Special Report: Calls to licence body corporate managers

By Grantlee Kieza, Industry Reporter

Industry leaders in strata management are calling for stricter requirements for body corporate managers in Queensland.

Unlike other states, body corporate managers do not require licensing or qualifi cations in Queensland, even though they may be in charge of a scheme’s funds totalling millions of dollars.

Strata Community Association (SCA) Queensland President Kristi Kinast told Resort News that it was “clearly unacceptable” that “you can be a builder or baker on Friday and a body corporate manager on Monday.” “It is well past time for body corporate managers to have compulsory ethical and professional standards to protect consumers from inappropriate conduct,” Ms Kinast said.

“Billions of dollars are under management in an industry that is totally unregulated. “SCA (Qld) off ers high educational standards and has a professional standards process, but we do not have total coverage of the industry and membership with us is voluntary. We have no recourse against non-members. “A regulatory barrier to being a body corporate manager must be created – this is essential to consumer protection.” Ms Kinast said anyone could get a free ABN online and call themselves a body corporate manager with no regard for professionalism or ethics. “This is frightening,” she said, “considering body corporate managers manage billions of dollars of other people’s money across the state.” The SCA describes body corporate or strata managers as professionals “who assist a body corporate in administering their scheme.” The body corporate committ ee engages a manager on a contract basis, defi ning the services included in the Standard Administration. Their work typically includes meeting management, managing the fi nancial aff airs of a body corporate, negotiating and renewing contracts and agreements and arranging regular maintenance. In Queensland there is no government-controlled licensing or registration requirement for body corporate managers. However, SCA (Qld) members are required to fulfi l eligibility criteria to join and have ongoing requirements to maintain their membership. Despite this, body corporate managers can still enter the industry with no specifi c qualifi cations. Todd Garsden, a partner at Mahoneys lawyers, told Resort News: “There is plenty of training out there but no requirement to take that training, and they are not necessary qualifi cations or minimum standards.

“So eff ectively the position of body corporate manager is completely unregulated. “The SCA is pushing quite hard to actually require licensing to a minimum standard and that would require training to receive those qualifi cations. The intent is to make licensing a requirement for body corporate managers in Queensland rather than an option. “Obviously there have been some issues in the past with managers who have run off with body corporate funds. And we are talking about huge amounts of money. “Some managers out there have very litt le experience in body corporate management and just see it as an add-on to an existing business.”

Todd Garsden, partner, Mahoneys lawyers

Ron McDonald, a Principal Media Offi cer with Queensland’s Department of Justice, told Resort News that while not required to be licensed in Queensland, a body corporate manager must comply with the code of conduct for body corporate managers and caretaking service contractors, which is automatically included in their terms of engagement. Mr McDonald said: “Under the code of conduct, a body corporate manager must have a good knowledge and understanding of the Body Corporate and Community Management Act 1997 and the code that applies to their functions; act honestly, fairly and professionally in doing their job; act in the best interests of the body corporate (if lawful to do so); not be fraudulent or misleading; not unfairly infl uence the outcome of a committ ee election; and keep records as required by the Act.” But that “good knowledge” is open to interpretation, according to Todd Garsden. “And even though that code applies to someone who is a body corporate manager, what are the consequences of breaching it?” Mr Garsden asked. “Nothing. “You can have your agreement terminated or you can be forced to sell it to someone else, but that's it.

“There are professional companies specialising in body corporate management but there can be serious issues when someone inexperienced takes on the role.

“You and I could turn around tomorrow and say we're body corporate managers and start gett ing clients, but really we might have no idea about how to run that type of business. “When it comes to the actual management of funds and decision-making over large sums of money, that aspect needs regulation and oversight just as it does in a real estate offi ce.

“Whether that's done through a licensing system or something else it would make sense. There’s not much argument against licensing for body corporate managers and a lot of argument for it. “It would be a real safeguard for the industry.” ARAMA CEO Trevor Rawnsley said all practising ARAMA members were required to hold a real estate license.

“There are consequences if any of our guys break laws because they could lose their license and if they lose their license they could lose their business, which could run into millions of dollars,” he said.

“But for a lot of unlicensed body corporate managers there are no consequences for poor performance. “The SCA educates body corporate managers but there is nothing quite like compulsion to ensure that the industry is properly regulated.” Chris Irons, the SCA (Qld) Senior Vice President, was Queensland’s Commissioner for Body Corporate and Community Management for fi ve years. He said that every strata manager he had spoken to would be "very comfortable” if the industry was regulated. “It always depends on what that licensing would look like,” Mr Irons said, “and what you are actually hoping to achieve. “Speaking from my personal experience one of the main things that should happen is that there has to be some form of continuing professional development because strata laws change all the time and you have to have a strata manager who is up to speed with that. “An interesting point to make, though, is that just because you regulate something doesn't automatically mean everything is magically bett er. The real estate industry must be one of the most heavily regulated industries in Queensland if not the world and yet real estate agents frequently fi nd themselves in the news for something going wrong somewhere. “The other point that everyone needs to remember is that regulation costs money. The government has to enforce it, the managers have to spend money to achieve the basic minimum, and then the cost must be passed on to someone. “That someone will be the unit owners.” Col Myers, a principal of legal fi rm Small Myers Hughes, told Resort News: “I think it's a horses for courses issue.

“If you're talking about some of the big inner-city complexes, the high-rise towers with quite sophisticated systems with lift s and fi re rating issues, I can see a reasonable argument for someone taking over the management of those needing higher qualifi cations than someone doing caretaking in a suburban townhouse complex. “The argument from managers is that even though it is their duty to look aft er those things they can engage specialist consultants to do that sort of work and pay for it out of their costs.

“That's probably what's happening a lot these days. “Being a body corporate manager on some of the big inner city buildings requires a higher level of knowledge like running a facilities management business. “These days a lot of facilities managers look aft er big commercial properties in the cities. “Body corporate managers in big complexes need to lift their qualifi cations to be up there with the work that those facilities managers do.” Lynda Kypriadakis, the Managing Director of the Diverse Group Of Companies & DPX Projects, says any specialist consultant selling services should be competent, and those same rules should apply to body corporate managers, and especially building managers and caretakers. “There should be a form of accreditation in recognition of skills for both body corporate managers and building managers,” Ms Kypriadakis said. “I actually think there is more vulnerability around regulatory compliance with an unqualifi ed building manager than there is with an unqualifi ed strata manager. “The caretaker and facilities manager or building manager needs a qualifi cation because they're coordinating and arranging maintenance of essential services infrastructure that is subject to over 100 Acts and regulations that mandate things being done to a standard. “You have to be qualifi ed and competent to do that properly. “Whatever form that recognition of skills takes I’m in support of that for any industry.”

But Grant Mifsud, a partner with Archers, The Strata Professionals, says he’s under no illusion that regulation or licensing would fi x “problems that are reported from time to time” with body corporate managers. “In any industry you have good and bad operators,” Mr Mifsud said. “There is licensing among real estate agents, accountants and solicitors, but bad operators still come along from time to time. “Archers, The Strata Professionals agree that licensing or regulating body corporate managers would be a good tool to improve the industry and we support that by voluntarily gett ing the qualifi cations required by the SCA Qld.

“But we do not necessarily have the opinion that it’s going to fi x everything. “Education is the key here, and look, with any goods or service that you purchase, you should be doing some background checks. “If the price is too good to be true, it usually is. That applies when you’re looking to appoint a body corporate manager. “Some opportunists see the role as a chance to make money because the entry barriers to the business are minimal.

“And there are criminals who see being a body corporate manager as a chance to take advantage of unsuspecting unit owners who put their trust in them.”

Grant Mifsud, partner, Archers, The Strata Professionals