Attending the Body Corporate AGM and understanding the operational structure of the body corp committee is your ticket for a smooth ride with your apartment investment for the next 12 months
Body Corporate AGM
Your chance to minimize expenses or loss?
The beginning of a new financial year is the time for receiving the papers for the upcoming AGM (Annual General Meeting). If you own a property with unit title (e.g. flat, apartment, townhouse) you are possibly conversant with the planning procedure of the body corporate (Body Corp).
At the AGM the Body Corp will vote for the new budget including the levies every unit title holder has to pay and the financials over the coming 12 months. As seen in this article about the specifics of apartments you will find a number of related blog posts when browsing through the blog post library.
I am quite switched on with Body Corp issues and happy to pass on tips how to get satisfaction from your investment as you deserve. It is true, a passive Body Corp can cost you a fortune and running an apartment investment on auto-pilot is risky, too.
AGM and EGM
The Unit Titles Act gives the Body Corp power over the financials and duties to keep your share in the common property maintained and in good working order. In return you have to pay levies. If you do not know or care whether the Body Corp has fulfilled its duties that is a voluntarily but unnecessary risk.
For everything the Body Corp does or make decisions on there will be held meetings, either an annual general meeting (AGM) or an extraordinary general meeting (EGM). In these meetings you get access to the chairperson, the committee, the Body Corp manager (previously the BC secretary) and the building manager.
Attending these meetings—you can raise your points of concern and ask questions. If you miss the AGM the Body Corp might pass a resolution to do things you do not like, for example to paint the building red. So— attend these meetings and understand the operational structure of your Body Corp.
Operational structure of the Body Corp
The Body Corp is a legal body and represented by the chairperson and a committee, which are elected every year at the AGM. For doing the work the Body Corp engages agents for the building and Body Corp management. Looking at the operational structure the first tier are chairperson and the committee, the second tier are the Body Corp secretary (nowadays Body Corp management) and building manager.
People often have difficulties to understand who is responsible and for what? For instance if the building manager neglects his duty to maintain the building the Body Corp will ultimately be responsible. These agent’s contracts normally have a disclaimer included saying that “ABC shall not be held responsible for…” In other words whatever happens you, the apartment owner, have no control. That is a risk for your investment. In one case the body Corp secretary has been sued by one apartment owner, the claim has been declined.
It is quite common that chairperson or committee are not up to “speed” and totally rely on the building manager or Body Corp secretary. That might result in avoidable expenses, to be paid by you, the unit owner.
TIPs for apartment owners
Make sure that the Body Corp keeps transparent financial records, meeting minutes and service contracts or you should ask for clarifications
Be satisfied that chairperson and committee execute their duties and obligations. Request copies from the meeting minutes. Being unaware of problems might increase the risks of unreasonable increases in levies.
When doing inspections have a closer look at the common property. The Body Corp must maintain and repair all building elements to serve owner’s units. Infrastructure includes pipes, wires or facilities such as hot-water supply, TV antenna and the structure of the building (complex).
Request a copy of the property insurance policy. The insurance should be based on full replacement value and include demolition and architect fees
(Note the insurance policy must include “sum insured”).
Body Corps often fail to introduce and enforce house rules. That affects occupant’s pets, rubbish disposal, recycling and cleanliness. If the common areas suffer and are not in good representable conditions the value of your apartments drops, too.
For levy payments be aware of ownership and utility interest, which have replaced the previous unit entitlement. The ownership interest is assigned based on a unit's relative capital value. The utility interest is by default the same as the ownership interest unless given a differing value by the Body Corp. It determines the extent of a unit owner's contribution for operational and maintenance expenses.
Finally keep in touch with the committee and take an active interest in what goes on in your apartment building. Attend the AGM and EGM and execute your rights. Good luck.
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Klauster Blogs lead to a real person, IT professional, investor, landlord and business owner with interests in technologies, properties and trading.
His passion, making experiences available and helping people like you, comes from extensive travelling and the principles of life—how to avoid pitfalls in unfamiliar territory when investing or forming relationships.
The philosophy to treat life, partnerships and hobbies as an investment has helped people in his circle. Life is a dream with a deadline, happiness comes from making the right choices and having realistic expectations.
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