Your body corporate committee is the group of volunteer owners who take the lead in managing the upkeep and administration of their building and protecting the interests of all lot owners. With the total insured value of strata properties exceeding $995bn in 2018, these committees have a great deal of responsibility across Australia.
In fact, this level of responsibility is growing. Since 2015, Australia has been building more attached properties than detached lots, and strata properties make up a significant proportion of this. With this in mind, it is important for you to be aware of how your body corporate committee is performing. This committee needs to have you -- the lot owner -- and your interests at heart. Any behaviour that is harmful or problematic needs to be spotted immediately.
But what are the signs of unproductive behaviour? To help you recognise this behaviour before it gets out of control, we've compiled some of the red flags to look out for. We've also put together some actions you can take if you believe a harmful culture exists within your body corporate committee.
Before we jump into the specific list of red flags, the biggest sign of dysfunction you'll find is distrust. This is especially evident in larger, tiered body corporates. Usually, it is a symptom of a broader issue. If something is being 'mismanaged', that leads to poor disclosure of systems and plans, either from the committee to the owners or between different committees. This leads to confusion about who is responsible for what, and this lack of clarity causes more problems. Even when all members of the committee have genuine intentions, their interests can still come into conflict if there is a high level of uncertainty.
Most of us have experience working in a collaborative group in a professional setting. During this kind of work, it's common for one person to take the lead and others to take a less active role. As a body corporate committee is a group like any other, this situation can also occur.
However, in the running of a body corporate, the results can be more severe. In most workplaces, there is a wider structure of management, and collaborative teams will have to report to someone higher up. In a body corporate committee, this is often not the case. If members are not taking an active role, this can swiftly result in a power vacuum -- a highly unproductive situation in the context of a body corporate committee.
Just because the members of your committee are taking an active role does not mean that this active role is necessarily the best one for the body corporate. The committee's role is to make decisions and take actions that benefit the body corporate as a whole. If committee members are pursuing their own agendas and supporting their own vested interests, this role is not being properly carried out.
This problematic situation is more common than you might think, simply because of the structure of the body corporate as an entity. As the body corporate system is a closed one -- there is no need to answer to any other organisation or entity outside of the system -- people can act largely autonomously. They are bound by the rule of law and legislation, of course, but this still permits them to operate largely unchecked.
For instance, the committee members may push to commission improvement projects that drive up property levies. While this is not a negative behaviour in and of itself, it may be problematic if this is against the wishes of the lot owners. The same goes for the inverse -- if the committee is keeping levies low but not handling the desired improvement work or keeping up with regular maintenance. Basically, if the committee is acting contrary to the wishes and needs of the lot owners, this is a sign of disconnect within the committee.
The way that the body corporate is organised -- with voting and democratic process required to set change in motion -- means that there is always going to be a party who loses out; a party who does not get their way. In most cases, this is not a problem. The majority will get their way, and these decisions should balance themselves out over time.
However, the committee of the body corporate is set up a little differently. The aim of the committee is to shield lot owners from the worst effects of disagreement and confrontation. As we've already touched on above, the committee should be acting exclusively in the interests of lot owners. This should not be derailed by infighting and confrontation between committee members.
These members need to minimise disagreements where possible. Yes, the committee members are human beings, so they can't always be expected to see eye-to-eye. However, an element of professionalism is crucial here. They should be able to put these differences to one side and work with the common good of the body corporate in mind.
If crucial actions and forward progress are being arrested by disagreements within the committee, or if the strata committee is beset by bullying and anti-social behaviour, this is a bad sign. Just like too much confrontation and arguing is a negative aspect of any group, it displays a damaging culture within the committee. This has several practical implications, including delays in carrying out works and increased costs due to inefficiency.
One of the key roles of the committee is to collect levies when they become due. It is these levies that provide the capital for improvements and the general operation of the building. If levies are not being collected, cash flow grinds to halt, along with maintenance, upkeep and other operations.
This might not be solely the fault of the committee. It is common for levy arrears to exist in a body corporate to some extent. The question is, "why?" If the committee is proactively issuing contribution invoices and seeing that collections are made, with or without the aid of a strata manager, then it is likely an arrears problem that stems from some owners not paying their dues.
If levies are building up and are not being properly collected, or if there is not enough cash flow to maintain the operations of the building, this is an example of negligence within the executive committee of the strata. This is harmful behaviour that cannot be tolerated.
Annual General Meetings (AGM) are crucial to the operation of the body corporate. The AGM covers a range of different topics, including the following;
Even if the committee has recently held a meeting outside of the normal schedule, you will still need to hold an AGM to handle all of the above points. These AGMs are held within three months of the end of the previous financial year, even if lot owners or committee members feel there is nothing pressing to discuss.
So, what happens if these meetings are late? If the late running of the meeting is a one-off, the answer is 'not a lot'. It doesn't matter too much if the meeting takes place outside of the three-month window as long as the meeting is held in a reasonably timely manner and all the necessary items are discussed.
This becomes problematic if meetings are missed repeatedly. This may show that there are disagreements or unproductive behaviours taking place within the committee that are preventing its smooth operation.
We have already looked at a few aspects of running a body corporate committee, such as handling levies and running AGMs. In fact, these are just two of the many duties that fall to the members of your committee.
The committee will also be responsible for handling repairs and maintenance on the property. These repairs and maintenance tasks can be divided up into two distinct categories: routine and ad hoc.
Routine maintenance refers to scheduled jobs that are designed to keep the property running as it should. As building components wear out and structural elements need to be replaced, the ongoing maintenance schedule needs to reflect this. The committee is in charge of this schedule.
Ad hoc maintenance or repairs take place outside of the regular schedule. If something is unexpectedly broken or damaged at the property -- perhaps because of bad weather or another unforeseen incident -- this needs to be taken care of. Again, this is the responsibility of the committee.
A harmful environment within the committee may lead to these tasks being missed. When repairs are not being taken care of or when routine maintenance is being missed, this is a bad sign.
Budgeting is an important factor in the work of a body corporate committee. The levies and AGMs we have already discussed represent just two parts of this. In fact, managing a budget is more complex than this. It will take up a significant portion of the committee's time and effort.
Negative behaviours such as lax processes or undue levels of disagreement may derail these efforts. If the committee is forced to increase levies or introduce a special levy to make up for a budget shortfall, this may result from either poor forecasting and budgeting or ongoing failure of cash flow management. Either way, this is not something you can afford to accept with the running of your property.
The body corporate committee plays a vital function in the protection and upkeep of a strata-titled property. A harmful committee can be a nightmare, but a great committee is a real asset to all the owners.
Need help getting your body corporate back on track? Schedule an obligation free call with a qualified and experienced Northern Territory strata manager.