New Ways for Body Corporate Managers to make money

Body Corporate Managers are always looking for new ways to make money. In recent years many have started offering additional services to clients but there is growing concern that the promotion of some of these services may constitute a conflict of interest.

In an ideal world, Bodies Corporate should take steps to ensure that they are compliant with all legislation and general rules and regulations. Some Body Corporate Managers have seized the opportunity to exploit this and make money.

The way it works is quite simple. They point out to Committees that  that the Body Corporate needs to get reports on various areas of compliance. They often give veiled threats of potential liability or Committee responsibilities if the reports are not obtained.

They then recommend their own in house services to provide the reports which can include things like:

• Sinking Fund Forecasts
• Workplace Health and Safety Reports
• Fire Risk assessment reports
• Asbestos reports
• Insurance assessments

and many more.

They don't stop there. They also provide services to "assist" owners with Dispute resolution, Levy Equalisation claims and one BC Manager even has a separate department that completes insurance claims at an additional cost of course.

There are often times when BC Managers do everything they can to promote these offshoot services in an attempt to generate more income for themselves. However, the problem that I have with all of this is that I don't see them always offering alternatives.

In one case, the Chairman of a Body Corporate was convinced that he needed to get three reports done urgently on Fire Safety, Workplace Health and Safety and an Asbestos assessment. He was pressured into thinking that he might even be liable if the reports were not done.

The Body Corporate Manager then proceeded to convince him that he should use the services of companies that were subsidiaries of the BC Manager. No alternatives were offerred.

When the reports were completed, they highlighted various issues that needed to be addressed and they offerred yet more "in house" services to rectify the faults.

It is inevitable that Body Corporate Managers will be creative in developing other services for their clients but they need to be very careful indeed to offer alternatives rather than try and convince Committees to go with their own offshoot companies.

An example of the potential problems that can occurr was highlighted in the comments of a QCAT adjudication  .....

“The adoption of the practice of body corporate managers purporting to act both as “experts” and “representatives” in the same case is not one which should be encouraged.”
This case referred to a claim to equalise the levies. The Body Corporate Manager offerred the services of one of their own consultants to represent the Body Corporate.

There is nothing wrong with Body Corporate Managers developing their business and providing additional services to their clients providing that they act ethically and offer alternatives to Committees.
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The opinions expressed in this article are personal commentaries and not intended in to be legal advice in any way. I have spent many years participating on a number of different Body Corporate Committees and provide an owner’s perspective on Body Corporate issues.
If you have any concerns or comments about any of the issues that are raised in these articles please use the form below to contact me.

Holiday letting - another nail in the coffin

Many investors have been finding that the return from holiday letting their apartments does not match the return that they would achieve from long term rentals.

Whilst there are times when the returns for holiday rentals are high eg Christmas and holiday periods, the net return over a full year is often a disappointment to owners. Fees and charges associated with holiday letting are high and the upcoming hike in electricity charges will be the final straw for many investors.

Owners who use holiday letting pay for all electricity charges. However, if they rent their apartments out with a long term lease, the tenants pay for the electricity.

Electricity providers are writing to owners advising of the increases in charges. One such provider clearly blames "the impact of the Federal Government's carbon price" as one of the factors influencing the increases.

Astute owners will be doing their sums and many will be making the decision to take their units out of the holiday pool and rent them out on a long term basis. This will be a huge blow to Caretakers who rely on holiday lettings in Body Corporate Communities.

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The opinions expressed in this blog are personal and not intended in to be advice in any way. I have spent many years participating on a number of different Body Corporate Committees. I am the owner of http://www.moviemem.com/

Access to BC records for all owners? Not necessarily.

As a general principle owners should be able to expect to have access to BC records after paying a prescribed fee. However, recent rulings by Adjudicators indicate that it is not that simple. If a BC believes that certain records are subject to "legal privilege" then they have the right to refuse access to any owner who may be involved in either actual or threatened legal action against the BC or presumably anyone who claims to be affected by the records.

There are times when it might be prudent to withhold certain documents from an owner on the basis of legal privilege but anyone with an ounce of imagination should be able to see how this ruling could be abused.

It would be very easy for a Committee to deny access to records based on "legal privilege". The owner would then have to decide whether to lodge a dispute. If the records were needed urgently, the process of waiting for the dispute to be heard could prove costly for the owner.

An Adjudicator recently ruled that a dispute with QCAT constitutes legal action. Presumably any dispute that has been initiated or implied also comes under the banner of "legal privilege".

There are other considerations that could lead to abuse of this process. Who decides whether records are subject to legal privilege or not? What if the person who is actually seeking the records is the Chairman, Secretary or another Committee member?

There have been disputes between the BC and the BC Manager in the past. The BC Manager is the custodian of the records. What would happen if the BC decided that the BC Manager could not access records because of legal privilege?

I feel that all BC records should be available for access by owners irrespective of any implied or actual legal privilege.

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The opinions expressed in this blog are personal and not intended in to be advice in any way. I have spent many years participating on a number of different Body Corporate Committees.

No Smoking on Balconies for Unit Owners - coming soon!

Proposed changes to NSW strata laws could result in legislation to ban unit owners from smoking on their balconies.
Smoking Ban on balconies for unit owners


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The opinions expressed in this blog are personal and not intended in to be advice in any way. I have spent many years participating on a number of different Body Corporate Committees.

Commisioner for Body Corporate & BCCM Act. Irrelevant to BC Communities?

The Commissioner for Body Corporate and Community Management Queensland and The BCCM Act are rapidly becoming irrelevant to Body Corporate Communities.

The reality is that many Bodies Corporate ignore the regulations often through lack of knowledge of the legislation but occasionally through indifference. When owners raise concerns they often find that the process of lodging disputes is too cumbersome and costly and in many cases they are forced to accept that their Body Corporate operates by its own rules.

The function of the Commissioner is largely to hear and adjudicate on disputes that are lodged. I have always found it strange that the only way that the legislation might be enforced if a dispute is lodged.

I know of Bodies Corporate who do not hold AGM's. I know of others who don't keep proper records and do not communicate with owners. However, the only way that a Body Corporate would ever be accountable would be if someone lodged a dispute. In many cases, the BC know that there is little possibility of a dispute even if they knowingly ignore the legislation.

The fact is that many owners are intimidated by the entire process and The Commissioner has done little to help make the process user friendly. I think it is fair to say that the process is designed to generally discourage owners from lodging disputes in the hope that they will sort out problems "in house".

In the recent adjudication of Dispute Number 0010-2012 Palm Springs Residences, the Adjudicator made two interpretations of the Act that only accentuate the fact that the Act is becoming irrelevant.

1. The Adjudicator, M.A.Schmidt stated: "as a general proposition, a body corporate may validly resolve to ratify past irregular conduct".

This comment sets an  extraordinary precedent. Firstly there is no time limit specified by M.A.Schmidt so presumably, the comment which is part of the overall ruling allows a BC to come back and "ratify irregular conduct" any time after the event. The implications of how this could be manipulated and applied make a mockery of the Act.

M.A Schmidt goes on to say that there could be legal implications for the BC in doing this but they would be outside the jurisdiction of the Act and, once again, owners would find the process of taking legal action against a BC daunting.

2. The Adjudicator, M.A.Schmidt stated that the applicants did not "complain of any detriment suffered as a result of having received notification 7 days after when they thought they should have been notified". The implication is that if a Body Corporate does not comply with time limits in notification of meetings, etc anyone who lodges a dispute would have to show that they suffered a "detriment" or some form of hardship.

These "rulings" only continue to demonstrate why so many Body Corporate Communities ignore the Act. The likelihood of an owner lodging a dispute is small. If an owner does happen to decide that there is no alternative but to lodge a dispute the chances of having the application upheld are a lottery.

It is time that the BCCM Act and the Office of the Commissioner for Body Corporate and Community Management were completely overhauled by the Government.

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The opinions expressed in this blog are personal and not intended in to be advice in any way. I have spent many years participating on a number of different Body Corporate Committees.

Body Corporate Levy Equalisation Farce

On February 19th Peter Lawlor announced changes in the legislation so that "millionaire penthouse owners" would no longer be able to exploit a loophole to have their Body Corporate Levies slashed at the expense of smaller unit owners.

In recent years there have been a number of applications for equalisation of levies in Bodies Corporate based on the premise that the levies go towards the maintenance of the common property. As every owner has an equal share of common property the theory was that every owner should pay the same amount irrespective of the value of the unit.

The original calculation of levies set by the Developer is often based on the size of the unit and the floor level ie the units on higher floors usually pay higher levies.

I interviewed Peter Lawlor on my radio programme on Jazz Radio 94.1fm shortly after he made the announcement. He argues that owners should be able to rely on the levies that were set by the Developer and an owner of a penthouse should pay more than an owner of small ground floor apartments.

There are obviously good arguments on both sides but there are currently applications to equalise the levies before QCAT formerly CCT that have been left in the "too hard basket" for more than a year.

Since Peter Lawlor's announcement, QCAT has not communicated the progress of at least one application, presumably waiting for the legislation to go through. This is a farsical situation. One applicant has argued that a court can not and should not hold off making a legal decision because the legislation "might" change. He argues that the current law applies and that a ruling should be made on that basis.

Of course, others argue that it would be ridiculous for QCAT to rule on the current law only to have their ruling overturned months later when the legislation changes.

Either way, QCAT should communicate the current status to all owners who are embroiled in these expensive and ongoing applications.

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The opinions expressed in this blog are personal and not intended in to be advice in any way. 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.

Schoolies Ban!

Interesting to hear that the committee of Q1 in Surfers Paradise are looking at ways to prevent schoolies from staying in the states tallest highrise. The Courier Mail reports that up to 500 students may have already been booked for the week. Apparently, the committee at Q1 are investigating legal avenues and possible changes to the by laws to prevent schoolies from staying in their building.

Perhaps the committee at Q1 might take their cue from Palm Springs Residences who recently voted to restrict all letting to a minimum of 42 days in their building. No doubt this will be open to challenge but it is an example of how residents and holiday rentals do not always mix.

It will be interesting to see how the committee for Q1 deals with this situation.

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The opinions expressed in this blog are personal and not intended in to be advice in any way. 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.

Why would you holiday let your apartment?

A large resort complex is currently advertising a special on luxury one bedroom apartments with beach views, separate lounge and kitchen, spa, etc etc, for $115.00 per night - no minimum stay. The complex is obvioulsy managed with hefty Body Corporate levies to go towards maintaining the extensive grounds, pools, gyms, tennis courts, etc.

The units were sold as "investments" with a "guaranteed return" for a set time frame. If you do your calculations, $115.00 a night will not leave very much at all for the owner of the unit after deducting cleaning and linen fees (often at $80.00 per clean), management fees/commission, Body Corporate levies, rates, etc etc. By the time all that is taken into account there is no possible way an owner can make a viable return.

The managers of the complex argue that they have to compete with other resorts but all they really care about is having high occupancy.

Many owners have had to liquidate their investments for far less than their purchase price because they were misled into believing that the holiday rentals would cover their repayments.

Bottom line is that you should think very carefully about purchasing an apartment for holiday letting.
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The opinions expressed in this blog are personal and not intended in to be advice in any way. 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.

Illegal Parking or a free for all?

Bodies Corporate often have to deal with vehicles that have been illegally parked and they usually go through a combination of the following steps:

• notify the owner of the vehicle
• place a notice on the vehicle requesting that it be moved.
• give a further notice if the vehicle is not moved within a set time frame
• have the vehicle towed if it is not moved within a reasonable time frame

Well, it seems that a recent decision might prevent Bodies Corporate from taking these steps without:

• issuing a formal contravention notice
• obtaining an order from the commissioners office which might take months to receive

There has been a report that one Body Corporate was ordered to retrieve a car that had been towed away and pay expenses to the owner.

Many committees will feel that it is not worth the aggravation of going to the trouble of lodging applications to the commissioner and issuing contravention notices over a perceived illegally parked vehicle.

This is another example of how the system fails owners by being unnecessarily complicated.

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The opinions expressed in this blog are personal and not intended in to be advice in any way. 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

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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.