THINGS TO CONSIDER WHEN CHOOSING TO SELF-MANAGE

The rising cost of living within Queensland has lot owners questioning how far their wallets can stretch. Many of our clients have been calling and asking what is involved with self-management.

Bodies corporate are not required under the legislation to engage a body corporate manager to assist with administrative services. Instead, bodies corporate have the ability to self-manage. While this may save the body corporate some money, there are many key factors the body corporate should consider when making this decision.

Below, we outline important considerations for bodies corporate contemplating self-management.

While this article scratches at the surface of self-management, a body corporate should carefully consider what other factors might be at play if they choose to self-manage.

Back to basics

While this may not be directly related to the topic of self-management, a body corporate that is exploring the idea of self-management would benefit from encouraging committee members and lot owners to complete the online training provided by our office.

This training offers a foundational understanding of body corporate and community management legislation. It covers essential aspects of the legislation relevant to many bodies corporate in Queensland.

Along with this, we strongly encourage lot owners to understand what regulation module and format plan applies to their body corporate.

The regulation module applying to a scheme lays out specific rules and procedures required of the body corporate. The format plan dictates the insurance that is required and maintenance responsibilities among other things.

Records

Most people who own in a community titles scheme are probably already aware, a body corporate must keep certain records, and make them readily available for inspection or provide copies to interested persons.

While the legislation does not provide the specific location as to where these records must be kept, if a body corporate was to choose to self-manage, someone needs to be prepared to store physical and digital copies of records.

As mentioned above, there are also legislative requirements to provide copies of these records when requested. Ensuring accurate records are kept allows for the smooth distribution of these records when required.

Many disputes handled by our office relate to the mismanagement of body corporate records, including bodies corporate refusing access to documents, or by simply not keeping up to date and accurate records.

A body corporate considering self-management must understand the importance of record keeping and the obligations under the legislation.

Insurance

This is a topic that hits close to home for many Queenslanders, regardless of living within a body corporate or not. With rising insurance premiums and some companies unable to offer coverage due to various factors, a body corporate has specific insurance obligations that must be met.

A body corporate must have public risk insurance for the common property and the body corporate assets that it is practical to have this insurance for, such as gym equipment. A body corporate must also insure the common property and body corporate assets for their full replacement value.

The body corporate must insure, for full replacement value, the following buildings, if lots included in the scheme are created:

• under a building format plan of subdivision or volumetric format plan of subdivision – each building that contains an owner’s lot (e.g. a unit or apartment); or
• under a standard format plan of subdivision if each building on a lot has a common wall with a building on an adjoining lot.

The owner is responsible for insuring buildings that do not share a common wall if the scheme is registered under a standard format plan of subdivision, unless the body corporate has set up a voluntary insurance scheme and the owner has opted-in.

A body corporate considering self-management should be aware of their format plan and the associated insurance requirements.

Understanding how to resolve body corporate disputes

When engaged with a committee, a body corporate manager has no decision-making powers, but they generally have a deep understanding of self-resolution requirements and the processes to resolve disputes, such as by-law contraventions.

If a body corporate chooses to self-manage, lot owners and committee members should ensure they understand the processes to resolve disputes within their body corporate and how they may be able to address this through our office.

Issue 42 of Common Ground does a deep dive into the dispute resolution processes.

Sharing of duties

While your body corporate committee may be happy to self-manage, they can also choose to engage businesses to complete tasks that may be out of their skillset. There is nothing preventing a body corporate from self-managing while engaging an accountant to handle their financials or engaging an insurance broker to assist in obtaining the required insurance for the scheme.

Committee members are volunteers and may not possess all the skills required for every task. Outsourcing certain responsibilities can help ensure that tasks are completed effectively and correctly, provided they are approved by the body corporate.

Understanding requirements for meetings and decision making

Effective meeting processes are crucial for the smooth day-to-day running of a body corporate. Our office has provided information on this topic in prior issues of Common Ground. However, its importance outweighs our repetitiveness.

A body corporate must ensure they follow correct processes within the legislation when making decisions. Not following these processes, especially if an applicant can demonstrate a difference in the outcome, could result in the decisions being ruled invalid through our office.

While some committee members may think that it is okay to skip sending out notices of committee meetings or to have 10 days’ notice for a general meeting instead of the required 21, this does not change the requirements under the legislation and leaves decisions open to be challenged.

You may wish to refer to issues 45 and 46 of Common Ground, which discuss body corporate decisions and the processes for committee meetings.

Further information

The choice to self-manage a body corporate can be a tough one. It is important that the members of the body corporate understand their roles and responsibilities under the legislation prior to taking on this role.

Remember that our information service is here to answer your questions. Call us at 1800 060 119 or submit your question through our online inquiry form.

This article is general information only and not a substitute for legal advice.

Article contributed by the Commissioner for Body Corporate and Community Management