogue and work together. The alternative to this is legal battles, lawyers’ fees and acrimony which no one benefits from.

We can also note that it seems your AGM may be being called incorrectly given the dates provided and timeline for submitting motions.

William Marquand
Tower Body Corporate
E: willmarquand@towerbodycorporate.com.au
P: 07 5609 4924

This post appears in Strata News #518.

Question: When the body corporate manager’s contract is due for renewal, are they required to provide the committee with an alternative quote at the AGM?

Answer: It’s a question of spending limits as body corporate managers are contractors like any other.

It’s a question of spending limits as body corporate managers are contractors like any other. If the price of the management proposal is below the major spending limit for a scheme only one quote is required. If the major spending limit is exceeded an alternative is required.

The body corporate can set the major spending limit at a general meeting but otherwise the default amount is the lesser of either:

$1,100 multiplied by the number of lots in the scheme

or

$10,000.

It’s worth noting that the spending limit is GST inclusive where most body corporate agreements list GST exclusive figures.

There can also be some debate about the value of a body corporate contract as most include a range of fees for services that may or may not be used. There is no exact answer as to what total should be listed, but as a standard you might look at the value of the contract as being the total for management and disbursements to cover the agreed services.

So, if you have a 30-lot body corporate building and a management agreement that lists fees of $130 for management per lot per annum and $40 for disbursements per lot per annum the value of that contract could be considered to be:

30 lots x ($130 + $40) = $5100.00 ex GST or $5610.00 inc GST.

In a building of that size the default spending limit would be $10,000 so only one agreement would be required to be considered although others can be added if you wish.

Check the BCCM website for more details on spending limits: QLD Government: Body corporate spending

William Marquand
Tower Body Corporate
E: willmarquand@towerbodycorporate.com.au
P: 07 5609 4924

This post appears in Strata News #515.

Question: Where/if in the BCCM Act or Residential Module does it state that an owner can put forward, at the AGM, the names of multiple Body Corporate Managers (and their quotes) for engagement as BCM – thus giving owners a choice?

Answer: There is no reason why multiple quotes from body corporate managers can’t be submitted, and it may be a requirement to have more than one depending on the total value of the contracts being considered.

Under the Standard Module, Regulation 2020, Section 86 allows owners to submit motions for consideration at general meetings.

Copies of all modules are available online. You can find a copy of the standard module at: Queensland Government: Queensland Legislation

The relevant section is copied below for reference.

The question asks whether multiple quotes from body corporate managers can be submitted. There is no reason why not, and it may be a requirement to have more than one depending on the total value of the contracts being considered. In that case, section 89 on Group of Same Issue Motions may be enacted with regard to how the motions are listed and voted on.

Section 86 Opportunity to submit agenda motions

1. A motion for consideration at a general meeting of the body corporate may be submitted at any time by— (a) a member of the body corporate; or (b) the committee.
2. Subsection (3) only applies in relation to the first annual general meeting of a body corporate.
3. If a motion is submitted by a member of the body corporate before the first annual general meeting, it must be included on the general meeting agenda if it is practicable to include the motion.
4. Subsections (5) to (8) apply in relation to all other general meetings of a body corporate.
5. If a motion is submitted, including by a member of the body corporate in response to an invitation under subsection (8), it must, subject to subsections (6) and (7), be included on the v49 [s 87] Body Corporate and Community Management (Standard Module) Regulation 2020 Chapter 4 Body corporate meetings—Act, section 104 Part 2 Administrative arrangements for body corporate meetings 2020 SL No. 233 Page 79 Authorised by the Parliamentary Counsel next general meeting agenda on which it is practicable to include the motion.
6. A motion submitted by a member of the body corporate may be included on the agenda for an annual general meeting only if the secretary receives the motion before the end of the body corporate’s financial year immediately preceding the meeting.
7. However, a motion of a following type must not be included on the agenda for a general meeting if the motion’s inclusion would result in the body corporate considering a motion of that type more than once in a financial year for the body corporate— (a) a motion proposing that a regulation module be applied to the community titles scheme that is different from the regulation module identified in the scheme’s community management statement; (b) a motion proposing that the remuneration paid to a particular service contractor be changed; (c) a motion proposing that the engagement of a person as a service contractor, or the authorisation of a person as a letting agent, be amended if, as a result of the amendment, the engagement or authorisation would include a right or option of extension or renewal.
8. If a notice is forwarded to members of the body corporate inviting nominations for committee member positions to be filled at an annual general meeting of the body corporate, the members must also be invited to submit motions for inclusion on the agenda for the meeting.

William Marquand
Tower Body Corporate
E: willmarquand@towerbodycorporate.com.au
P: 07 5609 4924

This post appears in Strata News #501.

Question: Our body corporate manager’s contract expires a month earlier than the AGM. How do we deal with the gap between ending the 3 year engagement and our AGM date?

Our 3 years Engagement of the Body Corporate Manager is going to finish towards the end of July. Our AGM should be held at the end of August. There will be approximately 1 month after ending the 3 year engagement where the BC Manager should not provide any work for the BC. How do we deal with a situation like this?

Answer: Technically, an EGM should be called in advance of the contract expiry to agree on a new contract or a new managing agency.

Unless the contract has any specific rollover clauses, it will end on the day it ends. That can create some difficulties for body corporates and managing agencies.

Technically, an EGM should be called in advance of the contract expiry to agree on a new contract or a new managing agency. If that hasn’t happened and the body corporate manager continues to act as a managing agent after the contract end date, they may be challenged on their capacity to act as managers or raise any fees for works done.

NSW legislation has taken steps to tidy this situation up – committees can agree a three month extension of a contract to allow time for a meeting to be held – but I’m not aware of similar provisions in Queensland. If your body corporate has any concerns about this it should probably seek legal advice.

William Marquand
Tower Body Corporate
E: willmarquand@towerbodycorporate.com.au
P: 07 5609 4924

This post appears in Strata News #495.

Question: As appointing a body corporate manager is a substantial expense, should a tendering process be entered into prior to renewal or appointment?

I am a residential unit (lot) owner in a large body corporate complex in Brisbane, of which 63 floors are up-market residential units and 12 operated by an international hotel chain. At the recent AGM, the existing body corporate manager was again approved in that role for the coming year. It appears, however, that the body corporate committee may not have engaged in any formal pre-tendering process prior to proposing that manager as the sole candidate at the meeting. As the cost of body corporate management is a substantial sum of expenditure in our yearly accounts, should not an authentic tendering method be employed by the body corporate prior to the AGM and disclosed to owners as a matter of proper practice?

Answer: There is no requirement to carry out a tender prior to engaging a body corporate manager (or any other contractor).

There is no requirement to carry out a tender prior to engaging a body corporate manager (or any other contractor). Relevantly, any lot owner is entitled to submit an alternate proposal that could have been considered at the general meeting along with the committee’s recommendation. If a lot owner did not take up this opportunity then it appears the process has been properly followed provided all relevant spending limits have been complied with.

Todd Garsden
Mahoneys
E: tgarsden@mahoneys.com.au
P: 07 3007 3753

This post appears in Strata News #486.

Question: Our body corporate manager’s contract is due for renewal. They want to submit a three year contract, which we would consider, but do we have to list an alternative for owners to look at?

Answer: You will need to get at least 2 quotes if the value of the proposed engagement is greater than the major spending limit.

You will need to get at least 2 quotes if the value of the proposed engagement is greater than the major spending limit. The major spending limit is the lesser of either $1,100 multiplied by the number of lots in the scheme, of $10,000. You’re not obliged to list an alternative otherwise, although it is open to an owner to get a quote from another management firm if they wish.

Chris Irons
Hynes Legal
E: chris.irons@hyneslegal.com.au
P: 07 3193 0500

This post appears in Strata News #463.

Article: Key questions when looking for a new strata manager

What should you ask and what warning signs should you look out for when choosing a new strata manager?

What do we want from the manager?

Maybe the most critical question but often skipped over. If you want to change managers, start by defining the reasons why and what you expect from your next manager. Then ask managing agents if and how they can deliver on those expectations. Be realistic. If you say to a new agency that you are a low fuss scheme and want to keep costs down that’s fine, but if you then spend the next twelve months mailing the manager every day, it’s not going to work out. If your plan needs help no problem but make sure the next company can manage that.

What are the costs?

Focusing on the annual fee per lot and costs for disbursements only tells part of the story. Most strata contracts are structured to have a set of agreed services that include general secretarial services in the annual fees, and a range of extra costs applied on a user pays basis. Some companies offer cheap annual fees, but they have to make money somehow, and that usually means deriving revenue from extra services. Check the contract carefully and make sure you understand what is included and what’s extra. Think about what your plan actually asks the manager to do and check this against the agreed services. If you require work outside of those services, you can reasonably expect to see additional costs.

How do we access our records?

You should be able to access general records to your plan such as details about the financials, minutes, insurance and by-laws quickly, easily and without cost. Online portals help provide transparency and if they can’t hold all documentation, check how long it will take a manager to respond to information requests and if there are any fees for giving access to your records.

What’s the term of the agreement?

Most agreements are one, two or three years. Longer terms may be encouraged by offering lower fees or incentives such as a cap on annual increases. Shorter terms give you the flexibility to renegotiate or move on at the end of the deal. Get a length you feel comfortable with.

Who’s the manager?

Your next company may be able to nominate the manager for your site in advance – ask and see. Why not have a chat with them and see if you think they will suit your building? Do they have the knowledge and experience you need? A good connection with the manager makes a big difference so make sure you get the right fit.

Does it matter if the company is big or small?

Larger strata firms tend to be more structured and process-driven while the smaller usually offer more tailored flexible services. In and of itself size probably doesn’t matter much but experience can and the capacity of the individual manager can.

What red flags should we look out for?

• Online reviews: They don’t tell the whole picture, but online reviews give an idea of what to expect. In isolation, a couple of bad reviews might not be significant, but if there are a lot of complaints about the same thing that’s a warning sign.
• Staff turnover: Even if you find a good manager, it’s no good if they are gone in six months. High turnover can be a sign of an unhappy company. Check how long staff stick around.
• Overworked managers: How many buildings does a manager have? How many lots? How many people assist them? Your manager might be great, but they are not much use to you if they are burned out. Unfortunately, many are.
• Conflicts of interest: many strata companies diversify into areas such as working with developers or property and building management. Synergy can be a good thing, but it’s not always easy to keep a balance. Make sure your strata company is focused on your needs as a strata plan.

William Marquand
Tower Body Corporate
E: willmarquand@towerbodycorporate.com.au
P: 07 5609 4924

This post appears in the March 2021 edition of The QLD Strata Magazine.

Question: If we are looking at replacing our Strata Managers at the upcoming AGM, should this be held at the office of the current managers?

We are having our AGM at the end of October. One of the Motions is to possibly replace the Strata Management Company. Is there a conflict of Interest if the AGM is held in the Office of the Strata Management company and there are no observers to ensure the count of votes are correct and proper. Shouldn’t this be held in a community building with observers (Lot owners) to ensure validity?

Answer: I don’t see an issue with the location of the meeting provided it was approved by the strata committee and is accessible to owners.

I don’t see an issue with the location of the meeting provided it was approved by the strata committee and is accessible to owners.

Votes cast (not in a secret ballot) are part of the body corporate records so any declared vote can be checked if required and challenged if incorrect.

Owners, including yourself, should attend the meeting to vote and help ensure a transparent process is followed.

William Marquand
Tower Body Corporate
E: willmarquand@towerbodycorporate.com.au
P: 07 5609 4924

This post appears in Strata News #416.

Have a question about engaging a body corporate manager in Queensland or something to add to the article? Leave a comment below.

Embed

Read next:

• QLD: Q&A What Power Does a Subcommittee Have to Make Decisions?
• QLD: Q&A Body corporate voting rules – What you can and can’t do
• Standard Module elections
• QLD: Q&A AGMs, Motions in Strata and the Obligation to Act

Visit Strata Managers OR Strata Legislation QLD.

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.