Question: Our body corporate decided to pay plumber repairs for a leak in a lot and then seek reimbursement from the owner. Can body corporate funds be used in this way?
When a plumber is called to investigate the cause of and repair a water leak in a lot, our body corporate decided to pay the plumber’s invoice and issue a “notice to pay” to the owner. Is this legal?
Can body corporate funds be used to pay for a repair that is an owner’s responsibility even if reimbursement follows? If an owner refuses to reimburse the amount, body corporate funds could be tied up indefinitely until the dispute is resolved.
The body corporate wants to ensure the plumber is paid promptly, rather than any possibly delayed payments directly from an owner. Has the corporate body taken the correct action?
Answer: Stop the leak as quickly as possible before more damage occurs.
When a leak occurs, it’s imperative to stop it quickly. When a leak is reported, often you don’t know if it is coming from common property or owner’s property. So, what is the best thing to do in these situations?
There probably isn’t a one-size-fits-all answer. Different buildings may successfully handle things in different ways.
However, if a leak is reported to a body corporate manager, they can generally send a work order quickly and have a plumber attend the site ASAP.
If that plumber can stop the leak and prevent damage to the property and an insurance claim, that’s a good outcome.
Alternatively, the manager takes additional time contacting the committee and asking them to inspect or contact an owner who may or may not be responsible and may or may not be available directly.
Most of the time, this alternative option results in a much longer time to fix the leak, and the chance of additional damage increases. How is this helpful?
As such, I don’t see any major problems with how your manager handles issues like this. However, if the committee is unhappy with the manager’s choices, they can review and instruct them accordingly.
Regarding the payment chain, the simplest way to think about it is that the responsibility for paying an invoice to a contractor sits with the person who arranged for the contractor to attend. If they think a third party should pay the invoice, they can contact that party, but the contractor shouldn’t be waiting for payment over a issue that does not concern them.
So, if the body corporate books the contractor to attend, it’s reasonable for the body corporate to pay the invoice. Any initial work done by the contractor should be to stop the leak as opposed to carry out all the repairs required. This kind of thing should be stipulated in the work order. If a contractor stops a leak on the instruction of the body corporate and does unapproved repairs, that’s another issue. This shouldn’t happen, provided you use responsible contractors and clear work orders.
And, if it turns out the owner should pay costs, it’s correct for the body corporate to ask them. The owner can refuse, and some do. Sometimes, a little persuasion is required and if there can’t be a mutual agreement on the costs, the body corporate may need to seek a legal resolution to impose the costs. That’s difficult and frustrating for everyone, but it doesn’t mean the initial decision to take action was wrong. You need to consider this against what would have happened if the leak hadn’t been stopped. It’s a counterfactual, so we can’t say for sure, but the longer a leak goes on, the more damage it does and the more headaches it causes. Other people may disagree, but for me, whatever action is taken to stop the leak quickly is probably the right choice. If that leads to a few issues after the fact, so be it.
William Marquand Tower Body Corporate E: willmarquand@towerbodycorporate.com.au P: 07 5609 4924