How to replace a Body Corporate Manager

How to replace our Body Corporate Manager (BCM)

In Queensland, follow these steps to replace your Body Corporate Manager.  It does not involve much effort to make a change!

Get a copy of the current Body Corporate Manager contract

If you are a Committee member, simply ask the Body Corporate Manager for a copy of the existing Body Corporate Manager contract.  If you are not on the Committee, you will probably need to ask a committee member for a copy of the contract (If there is no contract, then this is a good indicator that you should change Managers!).

Review the contract

Review the existing contract and make sure you understand the inclusions and exclusions of the current contract and how you might want this to be different with a new Body Corporate Manager.

Decide on timing

An AGM is the best time to replace your Body Corporate Manager because the Manager’s contract term will often need to be renewed at this time.  Some Body Corporate Managers charge an exit fee on contract termination, so be careful that the impact of any fee is fully understood.  If your Body Corporate is regulated by the ‘Small Schemes’ module, the contract must be renewed every year.  Under the standard module, (always applicable when there are more than 6 lots), the contract may be for up to 3 years.  You may be able to terminate the contract early if there is mutual agreement or the terms of the contract permit early termination.  An ordinary resolution authorising the termination will also need to be passed at a general meeting such as an AGM.  (Holding an EGM is beyond the scope of this discussion).

Get alternate quotations

Seek quotes from alternate Body Corporate Managers.  They can easily be found through an Internet search or the phone book.  Seek recommendations of good managers from your friends and colleagues.  You will need to get the contract terms sent to you along with any quotation.

Review quotations

Decide which Body Corporate Managers are on your short list based on the functions included in their contract.

Compare total cost of contract

Compare the total 1 year cost of the Body Corporate Managers.  It is essential that an ‘apples’ for ‘apples’ comparison be made.  To do this, a comparison of the Manager’s fixed fee plus the Manager’s variable fee needs to be completed.  It is also important to include costs which are impacted by the way that the Body Corporate Manager operates.  The obvious items are –

  • Printing, posting, email, phone and other communication charges
  • Administration fees.
  • Processing fees.
  • Disbursement charges.
  • Management fees.
  • Exit fees.

However, very often the Body Corporate Manager is in control of other items.  Indirect items that should be considered are –

  • Bank charges.
  • Software fees.
  • Meeting expenses.
  • Fees, permits, reports.
  • Income Tax and accountancy fees.

Review a case study of a Body Corporate we recently started managing

Select a preferred Body Corporate Manager

Based on your analysis, select a Body Corporate Manager to propose at the AGM.  Create a motion for submission at your AGM and request the Body Corporate Manager to include the motion on the Agenda.  The request to the Body Corporate Manager must be made before the AGM collateral is sent out to the lot owners.  If you are acting as a committee, you should pass a committee motion recommending the new Body Corporate Manager contract be submitted to the AGM meeting.  The existing Body Corporate Manager must not put themselves as a contender on the agenda.  Only the committee or a lot owner can propose motions.  Here is a sample motion to submit –

that XYZ be appointed as the Body Corporate Manager until the next Annual General Meeting for a service fee (fixed component) of $XXX (inc GST) and shall deliver services in accordance with the Administration agreement tabled at this meeting.

Budgets

The existing Body Corporate Manager will have assisted the committee to propose a new budget and levies for the new financial year.  It is usually best to not propose an alternative set of budget and levies since the appointment of a new Body Corporate Manager is not guaranteed.

Attend the AGM

At the AGM, the motion regarding the Body Corporate Manager will be decided.  If multiple Managers have been proposed, then the motion will be a motion with alternatives.  If the greatest number of votes is given to multiple Managers, then the selected Manager must be determined by ‘chance’ (eg. coin toss).  If a new Body Corporate Manager is selected, make sure that the AGM meeting completes all other business on the agenda.

Advise the new Body Corporate Manager

The committee should advise the new Body Corporate Manager of their appointment and provide details of the existing Body Corporate Manager.

New Body Corporate Manager task – pre handover

The new Body Corporate Manager will make contact with the existing Body Corporate Manager so that they can be contacted as soon as the records are finalised.  It is very difficult for the new Body Corporate Manager to act in that capacity until the handover is completed.

Retiring Body Corporate Manager – pre handover

The retiring Body Corporate Manager needs to tidy up all the records for handover.  Under the legislation, a period of 30 days is permitted.  The important tasks at this time are for the AGM minutes to be completed and distributed (within 21 days of the AGM); the financial records must be completed up until the day of handover to the new Body Corporate Manager; the Body Corporate bank account closed and a cheque made payable to the Body Corporate be provided upon handover to the new Body Corporate Manager.

Handover

The new Body Corporate Manager is usually responsible for the collection of the records and collateral of the Body Corporate from the retiring Body Corporate Manager.

Post handover

The new Body Corporate Manager will establish the records in their management systems, complete the opening of a bank account and deposit the monies of the Body Corporate into the new account.  A committee meeting is usually needed to create authorisations for the new Body Corporate Manager to complete administration tasks such as – signing and sealing Information certificates; operating the bank account; etc.  Letters of introduction are sent to all lot owners and the changeover can be considered complete.

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