Tuesday, April 28, 2009

Caretaking and Letting Agreement terminated.....

On 15th April 2009 the CCT ordered that a Caretaking and Letting Agreement had been vaildly terminated. The ruling makes interesting reading, particularly regarding the behaviour of the Caretaker.



I have spent many years participating on a number of different Body Corporate Committees. I am a dealer in Vintage Movie Memorabilia specialising in original movie posters and movie art. http://www.moviemem.com/I also present a radio programme on Jazz Radio 94.1fm Monday - Friday afternoons on the Gold Coast.

Tuesday, April 21, 2009

All Levies are equal but some are more equal than others......

I can't help but think of the words of George Orwell when the subject of equalisation of levies is raised. This refers to the view that all unit owners should pay the same or a similar amount in levies irrespective of the type of apartment that they live in.

Traditionally, and with no relation to logic, owners have paid levies that can be variously dependent on the size of their unit, the number of bedrooms or the floor of their apartment.

It is possible that the owner of a penthouse could easily be paying double the levies of an owner on a lower floor, despite the fact that the levies for both owners are supposedly set in place simply to contribute to maintenance and upkeep of the common property.

Generally speaking, the higher the floor and the greater the size of the unit, the higher the levies.
Some owners felt this "system" was unfair and a series of disputes have been lodged in recent years. The theory was that levies were based on the maintenance of the common property and had no relation to the size of the units or the number of bedrooms. If you owned the penthouse, you paid substantially higher levies than someone on the floor below but both owners were supposedly contributing to the common property so why should one owner pay more than antoher. Of course, the owners in the ground floor units argue that they have no use for the elevators so why should they have to pay for their maintenance.

There are some exceptions but rulings of Specialist Adjudicators have often favoured an equalistation of the levies, providing a good case is made.

Gary Bugden, a Specialist Adjudicator in one case, told me that he was reluctant to change the structure of levies unless presented with the report of an expert. These are easy enough to obtain. The report needs to jusify that all of the apartments should contribute equally to the Body Corporate irrespective of size.

This is not always an easy task. There are often variables that can mean one unit owner should, in fact, contribute more than another. An expert report can indicate that the contribution schedule needs to be changed but it is not necessarily a given that all reports will favour equal contributions.

The rulings of Adjudicators are supposedly based on an interpretation of Law and The Act.

A recent report indicated that State Tourism Minister Peter Lawlor has pledged to get rid of what he describes as 'unfair' body corporate laws. Good luck to him!

"It's completely unfair," he said, when referring to the equalisation of levies.

That's interesting. Is he saying that the judgements of the Specialist Adjudicators are wrong?

It is true that in some buildings the levy contributions have been challenged. Owners who purchased units on lower floors have found that they have had to pay significant increases while owners of penthouses have had their contributions slashed.

The reason for this is that the levy contributions in these complexes were often inequitable in the first place. Often, they were set by a Developer more through guesswork than any form of logic.

Frankly, I dont see that Mr Lawlor will have much success in changing the laws. The system needs to be based on logic not on the fact that some people would like to pay less than others simply because the market value of their apartments is lower.

Minister to act on unit laws

Regards to all



I have spent many years participating on a number of different Body Corporate Committees. I am a dealer in Vintage Movie Memorabilia specialising in original movie posters and movie art. http://www.moviemem.com/I also present a radio programme on Jazz Radio 94.1fm Monday - Friday afternoons on the Gold Coast.

Monday, April 13, 2009

Just sign on the dotted line…….

When Management Rights are purchased, the buyer usually enters into a contract referred to as a Caretaking and Letting agreement or something similar. In many cases the contract was originally drawn up by a Developer and passed on to the original Caretaker.

In an ideal world, the Body Corporate and the Caretaker will enter into a symbiotic relationship where both parties benefit from the terms and conditions of the contract. The Caretaker looks after the maintenance of the property for a fee and makes money from letting those apartments that are in the rental pool.

There are a number of variables that can affect this relationship that are too numerous, and probably too obvious, to mention here.

One of the basic fundamentals of these Contracts, or Agreements, is that they have a legally binding time frame ranging generally from 10 – 25 years depending on the Module of the CTS scheme and, to a certain extent, the whim of the Developer.

Many contracts in Queensland are now reaching their expiry dates. Bear in mind that Caretakers who own Management Rights consider that they have an asset that is usually worth a considerable amount of money. They naturally become concerned when they realise that the term of their contract is drawing closer to expiration.

If the contract is allowed to expire, the once valuable asset can become worthless. The obvious solution is to ask the Body Corporate to draw up a new contract with as long as possible time frames as they can get away with.

That is all fair and reasonable. There is nothing to stop the Caretakers from making a request to the Body Corporate.

The thing that I find amazing is that so many Bodies Corporate agree to a new contract with a lengthy time frame without getting anything in return.

Before you start to raise objections, I know that a Body Corporate cannot make a profit from a Caretaking and Letting agreement but the fact is that the Body Corporate has an asset. That asset is the ability to either accept or reject a new contract that could mean the difference between a Caretaker making a huge profit or losing their investment entirely.

So, if you cannot make money from allowing a new contract to be drawn up then why should the Body Corporate care whether a new contract is granted or not?

The fact is that the Body Corporate should be run like a business. Owners contribute levies towards the maintenance of the property. They are entitled to expect that their money is spent wisely.

Caretaking and Letting Agreements vary. There are usually aspects of the contract that a Body Corporate would not be comfortable with. Take one complex where there was no specific requirement for the Caretakers to keep the Office open during business hours.

The Body Corporate wanted the Caretakers to be more accessible to owners but the terms and conditions of the contract were always cited.

When Caretakers ask for a new contract to be provided to them they should expect that as an absolute minimum, the new contract will be revised to suit the Body Corporate. No revisions – no contract. If the Body Corporate wants the Office to be open from 9-5 on weekdays they can stipulate that in the contract. The Caretakers can either agree or have no contract.

There are some, including one fairly well known Gold Coast Solicitor, who seem to think that Bodies Corporate have some sort of moral responsibility to grant the Caretakers an entirely new contract, drawn up by their own solicitor, that will provide the Caretaker with a huge financial windfall. This view is not supported by common sense or even a modicum of business acumen. It is quite simply a deceitful ploy to profit through the apathy of owners.

Bodies Corporate are often governed by apathy. Many owners simply agree to a new contract without considering the implications or benefits that could be gained by negotiation.

I understand that there is a group who have initiated a “Say No” campaign to encourage owners not to agree to a new contract. Owners would certainly be well advised to "say no" until they have all carefully considered the implications of signing a new contract and probably debated the subject at a formal meeting of the Body Corporate.

They should be mindful of the fact that they have an enormous amount of bargaining power. The Caretaker stands to make a small fortune from the decision of the Body Corporate.

It is incumbent on the Body Corporate to ensure that, if a new contract is signed, the owners will benefit. Why anyone would glibly sign sign a contract without getting something in return is beyond me. Remember that the benefit to the Body Corporate does not have to be financial. It can be simply a contract that suits the Body Corporate.

Bear in mind that there are alternatives to having a live in Caretaker who controls the maintenance of the building for the term of the Contract.

I’m sure I don’t need to tell you that there a great many Bodies Corporate who are dissatisfied with the level of service provided by the Caretaker. They are often bound by the terms of the Contract and The Act and, consequently, they are powerless to take any action. However when a contract comes close to expiration there is no obligation whatsoever on the Body Corporate to extend the Contract.

There are some recent cases where the Body Corporate has voted to grant the Caretakers a new contract. I am aware of one case in particular where one vote decided the outcome. The Caretakers were then able to sell the Management Rights for a significant amount of money and the Body Corporate were saddled with a new 25 year contract that was actually drawn up by the Caretakers’ solicitor with conditions that were very generous indeed to the owners of the new contract.

I believe that owners in this building have a case to lodge a dispute with the CCT but that is up to them and it is, ultimately, another story.

Let me say that there are certainly cases where it may be beneficial to the Body Corporate to grant a new contract. I won’t go into the potential benefits as they should be fairly obvious to any one who has lived in a CTS scheme, but the Body Corporate should, at least, ensure that a new contract is drawn up by their own solicitor with conditions that suit the Body Corporate.

Once again, if the Caretakers do not like the conditions then don’t agree to the contract. There are alternatives. The fact is that the Caretakers may well agree to just about anything because they have too much to lose. This should be the basis of the Body Corporate’s position when negotiating a new contract – common sense business practice.

Best regards to you all


I have spent many years participating on a number of different Body Corporate Committees. I am a dealer in Vintage Movie Memorabilia specialising in original movie posters and movie art. http://www.moviemem.com/I also present a radio programme on Jazz Radio 94.1fm Monday - Friday afternoons on the Gold Coast.

Sunday, April 5, 2009

Another Body Corporate Farce

One of the requirements of living in a Community Titles Scheme is that all owners are required to contribute to the maintenance and management of the building that they live in. The responsibilities vary depending on the type of complex but, basically, all owners have to pay a contribution levy on a regular basis.

Occasionally, an owner will fall behind with their levies. There are times when the Body Corporate has no alternative but to take legal action to recover the outstanding debt. That is where things get complicated.

Up until recently, the Body Corporate would add any legal costs and charges to the outstanding amount. They would then have a number of enforcement options open to them.

On 11th Feb 2009, the Commercial and Consumer Tribunal handed down an adjudication on the treatment of recovery costs associated with the collection of outstanding levies. Whilst the decision may be a fair interpretation of the Act and Law, the end result is that there is now massive confusion as to how to go about recovering a debt.

Perhaps the key phrase in this order was that "such recovery costs are the subject of a judgement in a court of competant jurisdiction."

Legal advisors, Body Corporate Managers and Committees are scratching their collective heads about how to interpret the decision. One legal advisor has suggested that the only way to fairly claim back recovery costs is to lodge a Dispute. Guess what! This process is so complex that a lawyer needs to compile the dispute thus creating a further cost.

Of course that is only one lawyers opinion. The fact is that we are in unchartered waters. Who knows what an Adjudicator might rule. Lodging a Dispute can be time consuming and costly and there is never a guarantee of success. Other Body Corporate Managers and Lawyers have other ideas about how recovery costs should be claimed.

The bottom line is a long drawn out process that will inevitably take up the time of committee members who are unpaid and who dont need the aggravation.

An important part of the ruling is that Body Corporate Managers should separate recovery costs from outstanding levies. This means a separate ledger will need to be kept. Many Body Corporate Managers are unclear about how to calculate outstanding levies. One Body Corporate Manager has had to enlist the aid of a lawyer to actually calculate the amount owing and, surprise, surprise there is a dispute about that.

A Body Corporate Manager recently told me that she has at least 30 cases of unpaid levies at the present time. There may well be hundreds more cases.

Another Body Corporate Manager has said that the ruling now means that owners can get away with not paying their levies. This may well be true because if Committees are not prepared to spend their own time and energy in pursuing the outstanding levies and legal costs then the debt will remain unpaid.

Bear in mind that Committee members are not paid. Many will decide that it is just not worth their time in wading through the legal minefield to collect outstanding levies.

This is another example of a system that is out of control.


I have spent many years participating on a number of different Body Corporate Committees. I am a dealer in Vintage Movie Memorabilia specialising in original movie posters and movie art. http://www.moviemem.com/I also present a radio programme on Jazz Radio 94.1fm Monday - Friday afternoons on the Gold Coast.

Queensland Body Corporate - A system out of control

In the last twenty years or so there has been an explosion of communal developments in Queensland. These include gated communities, high rise unit complexes, townhouse developments and various other complexes where owners coexist in an environment that is managed by a Body Corporate.

The Body Corporate is usually controlled by owners and is intended to ensure that the common property is maintained, a set of by laws are in place and finances are managed.

So far, so good. The problem with all of this is that each Body Corporate is governed by a complex set of rules and regulations known as the BCCM Act.

Many owners who make the courageous decision to become involved in Committees find themselves embroiled in the tangled web of The Act that can make the smallest decision unnecessarily complicated.

Many Bodies Corporate find that they cannot survive without a Body Corporate Manager who provides a secretarial and accounting service to ensure that they comply with the regulations.

Others rountinely enlist the help of lawyers to unravel the complexities of The Act in dealing with disputes or contractual issues that plague Bodies Corporate.

Perhaps the greatest problem with the system is that the legislation is not properly enforced.

A Government department fronted by The Commissioner for Body Corporate hears and rules on disputes but no one actually polices the regulations unless a formal dispute has been lodged. The result is that many Bodies Corporate simply ignore the legislation usually through apathy and ignorance of the regulations.

Take the case of one complex of six units. Each owner shows no interest in the Body Corporate. They have no Body Corporate Manager. They do not hold meetings or keep records of any substance. One owner banks the levies and organises lawn mowing but little else is done.

This is all fine until something goes wrong. An insurance policy allowed to lapse, structural problems with the building, a dispute about use of the common property, etc etc can all result in a major problem for a Body Corporate who ignores the legislation and yet many Bodies Corporate meander along like an accident waiting to happen.

Other Bodies Corporate, with owners who take more interest in ensuring that their building functions within the law, struggle to cope with the endless amount of work that can result from simply looking after the best interests of the owners.

In many cases, developers install Caretakers into complexes with lengthy contracts to maintain the property. However there are little or no checks and balances as to whether the Caretakers have the ability, experience or desire to actually fulfill their obligations. If Bodies Corporate are not satisfied with the performance of the Caretakers they have to jump through hoops to resolve the issues due to the complexities of The Act.

As is so often the case, the Body Corporate Managers and the Lawyers thrive on all of this, lining their pockets as The Act becomes more complex.

In the coming months I will be highlighting some of the major issues that confront Bodies Corporate, including some Adjudications that can make living in a Community Title Scheme with a Body Corporate a nightmare and threaten to destroy a lifelong investment.

Watch this space


I have spent many years participating on a number of different Body Corporate Committees. I am a dealer in Vintage Movie Memorabilia specialising in original movie posters and movie art. http://www.moviemem.com/I also present a radio programme on Jazz Radio 94.1fm Monday - Friday afternoons on the Gold Coast.