Replace your body corporate manager – switch now!

Replace your body corporate manager (BCM)

In Queensland, follow these steps to replace your body corporate manager.  Making the change is pretty easy!

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.  BCCM legislation states that the committee does not pay for documentation.  Not on the committee?  Ask a committee member for a copy of the contract.  Still not found?  Look at old AGM notices, you should also be able to find it there.  Otherwise, if you ask the body corporate manager and you are not on the committee, they might require you to pay for the document (currently 65c per page).

No contract exists?  This is a good indicator that you should change managers.  The legislation mandates that there must be a body corporate manager contract.

Review the existing body corporate manager contract term

Review the existing contract and check that the contract term is valid.  Schemes regulated by the small schemes module are limited to a one year contract.  Other scheme regulations (standard, commercial, accomodation) permit three year contracts.  Your scheme’s regulation is stated on your community management statement.

Do not put up with any nonsense from a body corporate manager if you advise them that their contract is invalid because of an incorrect contract term.  If you are unsure, double check with the BCCM Commissioner’s help line.  Advise the body corporate manager that you have already consulted the BCCM commissioner’s office.  You may be able to terminate the contract early if there is mutual agreement or the terms of the contract permit early termination.  Authorising the termination will also need to be passed at a general meeting (AGM or EGM) if the contract has not ended naturally.

Decide on timing to replace your body corporate manager

An AGM is the best time to replace your body corporate manager.  Manager’s contract are often set to expire around the time of an AGM.  A second reason to replace your body corporate manager at this time is that there must be a motion at a general meeting to appoint a new body corporate manager.  Some body corporate managers charge an exit fee on contract termination (check their contract).  Be careful that the impact of any fee is fully understood.

Get alternate quotations

Seek quotes from alternate body corporate managers.  Find potential managers through an internet search.  Get recommendations of good managers from your friends and colleagues.  Do not restrict yourself to locally based body corporate managers.  The only reason for selection of a local manager is when you want to use their offices for meetings.

You must get the body corporate manager contract terms sent to you along with any quotation.  Check if the manager is a member of Queensland’s professional body corporate manager association (SCAQ).  Use their search utility to find alternate body corporate managers who are SCAQ members.  If you later have an issue after you replace your body corporate manager, you will have recourse to the complaints process of the SCAQ provided that they are a SCAQ member.

Review quotations

Decide which body corporate managers are on your short list.  Make decisions based on the inclusions and the anticipated additional services included in their contract.  This is also the time to negotiate the contract terms with your preferred manager.  For example, we suggest some items to think about might be –

  • Removal of any exit fee clauses.
  • Contract pricing that is inclusive of all disbursements.
  • Restating the total cost inclusive of GST if specified exclusive of GST.
  • Modifing the termination clause to permit either party to terminate with 30 days notice.

A manager unwilling to negotiate a fair contract is probably an indication that they should not be on your short list.  There is also recourse under consumer law to unfair contracts.  You can read about the new law on one of our posts.

Compare total cost of contract

Compare the total one year cost of the body corporate manager contracts on your short list.  It is important that an ‘apples for apples’ comparison be made if price will be an important decision factor for selecting your preferred manager.  To do this, complete a comparison including the manager’s fixed fee plus all the relevant variable fees.  Make sure 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.  It can be a shock to find that after you replace your body corporate manager, your total body corporate manager costs did not go in the direction you expected.  Indirect items to consider 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.  The process to follow to replace your body corporate manager differs depending upon whether you are acting as a lot owner or acting as the committee.

AGM motion process to replace your body corporate manager when acting as a lot owner

As a lot owner, create a lot owner motion for submission at your AGM and request the body corporate manager to include the motion on the agenda.  If regulated by the ‘small schemes’ module, the request to the body corporate manager (acting as the secretary) must be made before the AGM collateral is sent out to the lot owners.  In other cases, the request must be received before the end of the financial year of the body corporate in order to get on the AGM papers.  Normally, other than ‘small schemes’, you should receive communication from the body corporate requesting any lot owner motion input about three weeks before the end of the financial year.

AGM motion process to replace your body corporate manager when acting as a committee

Pass a committee motion recommending the new body corporate manager contract be submitted to the AGM meeting.  Resolve a second motion that the existing body corporate manager not be proposed at the AGM.  The committee can do this at any time up until the AGM documentation is sent out.  The existing body corporate manager must not put themselves as a contender on the agenda unless the committee consents.  AGM documentation should only be sent out by the body corporate manager after the committee has given consent to the documentation.

Your committee does not need to advise the body corporate manager of their committee meeting.  A committee meeting and minute will be valid when these conditions are met –

  • Call the committee meeting with sufficient notice and in accordance with legislation.
  • Form a quorum at the committee meeting.
  • Create minutes in accordance with the legislation.
  • Distribute minutes to all lot owners.

This is easy when regulated by the ‘small schemes’ regulation since lot owners do not have to be given notice of meeting.  It is more difficult for other regulation modules.  All lot owners must be given notice of the meeting.   Lot owners have the right to attend the committee meeting.

AGM motion wording to nominate a body corporate manager

In either case, here is a sample motion to submit for AGM consideration –
that XYZ be appointed as the body corporate manager until the next anual 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 and levies

Did the existing body corporate manager assist the committee to propose budgets and levies for the new financial year?  Take a softly, softly approach.  Appointing a new body corporate manager is never guaranteed until the votes are in.  Revise budgets and levies in the following financial year after you replace your body corporate manager.

Attend the AGM

At the AGM, the motion regarding the body corporate manager will be decided.  When multiple managers have been proposed, then the motion will be a motion with alternatives.  Should the greatest number of votes be won by multiple managers, then the selected manager will be determined by ‘chance’ (eg. coin toss).  Complete all other business on the AGM agenda including the committee election.  Sometimes a meeting can end abruptly when the incumbent body corporate manager is not selected and they are present at the meeting.

Advise the new body corporate manager

The committee advises the new body corporate manager of their appointment.   Give them the contact details of the existing body corporate manager.

New body corporate manager task – pre handover

The new body corporate manager contacts the existing body corporate manager to learn the record finalisation date.  It is very difficult for the new body corporate manager to give effect to their appointment until the handover is completed.

Retiring body corporate manager task – pre handover

Before handover, the retiring body corporate manager tidies up all the records.  Under the legislation, a period of 30 days is permitted.  The important tasks at this time are –

  • Create the AGM minutes.
  • Distribute the AGM minutes.
  • Generate financial handover documents.
  • Close the bank account.
  • Obtain a bank cheque made out to the body corporate.

Unhelpful managers may not complete all of these actions.

Handover

The new body corporate manager is usually responsible for the collection of the records and documentation of the body corporate from the retiring body corporate manager.  A USB stick is usually provided with all the electronic records.  Paper records from days gone past can also be expected.

Post handover

After handover, the new body corporate manager establishes the records in their management systems.  They open a bank account and deposit the monies of the body corporate into the new account.  A committee meeting may need to empower the body corporate manager to –

  • Open and operate the bank account.
  • Sign and seal information certificates.
  • Appoint the body corporate manager as the Public Officer.
  • Update the address for service of the body corporate with the Titles Office.

Letters of introduction are sent to all lot owners and the changeover can be considered complete.

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