Firstly, we have many integrations.  Lot owner ledgers and body corporate accounts are reconciled automatically every day.  Our phone system alerts us automatically to the caller’s name when a committee member makes contact.  Our reminder system generates scheduled alert emails to the committee nominee when periodic tasks need deciding and actioning by the committee.  Our automatic email and SMS reminders ensures lot owners do not get stung with arrears fees.  Our internal reminder systems ensure we don’t miss important dates in the calendar of your body corporate.  Our bespoke management software enables us to send through year end financials within three business days of the end of your financial year.

Secondly, our contracts are designed to be largely inclusive.  We don’t spend our time tracking our activities and invoicing a body corporate for every minute of the day.  Our approach is based on our contract which includes all small time bound tasks.  If it is a long task, the committee nominee will be advised and the committee will have the option of completing the task themselves, or alternatively we will timesheet and invoice for the task. No surprises, no bill shock.

Lastly, we think outside the box.  Using our specialist software, that’s how we can offer a DIY or bookkeeping or full service offering unlike any other body corporate manager business in Queensland.  Whilst other managers will take two weeks to organise their records should you not renew a contract, our efficiency enables us to readily handover all records within one business day of our contract ending with you (a very rare occurrence) subject to new banking details having been advised.

Our system automatically issues an email and or TXT warning of an overdue payment every month.  There is no charge for this.  Additionally, the email is sent after the due date for the levy but before any penalty fees are applied (which is legislated as one month after the due date).  A lot owner who then pays in full before the penalty fee date will have not been hit with any additional payments.  Happy days!

Contrast this with a typical body corporate manager approach.  The notice is often issued only after the penalty fee date so usually they must pay both the penalty amount (2.5% of the outstanding levy) and an arrears notice fee (typically $39).  Usually, there can be confusion and the lot owner pays one of the amounts but not both or not quickly enough and a second penalty kicks in which spirals into additional arrears notice fees being issued.  Outcome – lot owner very unhappy – but a very happy body corporate manager who is earning arrears notice fee revenue for what many would consider an automated task.

In the past, when technology was limited to post, we could reasonably believe that the fee charged by a body corporate manager was appropriate and reflected the effort involved. However, with the advent of email, txt and automation – we believe that the body corporate manager effort is much reduced (and probably no effort is required at all).

In our business, we do not charge fees for issuing late notices to lot owners. Every month, our system automatically emails and/or txts any lot owner who is in arrears. If necessary, the system will automatically post – however this is very unusual given that most lot owners have email. The constant reminder works and the lot owner does not get upset by the imposition of additional lot ledger fees. We track any lot owner who has debt that approaches two years in age. However, we are yet to have any lot owner get to that point where debt recovery action is needed. When that point is reached, the committee is contacted so that they can decide the next action.

If you like our approach, please consider moving your business to us. Read about all our alteratives here.

One of the interesting presentations was given by Macquarie Bank. Macquarie bank are a substantial provider of banking services to the strata industry through their DEFT levy system. They are well placed to advise the body corporate management industry in Queensland of how we are tracking. Here are a few of their insights which they derived after conducting their yearly survey of the industry.

The average revenue per lot received by a body corporate manager in Queensland in 2022 was $449 (This is inclusive of insurance commissions). Only 6% of body corporate businesses in Queensland offer an inclusive fee service (we are one of them). The majority of body corporate businesses sell their services on a base fee (on average $240 per lot in Queensland) and then generate substantial additional revenue through disbursements and tasks that are not an inclusion of their body corporate management contract. Without analysis, lot owners may often vote for what appears to be the ‘cheapest quote’.

Feedback from our body corporate clients suggests that it can be difficult to control, identify and/or comprehend the additional invoices that a body corporate manager charges a body corporate. Our clients like our mostly inclusive flat fee approach and the knowledge that when we are about to undertake additional fee-for-service work they will have been told before we start those tasks. Have a look at this example of a body corporate manager that charges on a base fee basis.

Some body corporate managers will try to recover their effort expended at setup, by charging a fee when a client leaves. The amount of effort required from a body corporate manager at time of exit is considerably less than when the client was setup. Some body corporate manager contracts explicitly state exit fees if and when a client leaves. However, this can again lead to being compared as being uncompetitive and in many cases no exit fee is stated in a contract.

So, it can be a surprise to see substantial charges by a body corporate manager around termination time when the committee collects their financial records. If no exit fee has been stated in the contract, the body corporate manager will have difficulty justifying the expense. The tasks that must be completed by the body corporate manager at handover are prescribed by the Act. They are not additional duties that the body corporate has engaged them to perform. Consequently, there should be no additional charges at handover.

A committee will often choose to ‘let it go’ as they have had other issues with the prior body corporate manager and further effort to engage with them can be frustrating. It is also not the job of the new body corporate manager to pursue this issue (or at least not without being remunerated). If their is willingness on the committee, we can recommend writing to the former body corporate manager a letter similar to this attachment. You may find that the body corporate manager will remit your monies. However, if they do not, you will need to lodge an adjudication application with the BCCM commissioner. The exact process is beyond the scope of this post.

Tracsafe charges no exit fee and does not extract unjust expenses at handover when one of our client leave.

At one extreme is a duplex that is under body corporate administration by a body corporate manager. In a recent example, the total annual levies were $2,800 per lot owner. $5,600 for both lots together per annum. Buyers often baulk at proceeding when they uncover significant future recurring outlays such as these. In our case, the buyer was advised by the real estate agent – ‘Don’t worry, the government is getting rid of bodies corporate’. There is a very small grain of truth in what the agent said. Back in 2012, the government legislated to enact a new regulation specifically designed for duplex lots that form part of a body corporate. If the duplex takes action to be regulated by the new regulation, a ‘set and mostly forget’ administration regime can be implemented. Under such an arrangement, the need for a body corporate manager is significantly diminished and consequently so are the outlays. (It is rare that a body corporate manager advises lot owners to convert to the new regulation and to dispense with their services.)

The good news for the seller in this story is that, from a conveyancing perspective, there should be no issues in transacting this lot because all body corporate records are available and up todate. The bad news for the seller is the potential lack of buyers! The bad news for the new owner is that the high levies are unlikely to diminish without some significant action by the lot owners acting together.

In our second example, a buyer entered into a contract unaware that the lot they were buying was part of a body corporate. An astute real estate agent should not allow that to occur since a body corporate disclosure statement is required to be signed by the buyer before the real estate agent permits a contract to be signed by a buyer.

Even if the disclosure statement was prepared, the real estate agent is likely to have advised the buyer that the lot owners in the duplex have ‘got rid’ of their body corporate. The more likely reality is that the high compliance legislative requirement for the body corporate is in place but the lot owners are simply ignoring their obligations and going about their business as if they were on a freehold block of land. Both the real estate agent and the conveyancing lawyers largely maintain the fiction in order to transact the lot.

In cases like these, the good news for the seller is that buyers are not dismotivated from buying the lot. The bad news for the seller is that the conveyancing process can come unstuck and the contract aborted or significantly delayed once a buyer uncovers the inconvenient truth about the body corporate. The bad news for the new lot owner is that body corporate issues can arise after settlement … for which they are uninformed.

Tracsafe can help in most situations. We can readily convert a duplex to the low compliance duplex regulation. We recommend that sellers talk to us before putting their duplex on the market. Real estate agents are encouraged to call us, we can often complete a conversion very quickly depending upon the situation. Conveyancers, please make contact when your transaction gets stuck – we can usually help.

Unfortunately, not all body corporate managers advise the total cost of their service when they give quotes. Very often, a body corporate manager will advise a fixed fee component to their quote but not correctly state the variable fee quote component. On a prima facie analysis, lot owners may vote for a body corporate manager that seems to be the cheapest according to the texts of the submitted motions.

Quotes of this nature are deceptive. The Act requires body corporate managers to follow a code of conduct that includes not engaging in fraudulent or misleading conduct. What should a committee do ?

One suggestion is that all lot owners are requested to resubmit motions that includes the expected total yearly fee of the proposed body corporate manager. However, this may still not get the desired result even if the lot owners agreed to do so.

We suggest that the better way is for the Committee to prepare a one-page summary that forms part of the AGM Notice that provides a true total comparison price for each body corporate manager based on their contract, pricing and the known history of the body corporate. The Committee can then form and express an opinion that voters may choose to follow.

A last option is that the Chairperson, at the AGM, could rule a motion ‘out of order’ on the basis of being misleading conduct by a body corporate manager. However, this would be a long bow to draw and if you read this adjudication, it would not be an option that we would recommend.

The committee requested final financial documentation (as required by the Act) to be sent through prior to handover.  The request was ignored.  The committee wanted to collect their documentation on the day after the documentation was to be ready for handover from the manager.  Imagine their surprise to learn that this would incur a $40 cash only holding fee for collecting the documentation on the day after handover and then an additional $40 for every day after that.

Fortunately, not all body corporate managers are like this example.  Should a client ever leave our business, they will get the same courteous, honest service as they leave just as they received when they came to our company.  No financial surprises and no tricks.  If you want to terminate your body corporate manager contract, follow the step by step guide that we have written on how to replace your body corporate manager.

We do not have exit fees in our contracts, nor do we think that they are appropriate.  The work required to finalise a Body Corporate is very simple since most Body Corporate Managers use computer programs that keep all records up to date.  Finalising a Body Corporate can be completed in a couple of clicks of a mouse.

In truth, the biggest expense for a Body Corporate Manager is when a new client is onboarded.  Everybody wants a new client!  It can be very time consuming to recreate all the client’s records in a new system.  Matters are worsened when trying to recreate lot ledger balances when penalties, discounts and lot expenses are in play.  When transferring from another Body Corporate Manager, sadly the records are often passed over in a paper imaged format.  Unnecessary data entry is then required when the records could have been passed over in a simple spreadsheet format.

In order to win business, most Body Corporate Managers do not charge an entry fee when a new client is onboarded.  When they leave, some Body Corporate Managers try to make up for that with exit fees.

Tracsafe charges no entry or exit fees for our full service clients.

It is the experience of many schemes where lots are rented, particularly in the tourist areas, that tenants are prone to losing keys which provides access to the building and unit.  For this reason, most bodies corporate in buildings where a large number of lots are let charge a standard fee for providing replacement or additional keys.

This practice makes sense where the key has a function providing access to a common entry door.  The Body Corporate needs to control the copying of the key and if necessary the storage and integrity of the master key that is used to make the copy.

However, where the key is unique to the lot and has no other function, it does not make practical sense.  In these cases, the lot owner will usually have the authority to have the key copied.

In our case, the key only gave access to the lot.  Additionally, in this complex, the lot key can only be copied by the manufacturer.  A local locksmith places an order (referencing the number found on the key head) and the key is cut after the name and signature is found to match the manufacturer’s records.  In cases where there is no match, the lot owner will need to provide proof of ownership such as a rates notice.