How to switch to DIY – Body Corporate Self Management in Queensland

QLD Self Managed Body Corporate – Make the switch

If your Body Corporate is already self managed, then a simple Committee resolution will generally be sufficient to authorise budgeted expenditure to purchase a DIY-BC software subscription.  This is because the price for buying DIY-BC will be less than the relevant limit for committee spending (currently $200 times the number of lots) unless you have a very large number of lots.  Additionally, we do not believe that our DIY-BC software subscription falls within the definition of a ‘Body Corporate Manager’ or ‘Service Contractor’ for which a resolution at a general meeting is required.

Body Corporate Manager Resolution

Switching away from the services of a Body Corporate Manager may require consideration at an AGM.  If your Body Corporate is subject to the ‘Standard Module’ then the term of engagement for a Body Corporate Manager may be up to 3 years.  If your Body Corporate is subject to the ‘Small Lot Module’, a term of engagement for 1 year maximum is permitted.  Switching is best considered as the contract term approaches expiry.

Normally, a Body Corporate must routinely pass an Ordinary resolution approving the engagement of a Body Corporate Manager.  A committee intending to switch to Self Managed does not need to have any engagement motions on the agenda for the AGM.  The engagement of the Body Corporate Manager will finish on the date as specified in the engagement contract.

Even if the committee intends to switch to Self Managed, an engagement resolution may exist on the agenda because any lot owner is able to submit motions for the AGM.  This can be defeated if sufficient lot owners are in favour of not reappointing the Body Corporate Manager.  Note that the incumbent Body Corporate Manager may not submit motions for the agenda, only the Committee and lot owners may submit motions.

Make sure that all lot owners are ‘paid up’ prior to the AGM, otherwise their vote will not count.

Budget Implications

Resolving to not have a Body Corporate Manager will impact your budget and associated instalments.  There are three ways that this can be approached.  The simplest option (and the one we recommend) is to approve the budget prepared by the existing Body Corporate Manager unchanged.  There will be sufficient budget expense items to cover the self administration costs and the budget can be readjusted in the following year.  Another option is to have an alternate budget prepared for the AGM based on the assumption that the Body Corporate will be self managed.  Lastly, a final option is for the new committee to wait until after the AGM and then prepare a new budget and hold an EGM to ratify the new budget and instalments.  In this final case, it would be necessary to vote down the AGM proposed budget and levies to remain strictly compliant with the Act.

When to act

As a lot owner, you may only submit motions for consideration if they are submitted to the Committee (Body Corporate Manager) on or before the end of the Body Corporate’s end of financial year.  After that, you can get the motion on the agenda by working through the lot owners who are the voting members of the Committee (probably as long the AGM collateral has not been issued).  The motion we recommend for submission to the AGM agenda is –

“that the Body Corporate administration contract with XYZ not be renewed and that the Committee self manage the affairs of the Body Corporate and that should this motion not be successful then the related set of motions (if they exist) dealing with budgets/levies for a self managed Body Corporate shall not be considered and must be withdrawn”

New Committee

Resolving to not have a Body Corporate Manager will require that the Committee take a more active role in the administration of the Body Corporate.  Prior to your AGM, make sure that all Committee positions are nominated by lot owners that are fully supportive of the DIY approach.  After the AGM, the Secretary should immediately discuss with the retiring Body Corporate Manager the process for handing over all the Body Corporate collateral and the completion of the minutes of the AGM.

Warning!

Sometimes at an AGM, when an Administration contract with a Body Corporate Manager is not renewed, the Body Corporate Manager closes the meeting early without concluding the business on the Agenda.  This is against common law principles – “where possible the chair should endeavour to secure a vote on a motion for adjournment”.  It should not be unilaterally closed.  It is a very selfish and destructive act since it places the Body Corporate in total ‘limbo’.

We strongly advise that the AGM continues to consider all items on the agenda and does not accept that the meeting is closed (without a vote).  If the Body Corporate Manager was chairing the meeting and elects to leave the meeting, the remaining participants should appoint a new chairman and continue.  The meeting participants should not feel compelled to leave the meeting room but if forced, they should first vote on adjourning to a time and place where it shall be reconvened.

Irrespective of whether the Body Corporate Manager leaves or stays, a lot owner should take minutes of the entire meeting.  It is very possible that the Body Corporate Manager may not subsequently create, and issue, minutes of this AGM.  Be prepared for non-performance even if a commitment to complete is secured.

Ready to change?

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