First published in Resort News, May 2024
One of the greatest sources of tension between a resident manager and a body corporate is where there is a gap between expectations and obligations.
Every management rights agreement has a description of duties that sets out the tasks a manager must complete as part of their contract. That might be a formal schedule with items line by line, or it might be a general description of what should be done, such as ‘mow the lawn as required’.
But any itemisation of duties is only as good as the draftsperson who wrote it.
The schedule should clearly set out the duties that a manager is obliged to undertake, and ideally to set limits where the obligation ends.
This is particularly the case where a level of expertise is required to complete a task.
For example, if a manager is asked to trim fronds from a tall palm tree and an extension ladder is required to do the job, is that part of an overall obligation to maintain the gardens or does it fall outside the schedule of duties?
In other words, what does the caretaking component of the management rights agreement require the resident manager to do, and what does the management rights agreement say about using skilled tradespeople?
Managers must ensure they have a clear understanding of what is required under a schedule of duties, and if there is any doubt to raise it immediately with the Body Corporate.
If the manager is uncertain about the extent of their obligations, it is almost guaranteed the Body Corporate will be just as uncertain, if not more so.
The key is to never surprise the Body Corporate with a fee for an outside contractor where the committee expects the task to be performed as part of a manager’s agreed duties.
Manage expectations and manage your duties.
Caretaking agreements can include a clause that outlines that any duties requiring a skilled trade are to be arranged by the manager and paid for by the Body Corporate.
From a management rights perspective, if you're not going to do the duty yourself and you're going to engage someone else to do it, it’s important to understand who is paying for that work.
Is that you, because you're choosing not to do the job and you pay someone else to do it?
Or is it going to be the Body Corporate because it's a job that you only have to manage on behalf of the committee because it's not within the scope of your duties?
Disputes over these issues can flare quite easily. They can also affect the sale of your business because if you include income that a buyer’s lawyer doesn’t think should be included because of the duties, then you aren’t going to get a multiplier on that.
And expectations can accumulate over time. A manager may get into the habit of charging a particular task to the Body Corporate as an extra expense – then two years later someone on the committee points to the Schedule of Duties and argues the task is part of the manager’s agreement.
Then you have two years’ worth of expenses to argue over.
Managers should ask themselves the question: If the body corporate is paying for this, why are they paying for this? Which part of the agreement says they should?
And if there is any doubt you are better off having a conversation with the Body Corporate about it rather than seeking permission later.
