The Hazards of a Poor Body Corporate Committee

hazards of poor body corporate managementFor the vast majority of lot owners paying levies, observing by-laws and voting at general meetings will be the sum of their involvement with the body corporate.

To a chosen few falls the task of leading and decision making.

Management of a body corporate is a simple enough premise: all the lot owners combined vote to elect a committee who are then responsible for day to day management, sometimes with the help of contractors such as a body corporate manager or a building manager.

Unfortunately, it’s not really all that simple. In fact there are any number ways in which body corporate committee management can go pear shaped, including:

  • no one lot owner is actually prepared to be on the committee
  • committee members have different agendas and conflict arises
  • the committee is ineffectual and can’t get things done
  • conflict occurs between the committee and contractor(s)
  • the contractors are ineffectual and tasks remain undone
  • the committee ends up being one person who starts feeling they “are” the body corporate
  • the committee no longer has control over the scheme and disputes arise

The Effects of Poor Management

Management is a system: the combined lot owners elect the committee, the committee reviews what’s going on, discusses and makes decisions. They then instruct the body corporate manager and, if there is one, the building manager who carry out the specific tasks and provide feedback.

It will depend on where the system breaks down as to what effect it will have on the body corporate.

The most common issues are poor maintenance and cleanliness, overgrown gardens and cluttered common areas.

But other issues do arise.There may also be compliance issues such as fire safety requirements not being met leaving the building unable to respond in a crisis.

Without good management by-law breaches may not be rectified and “lawlessness” abounds. Eventually there will be those who do what they want, when they want at the detriment of other investors.

Financially levies in arrears may accrue as no effort is put into collection. The levies may not increase over a long period of time and consequently financial buffers are eroded. I’ve seen several cases where sinking funds were whittled away leaving administrative fund deficits.

The video below is a good example of the effect of poor management in a strata scheme.

Rubbish like this is a clear fire hazard. That the committee hasn’t ensured the building is cleared out signals a lack of either interest or effectiveness or even that there isn’t a committee. Quite possibly the complex is completely tenanted with no owners onsite. Possibly the perpetrator is even on the committee.

What If There Isn’t a Body Corporate Committee?

Committee positions are entirely volunteer, which is a bit of a problem if you can’t find anyone who’s prepared to give it a go. There is provision in the BCCM Act to appoint a body corporate manager to act as committee in the event that no, or not enough, lot owners are prepared to get involved.

It’s pretty rare to see it happen though and for good reason. It’s a expensive option for lot owners.

This may come as a shock but not all body corporates follow the provisions of the act to the letter of the law. Corners are cut in lots of different ways, usually aimed at keeping levies as low as possible.

When a body corporate manager is appointed to act as the body corporate committee they don’t have the ability to pick and choose what they’re going to do. If there is a maintenance issue it must be rectified. If there is a report or assessment that’s required for compliance purposes it must be obtained.

Anything that is required of a body corporate under the Act must be done by a body corporate manager appointed to act as committee.

And that’s on top of paying the body corporate manager more.

Along with rising costs comes rising levies.

* * * * *

It’s really better for both body corporate and contractors if there is a committee and that committee is engaged and effective.

Which doesn’t necessarily mean that a body corporate with management issues is a poor investment, more that it’s a bargaining tool for the investor who’s prepared to get involved.

If you’re not prepared to get involved, well maybe it’s worth reconsidering.

THE BASICS OF BODY CORPORATES

A little knowledge can go a long way


I see so many stressful and frustrating issues in body corporate records that result from simple misunderstandings it hurts my head. If I could do one thing to help it would be to teach everyone the basic rules, so they can avoid all these dramas.


With that in mind I've put together a short eBook that sets out the basics everyone owning in a body corporate really should know. It won't make those big issues go away, but it will give you a firm grounding from which to communicate.


It's completely free, so please, download it now!

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Trackbacks

  1. […] If its not genuinely how much it costs and levies are being kept artificially low for whatever reason, that’s a indicator of poor management. […]

  2. […] If its not genuinely how much it costs and levies are being kept artificially low for whatever reason, that’s a indicator of poor management. […]

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