3 Common Disputes with Building Managers

3 common disputes with building managersOne of the questions under the “Contracts” section in our Pre Purchase Strata Report is:

Are there any disputes with the Building Manager?

The question is there because disputes with Building Managers do come up, and they have the potential to be both very expensive and very damaging to the sense of community within the scheme.

Essentially a Building Manager, or Onsite Manager as they’re often called, is the body corporate’s “employee” onsite. Their role is to keep the scheme clean and tidy, undertake simple maintenance and arrange professionals for the not-so-simple stuff. In return they are paid a monthly contract fee.

It sounds simple but it really isn’t. Caretaking and Letting Agreements are complex contracts and are usually drafted and entered into by developers with only minimal consideration of the body corporates needs.

Just that simple point has the potential to be devastating for the body corporate as in the decision for Gallery Vie Body Corporate where a clause in the contract allowed the Building Manager to vary the contract to suit themselves without any input or objection from the body corporate.

Common Disputes with Building Managers

There are three common areas where disputes with the building manager occur:

  1. Disputes between the building manager and residents
  2. Disputes between the building manager and body corporate
  3. Disputes between the building manager and letting lot owners

1. Disputes between the building manager and residents

One of the key responsibilities for building managers is enforcement of bylaws. Building managers are meant to be that petty person who comes around and points out the many ways in which you’re breaking the rules before politely insisting you stop.

I’m being flippant because as you can probably see it is not a very nice job at all.

And of course enforcing bylaws is not petty. The more bylaws are enforced fairly across all residents the more harmony is enjoyed around the scheme, which is important for the values of the lots and their attractiveness to owners and tenants alike.

Some building managers are excellent at policing bylaws. They’re courteous and professional and obtain high levels of compliance. If you have one of these managers, rejoice.

Other managers are apathetic or find the whole process too confronting to be effectual.

And then there’s those managers who’re just woeful and their attempts at policing actually create more conflict and bad will around the scheme than the original bylaw breach. People end up choosing sides and it can lead to bullying and other bad behaviour.

The place can turn into an armed camp which is stressful for other residents and a real turnoff for potential newcomers.

If disputes between the building manager and residents erupt then it’s going to place particular pressure on leadership. A strong Committee will set boundaries that help resolve the issue.

What to do when there are disputes between the building manager and residents

It can be very difficult if you, or one of your neighbours, are in conflict with the building manager. You all live in the scheme and it’s difficult to escape.

If the conflict is with you try and remain respectful and calm. Don’t accept blame if you don’t believe it’s warranted but do try to be objective and courteous. If the situation becomes threatening walk away.

If the conflict is between your neighbours and the building manager try not to get involved or pick sides. If you do have to, again respectful and calm.

Physical confrontations or threats should be referred to the police.

Contact your Committee or body corporate manager for help. Failing that call the Commissioner Body Corporate & Community Management; they really can be very helpful.

And of course, if you are breaching a bylaw it’s a good idea to stop.

2. Disputes between the building manager and the body corporate

Most disputes between building managers and the body corporate come down to contractual issues.

Caretaking and Letting Agreements, the documents that engage and authorise the Building manager, are collectively called the Management Rights and they are a valuable, tradeable commodity. Purchasing Management Rights contracts for a particular scheme is a significant investment.

And for the body corporate an Building manager represents a substantial financial commitment making up a large proportion of yearly levy costs.

There’s a lot of money invested into the working of these contracts by both parties so consequently when a dispute arises it’s usually hotly contested and ends up costing all parties considerable amounts of time, energy and money.

Every dispute is different and should be judged on its own merits.

That said the most common complaints usually come down to:

  • The body corporate is not paying enough
  • The building manager is not doing all the tasks required by the contract
  • The body corporate is asking the manager to do something extra to the contract
  • The building manager is not performing the tasks to an acceptable standard

There’s a whole process that must be followed when either a body corporate or an Building manager is in breach of their contract, almost all best handled by legal representatives.

A breach notice setting out the problems must be issued, with a clear outline of what needs to be done to rectify the problem and a time frame for completion.

If a breach notice is the first step the final step is cancellation of the Caretaking Agreement, and / or Letting Agreement. It’s a long winding and costly legal path to that point and certainly won’t signal the cessation of hostilities. Terminations are almost always contested through the court system.

What can lot owners do?

Sadly there isn’t much that a lot owner can do to resolve an issue between the body corporate and an building manager. The issues are almost always complex, expensive and eventually decided by the courts or negotiated settlement.

Terminating a Caretaking and / or Letting Agreement will require a resolution of the lot owners at general meeting. Each lot owner should review the situation and vote honestly as he or she feels the issues merit.

3. Disputes between the building manager and letting lot owners

Letting Agreements are different from Caretaking Agreements.

A Letting Agreement confers on the contractor, usually the entity that holds the Caretaking Agreement, an exclusive right to be the only letting agent able to work from within a scheme.

That does not mean they are the only agent who may let lots in the scheme. Quite the contrary in fact. As a lot owner you can engage any real estate professional you choose to manage your lot, including the building manager.

The key point here is that contracts between building managers and lot owners as Letting Agent are distinctly separate from anything body corporate related.

Simply put the body corporate is not involved in a rental management agreement between you and the building manager.

That means if you have dispute regarding rental management of your lot you need to take it up directly with the building manager. If the dispute cannot be resolved you may need to pursue legal action through the court system and any remedies sought will be under real estate legislation.

Conclusion

Building managers do have a vital role in the day to day management of the body corporates and a good manager helps immeasurably with harmony and maintenance, all for a manageable fee.

Unfortunately the only qualification to be a building manager is a Real Estate Certificate and the funds to purchase Management Rights. That means there are a lot of indifferent or even poor managers in schemes all over Queensland and that has the potential to be vastly expensive and corrosive.

For those buying into a scheme it becomes a consideration of whether or not this situation is going to have ongoing consequences. Do you walk away or ignore the issue and hope it goes away?

Each case needs to be decided on its own merits and with reference to your goals and circumstances.

Has your scheme had a dispute with a building manager? Leave a comment and tell us about it.

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Comments

  1. Our BM has total influence over life at our very large community scheme -789 lots mostly investment owners. A GM quorum for decision making is not possible and the manager takes advantage of this esp with our weak, apathetic committee. Complaints to the police must be submitted by a committee member to be acted upon (an owner cannot submit a complaint) and all committee members are under his influence for some reason and many disgruntled owners can’t understand why. Democracy does not work in our scheme and the law is based on democratic processes. The BCCM commission is not able to assist us in this. Ideas from you and readers are most welcome.

    • Hi Deirdre
      That sounds awful. Its a common problem with body corporates that only a few people vote, AGMs are adjourned from lack of quorum and then those small amount of people carry the vote. Essentially a few people are controlling the scheme. The only way to reverse the issue is to get more people involved. Quite a difficult prospect when they’re mostly investors living offsite.

      How is the manager taking advantage due to lack of quorum? Do they hold proxies? Even then, how would it benefit them? Motions on agreements are all secret motions with no proxies and they cannot vote at Committee meetings.

      Complaints to police should only be able to be controlled by the Committee when they relate to common property damage or misuse. Anything else that happens between individuals should be reported directly. The Committee cannot interfere in business that is not related to the common property.

      Have you considered joining the Committee? That might be a way to get some action happening.

      • For three years I have nominated for Committee and each year the rental agent (who has 500 rental properties) ensures unknown owners are nominated and receive excess votes to me and other active, scrutinising owner residents who want to bring about change. We have requested an independent returning officer but the BC manager says it is unnecessary. In 2013 I took photos of particparticulars slips yhat had Chinese names and Kotean signatures. Obvious rigging but because it has never been checked becore it was dismissed by the Committee. The BCCM commission’s adjudication rulings are enforced through a magistrate court and this is very costly. Service contracts have 10% admin costs built in (possible kickback) and on a 1.5m dollar contract that is substantial.

        • A lot of sales off the plan for new buildings do go to overseas investors since they may only buy new properties. It is likely that your building will have a substantial number of Korean and Chinese investors so that doesn’t seem unusual to me. It sounds like your building manager is simply asking lot owners to vote a certain way and they are agreeing. There isn’t really a lot you can do about it since “proxy farming” is actually allowable. The only good news is that you’re allowed to campaign as well.

          The legislation does allow that the Chairperson may open secret ballots for Committee election. It’s frustrating I know but it does seem that the rules are being followed.

          It sounds very frustrating Deirdre and it sounds like you are doing all the right things. Keep bringing up issues with the Committee. Keep nominating for Committee. Talk to as many fellow lot owners as you can.

      • Our Chairperson has been paid $25,000 over 4 yrs unauthorised by the BC members. I uncovered this and the police confirm it is fraud but a Committee member must complain to police. An owner not on committee apparently can’t. Is money consideref common property?Your advice is most welcome.

        • If the $25K paid out has come from body corporate funds, spent with no motion then I would contact the Commissioner and discuss the idea of making an application seeking either clarity of the payments or that they be paid back. Your building is very large so the money will fall within Committee spending limits but that is not the only “box” the Committee need tick.

  2. My partner is the Treasurer of a BC Committee. They suspect the Caretaker may have authorized the payment of cheques to an associated person for performing tasks that are his responsibility.
    The Treasurer has access to ledgers showing details of payments made and invoices submitted. This was authorized by the BC Committee, However, requests for details of questionable invoices have not been answered by the BC Mangers. What can be done?

    • You’re definitely doing the right thing asking for copies of the invoices. What you need to do now is keep asking. Be aware that sometimes things can drag on, particularly if the BCM is a large company. Keep asking though. They should be able to provide those details.

      Also refer to the caretaking contract for specifics of the Caretakers tasks. Some contracts are overseeing contracts and others are doing. Be clear on which your caretaking contract is. It could be legitimately done.

      If you’re sure though persist. If copies aren’t provided the next step is to seek Adjudication.

  3. Huw Sprules says:

    Hi,
    16 units. Our committee wishes to turn off and dispose of a gas pool heater at our complex. It is old and has a value currently of $200-$300. We do not wish for the pool to be heated any longer so would like perminent removal. Do we dispose of this body corp asset by special resolution or is it a committee decision given the value of the asset?

    • Hi Huw

      That’s a difficult question! And my answer is, I’m not sure. On the surface it seems like the committee will be fine passing a motion to remove and dispose of the gas pool heater. The value is certainly within committee limits. The question, as you’ve so rightly pointed out is whether or not a change to the facilities within the scheme requires a motion at general meeting. I would refer to the by-laws. If heating the pool is mentioned anywhere there I would put the matter to all owners. Otherwise pass the motion at committee and resolve any issues that come up after the fact.

      That’s just my opinion of course. Good luck with your decision and thanks for the question.

  4. Joan loh says:

    I’m a caretaker/manager selling my MR business but body corp refuses to stamp n seal the final documents. Instead they insist that i pay a solicitor to handle the changes in the contract about office hours. I just want to sell my business and get out and it’s jarring to me that I’m made to pay, in this case lawyer fees to my detriment. What should i do???

    • Hi Joan

      Ah, that’s a problem. The body corporate will want the formal documents because the contract continues notwithstanding you leave. I can’t say if it’s a requirement of the act as I don’t know. It is certainly industry practice. I’ve never seen anything but legally prepared MR documents.

      Unfortunately forcing the issue will require that you see a solicitor. It might be quicker and simpler to have the Variation prepared and get out of there.

  5. Joe Peterson says:

    We have a holiday unit in a beachfront apartment (100 units) that we now manage ourselves. The BM owns 4 of his own and manages about another 15. The rest are residential or now privately let. The BMs are rude and abnoxious to anyone (astounds me people like this buy into a customer service job) and this is affecting the building as a whole with the negative reviews that continue to circulate. We lose occupancy because of it and our values are depressed. Any thoughts?

    • Hi Joe

      This is a challenging problem to resolve. Largely its going to be a question of whether the incidences are isolated to you or are being felt by other owners, particularly committee members.

      One remedy is to write to the committee and let them know of the problems you’re experiencing. The challenge is, the BM is on the committee and the issue will then be bought to their attention. If the committee supports you, well and good, however if the committee doesn’t then you could be in a position to experience even more problems.

      A first step could be to discuss your issues directly with the BM. It may exacerbate the problem but it may also lead to some understanding. If it doesn’t work then a complaint to the committee brings the whole thing “into the light” and may offer you a little protection.

      You can try to take action yourself against the BM however its challenging. Even when schemes are united its difficult to successfully breach, let alone remove a building manager. Best case scenario you are one of several who has had problems and you can jointly petition the committee to resolve the issue.

  6. Hi,
    Our building managers are very rude and do things about their way only to their liking . They have left building cleaning General maintence jobs untouched . It’s been years of neglect and they get paid their fee . Finally something got done as they dident realise it was on their contract to keep things maintained . Now they won’t talk to any committee member and the chairperson is ganging up with them against the committee and telling lies over by laws to try and catch people . It’s creating tension for not doing their job correctly . What are committee steps as we have witnesses that can come foward recieving the same treatment of indecency

    • Hi Sabrina

      That’s no good. Problems with Caretakers are tragic. You can read about a process to deal with building managers here.

      Its a long drawn out process I’m afraid and it will help significantly if the committee are united. You say that the Chairperson is siding with the Building Manager, which is problematic, however its not the end of the world. Even as Chairperson they only have one vote and the other committee members uniting will be able to out vote them.

      Its a good idea to discuss your concerns with the other owners and try to gauge their feelings on the subject. Some form of general meeting motion will be necessary to move forward and speaking with owners will sow the seeds for getting the matter passed, should they be worried about the issue too.

  7. I have an issue with Privacy regarding our Building manager. I requested she investigate white powder that was covering a great deal of our lift interior, thinking because pest control were in the building it could be some sort of insecticide. On viewing video footage she apparently found it was caused by a painting contractor. That should have been the end of it, instead she rang the owner who had employed the painter claiming a complaint had been made and named me. A total misrepresentation of my enquiry. That owner was very upset and rang me. Later an email arrived from Managers office letting me know the source of the powder residue and then named the owner who had employed the painter. I did not need that information and believe she breached that owners privacy as well. This is the second time the manager has named me, I raised genuine concerns about the noise on my roof from and aircon compressor. Manager informed that resident that I had complained.That resident caught me in the lift to discuss it. I feel my privacy has been breached and worried that someone could be verbally or physically abused because of this action by the manager,how do I stop her. She doesn’t answer my email or calls to office.

    • Hi Rosebudd

      I don’t have an issue with anything that is described here. It could have been done anonymously, as in raised by the Building Manager without letting owner’s know who was the person who had raised/caused the issue, but I don’t believe there is any expectation of privacy. Indeed things tend to run more smoothly when there is full disclosure on all sides.

      I understand that you’re suggesting if you complain you might be verbally or physically abused but I don’t agree that it is the Building Manager or Committee’s responsibility to protect you. We all face the same dilemma when we’re unhappy with something. Speak up and risk being attacked or keep quite and endure. It’s a challenge but it’s our own individual challenge.

      Unless they were phoning to apologise I think the owner that phoned upset was out of line. You have the right to expect the common property be in neat and tidy condition and you have the right to bring it up if its not. You have the right to expect not to be hassled when you do. If you were hassled the person in the wrong was the one who hassled you.

      Perhaps you could raise issues anonymously in future? That way no one will know it was you and there can be no ramifications.

      • I am sorry I believe your reply is flippant. I can see no good reason, when you live in a small community for a building manager to act in the way she did. There was no need to use names, she needed only to ask that the owner to take more care when her tradesmen use the lift. The path the manager took only caused upset and harm and to say I can’t expect the committee to protect me is foolish. I wouldn’t need protection if this situation had been handled with more tact and professionalism and why would I ask the committee to do anything. I only asked what the powder was not the name of the person who did it, why would I need that information? Thank you anyway, I asked for advice and you gave an opinion.

  8. We have caretaker/building manager running a hotel letting pool without notifying the Body Corporate. He has a rental agreement with the Body Corp for long term rental. It his failure to notify of changing developments in the building that concerns me. He has a website using the building name and his office phone number. His lack of communication and the fact he has a conflict of interest seems a basis to breach him.

    • Hi Marilyn

      If the terms of the Caretaking and Letting Agreement are being breached then it is up to the committee to deal with matter(s). If you’re a lot owner then you can notify the committee of what is happening, if they don’t already know. It will then be up to them to review the agreements and see what the breach is, if any.

  9. The annual pest control inspection is fue. We are owner occupiers and received the news written on an RTA form. Anyway the onsite manager is telling us he has to come into the house with the pest control person or maybe he will do the pest control. Can he enter our private dwelling? I own it not rent. He is a whiney troublemaking twit who thrives on drama. I dont want him in my home. The pest guy ok but him….no. hes adamant he has the right under body corp. Advise please.

    • Hi Kim

      Section 163 of the Act provides for a person authorised by the Body Corporate to access a lot when reasonable necessary to inspect the lot to ascertain whether work is necessary or to carry out work that the Body Corporate is required or authorised to carry out.

      The body corporate does not have authority to carry out pest control works to your lot. They should not be carrying out pest control to lots at all as it is a lot owner responsibility. As the works are not valid the entry will not be valid either.

      Can you stop them coming in? More problematic as they’re likely going to roll right over your objections relying on the by-laws and legislation. If you have different keys and can lock the door so much the better. If you cannot then you might be stuck with complaining about the matter after the event.

  10. Hi, our building managers are lying about the cleaning that’s meant to happen weekly. For 3 weeks our hallway has not been vacuumed and when I bought it up to the committee they replied it was between me and them??
    I think they are ignoring me because I heard a unit was being sold cheap by a separate RE agent, I went and asked them why it is selling so cheap? They told me the owner was desperate for money and if I purchased the unit through them they would give me half the commission of the sale. I said ok what’s the lowest price you think they would take? They sent me a text a week later with the price, I text back really & I get half the commission? They replied by text no that is not available now. So I said no deal and now they are giving me the cold shoulder? What should I do?

    • Hi Matt

      Oh dear. I wish there was a magic pill that could help resolve problems once they occur. Unfortunately relationships with people are not so easily fixed. Particularly as your committee seems weak. If the building manager is not doing their job then its incumbent on the committee to ensure they do.

      You have some choices here. You can either keep bringing up the cleaning until something gets done, the broken record technique. It won’t help with the cold shoulder though. You could keep your head down for a few weeks and see if things blow over. Alternatively you could try and talk to the manager and find out what the problem is.

      Its a challenging situation Matt. Good luck.

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