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Annual general meeting, AGM the chance to minimize expenses and loss. Understand the operational structure of the body corporate, use the committee as ticket for a smooth ride with your apartment investment

 

Body Corporate—Annual General Meeting

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 like a flat, unit, apartment or townhouse you possibly are conversant with the operational procedures of the body corporate (BC). As useful link here are summarized the three ownership title types and the specific of strata title properties under the Unit Title Act.

 

At the AGM the Body Corporate votes for the new budget that includes all spendings and levies for the coming 12 months. You can take it as business plan for managing the common property (building management), running the Body Corporate (finance and administration) and confirmed Body Corporate representation (chair person, committee). That is why apartment owners need to know their rights, obligations and the rules set by the Body Corporate.

 

AGM and EGM

 

The Unit Titles Act gives the Body Corporate ownership over the financials and duties to keep the common property maintained and in good working order. The individual owners have to pay levies in return. If you do not know or care whether the Body Corporate has fulfilled its duties or not is a voluntarily but unnecessary financial risk.

 

For everything the Body Corporate does or make decisions on there will be held meetings, either as annual general meeting (AGM) or as extraordinary general meeting (EGM). In these meetings you get access to the chairperson, the committee, the Body Corporate manager (previously the BC secretary) and the building manager. And between committee meetings, commonly quarterly held , are to monitor progressing work and budget.

 

If you miss the AGM the Body Corporate might pass a resolution to do things without hearing your concerns. If e.g. the AGM decided to paint the building red, so you might not like it to own a share of a red building. So— attend these meetings and understand the operational structure of your Body Corporate.

 

 

Operational structure of the Body Corporate (BC)

 

The Body Corporate is a legal body and represented by the chairperson and the committee, which are elected every year at the AGM. For the Body Corporate and building management are normally agents engaged. Those agents employ or hire trades people who do work on behalf of the BC. Looking at the operational structure the first tier are chairperson and  committee, the second tier are the Body Corp secretary (Body Corporate management) and building manager. For keeping the building in good working order the BC pays for services under contract (Fire/Security monitoring, etc) and trades people for maintenance and repair (e.g. services for hot-water, lift maintenance, air conditioning/heating, etc).

 

Often residents and apartment owners have difficulties to understand who is responsible and for what? For instance if the building manager neglects his duty, the Body Corporate is ultimately responsible. But the respondent for complaints is the BC management, again an agent up to the job or not. By the way agent’s contracts have a disclaimer saying that “ABC shall not be held responsible for…”  In other words, if the committee is not up to its job, whatever happens, the apartment owner’s obligation is to pay for it.

 

Quite frankly, it is risky when the owner has no control over his investment, and the Unit Titles Act (legal frame work) is lobbied by the agents who manage Body Corporates as business.  When the chairperson and committee are managed by the agent and not vise versa, you may imagine your position. The apartment owner pays for mismanagement, too.

 

 

TIPs for unit title owners

 

Make sure that the Body Corporate keeps transparent records and provides access to meeting minutes and documentations like building manager’s reports

 

Be satisfied that chairperson and committee execute their duties and obligations. Being unaware of problems increases the risks of unreasonable levies  e.g. to cover costs for damage , vandalism, or bad building management.

 

Do your own inspections and visit the common  property. The Body Corporate must maintain and repair all building elements to serve owner’s units. Infrastructure includes pipes, wires or facilities such as hot-water supply, heating, TV, Internet access.

 

Request a copy of the property insurance policy. The insurance should be based on full replacement value and include demolition and architect’s fees (Note the insurance policy must include “sum insured”).

 

Body Corporate management often fails to enforce house rules. That affects occupant’s pets, rubbish disposal, recycling and cleanliness. If the common areas suffer from vandalism and are not in good representable conditions the value of your apartment 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 (security, lift, fire protection etc).

 

Finally 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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