QLD: What happens if a body corporate cannot form a committee?

Question: No one will nominate for the committee. If we have no committee, will every decision require a vote by all owners at an EGM? What options are available to us?

There are a number of highly relevant and valid reasons (including health) why none of our owners intend to nominate for the committee in the coming year. We have been told that if the minimum number of positions is not filled, every decision will require a vote by all owners at an EGM. Our Body Corporate Manager will charge $1,000 per meeting.

We recognise it would be best to form a committee, but there is every likelihood this won’t happen. Are there any alternative options available?

Answer: All bodies corporate must have a valid Committee. If there is no committee the body corporate can engage a body corporate manager under a part 5 Agreement, to carry out the functions of a committee.

Living in Strata Communities brings with it many joys, but also it brings with it a number of obligations. Compliance with the Body Corporate and Community Management Act, and the associated Regulations Module you are registered under, can be problematic.

With regard to a Committee, all bodies corporate must have a valid Committee. If there is no committee the body corporate can engage a body corporate manager under a part 5 Agreement, to carry out the functions of a committee.

The rules for forming a Committee vary, depending on the Regulation Module you are registered under. For example if you are registered under a Small Schemes Module, you only need a Secretary and Treasurer. This can be two eligible individuals or one person may hold both positions.

I will answer your question as if you are register under the Standard Module.

In which case, the composition of a committee must be at least three (3) voting members and not more than seven (7). You must have a Chairperson, Secretary and Treasurer. There must be a committee even if you have a body corporate manager engaged under section 119 of the Act.

If you cannot form a committee at your Annual General Meeting, you will need to call an Extraordinary General Meeting (EGM) to again call for nominations to try and form a Committee.

If you are not able to form a committee at this EGM you will need to have a body corporate manager appointed under a Part 5 Agreement, section 122.

So what is the difference between having a body corporate manager engaged under section 119 of the Act or under a Part 5 Agreement, section 122.

1. Under section 119, the Committee still make the decisions of the body corporate provides instruction to the body corporate manager. There is an Administration Agreement that would usually have a schedule of set fees for a list of agreement services.
2. Under a part 5 agreement, you basically hand over all the decision making to the body corporate manager. Under this agreement they will charge you an hourly rate for all work undertaken for your body corporate, and this rate could be $500 per hour or higher.

In my humble opinion, a part 5 agreement should be the last resort. Why would you want to hand over the decision making to someone who was not an owner in the scheme.

As you only need a minimum of three (3) voting members to form an eligible committee, I would recommend you try every avenue of having owners nominate.

If an owner has their health to consider and does not want to, or cannot be, on the Committee they are able to nominate a family member. Or a person acting under the authority of a power of attorney given by an owner can be nominated to the Committee.

It is not unusual for owners to feel that they do not want to hold a position on the Committee due to the fear of the perceived work load.

However, when you have a body corporate manager engaged under section 119, they do this work for you but under your instruction. So they basically take the work load off the elected members.

If you cannot form a committee, you will need to appoint a body corporate manager under Part 5 Agreement, at a General Meeting, to carry out the function that would, if there were a committee for the body corporate, be carried out by the committee and each executive member.

This is going to add considerable cost to your owners. So you need to ask owners, why would they want to put themselves to this additional expense.

While there can at times be substantial matters that a Committee need to deal with, if all owners take turns at being on the Committee it helps to share the load.

• You only need Three (3) eligible candidates to form a committee.
• The Committee will then work closely with your body corporate manager.
• Your body corporate manager will ease the workload from the committee but the manager will not have unilateral decision making ability.
• You will have control of your expenditure and other day to day administrative matters.

So my recommendation is to talk to your owners, and see if you can get at least three owners to “give it a go” and join the Committee.

This post appears in Strata News #626.

Karen Thompson
Vision Strata
E: contact@visionstrata.com.au
P: 07 5630 6546