One 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:
- Disputes between the building manager and residents
- Disputes between the building manager and body corporate
- 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.