25 Feb Dish from the Commish – Engaging a BCM in a place of a Committee

Dish from the Commish – Engaging a BCM in a place of a Committee

Engaging a body corporate manager in place of a committee

Life is busy. It can be hard enough managing your own affairs without being elected to a committee of a body corporate and being expected to manage the affairs of a community titles scheme. Even so, it is considered best practice to have your body corporate represented by those who have an emotional and/or financial interest in the scheme. Sometimes however, it is not always possible.

A committee under the Standard and Accommodation Modules must contain a minimum of three eligible individuals. The three executive member positions of chairperson, secretary and treasurer must also be filled. Non-voting members of the committee are not counted to make up the minimum of three members.

If your body corporate is not able to find enough people to fill the executive positions on the committee or enough people to fill to the required number of three, the body corporate must consider engaging a body corporate manager in place of the committee. This is often referred to as a ‘Chapter 3, part 5 engagement’.

This means that even if you have been able to fill two executive member positions or a number of people are willing to be ordinary members of the committee, your body corporate has not fulfilled the minimum requirements under the legislation (Standard and Accommodation Modules) and a body corporate manager must be engaged.

A body corporate manager engaged under these circumstances is authorised to carry out all the functions of a committee and exercise all committee powers. This means the body corporate manager makes all the decisions that your committee normally would, including things such as pet approvals and spending up to the committee’s spending limit.

The body corporate has three different opportunities to engage a body corporate manager under these circumstances.

Firstly, at an annual general meeting (AGM) if at least one executive member position on the committee is not filled or the total number of voting members of the committee elected is less than three. Bodies corporate often choose to include a motion about a Chapter 3, Part 5 engagement on the agenda at the AGM when year after year they fail to achieve three individuals on the committee. Lot owners also may have made it clear that they do not intend to nominate so a motion is put on the agenda at the AGM just in case. This is more common for smaller schemes.

If the motion passes at the AGM to engage a body corporate manager under Chapter 3, Part 5, it will save the body corporate the expense of calling another general meeting.

Secondly, at an extraordinary general meeting (EGM) called after an annual general meeting where at least one executive member position on the committee is not filled or the total number of voting members of the committee elected is less than three. Sometimes it is not always obvious that the body corporate will not be able to fill the committee positions to the required number at the AGM. If that is the case, the body corporate must call an EGM within a month to make a last attempt to fill the committee and also propose a motion to consider engaging a body corporate manager in place of the committee.

While there is added expense to the body corporate to do it this way, it can be a good idea to allow lot owners another chance to nominate for the committee. Often when owners receive the minutes and realise that not enough people have been elected to the committee they may change their mind once they weigh up the expense of a body corporate manager engaged under Chapter 3, Part 5 and the added responsibility of being a committee member.

Thirdly, at an EGM called to fill a casual vacancy on the committee and at least one executive member position on the committee is not filled or the total number of voting members of the committee is less than three. Sometimes committee members resign or sell their lots and are no longer eligible to be on the committee. If this happens, the body corporate must fill the vacancy within one month. If the number remaining on the committee is still above the original quorum amount, the committee can vote to fill the vacancy. If the number of members remaining on the committee are less than the original quorum amount, the remaining members must call an EGM to attempt to fill the vacancies. If, because of the vacancy, the numbers on the committee have fallen below three or one of the executive positions remains unfilled the body corporate must consider a motion to appoint a body corporate manager under Chapter 3, Part 5.

Regardless of the type of general meeting at which a motion to appoint a body corporate manager is considered, it must always be the last item of business on the agenda. This allows the body corporate to make all attempts to fill the committee positions.

Engagement of a body corporate manager under these provisions must always be in writing and state that the body corporate manager is authorised with the powers of the committee and each of the executive members of the committee. It must also state the basis for how the payment for the body corporate manager’s services is worked out, for example an hourly rate, a rate per lot or a rate for each service provided.

This type of engagement ends 12 months after the engagement begins or at the end of the body corporate’s next AGM held after the general meeting where the engagement was approved. The engagement may be terminated in the same manner as other service contractors – by mutual agreement, conviction of offences such as fraud or assault and failure to comply with a remedial action.

During the period of the Chapter 3, Part 5 engagement the body corporate is not able to elect a committee. A report is provided to the members of the body corporate to keep them up to date with the decisions and spending of the body corporate manager.

Being a committee member is often a thankless task with a lot of responsibility. Outsourcing that responsibility to an external party is tempting; however, it is not a decision that the body corporate should make lightly. It might be a good idea for the body corporate to question why there is a lack of interest in committee membership. Are there some underlying issues for the body corporate to resolve?

If the majority of those interested live offsite, for example, the body corporate could encourage the use of electronic attendance at meetings. If the problem is being inundated with owner requests, the body corporate could consider implementing a by-law to manage owner communications. It may be just a feeling of committee members of not being valued and perhaps the body corporate could consider paying a small remuneration to its committee members. Body corporate legislation sets out what remuneration is permissible.

For further information please contact the Information and Community Engagement Unit of my Office on 1800 060 119 or visit our website www.qld.gov.au/bodycorporate.

About the Body Corporate and Community Management department

The Body Corporate and Community Management department of the Queensland Government provides a range of information and services for those who live, invest or work in a community titles scheme in Queensland.

If you require information on strata or body corporate issues you can search our fact sheets at https://www.hlss.co or visit the BCCM website for additional information here.

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