Question: The body corporate put forward a vote to increase our admin fees. Our caretaker is an owner. Are they able to vote, or is this a conflict of interest?
At the last AGM, the body corporate put forward a vote to increase our admin fees.
A substantial amount of admin fees go towards our caretaker, who is also a lot owner. Is the caretaker excluded from voting due to a conflict of interest? Essentially, they are voting for their caretaker fees to go up. Is $200k pa. for caretaking normal?
Some lot owners were not notified about the voting. Does this make voting invalid?
Answer: Most of the key items on your admin budget are non-negotiable.
While owners can vote yes, no or abstain to levy motions, this process creates an illusion that the expenses these motions raise money for are optional.
The reality is that most of the key items on your admin budget are non-negotiable – your scheme is required to pay insurance, caretaking contracts are legally binding, and the body corporate is obliged to maintain the common property in good condition.
These costs are fungible to the extent that if you want to save money, you can select the cheapest insurance policy on offer or choose a lower priced maintenance contractor, but for the most part, you are committed to these expenses. As the costs increase, so will your levies.
Regarding caretaker contracts, there is even less flexibility. They have guaranteed annual increases written into the contract for the term of the contract. These are fixed costs and must be considered in your budget each year – or if they are not considered, you will soon find your scheme is out of money and facing legal jeopardy.
If you are concerned about this, it is probably worth calculating how much the caretaking contract will cost over the contract’s lifetime. See a blog we wrote about this here: The caretaker crunch: Schemes with caretakers may be particularly affected by high inflation.
Given this, it seems reasonable that the motion for your admin budget is proposing an increase to accommodate increases in the caretaking fees.
And, if the caretaker is an owner, they are allowed to vote on this. There is no conflict of interest exclusion here. They are not really voting for their increase as it is already guaranteed as part of their contract.
There is also no standard amount for caretaking contracts. Ideally, they should be a fair reflection of the work done, but there is little place for idealism in body corporate. Some contracts are reasonable and some less so, but unless your contract is within its first three years (Something can be done about unfair and unbalanced Caretaking Agreements) the contract you have with your caretaker isn’t going to change just because you think it seems unfair.
In terms of owners not being notified about the voting, this would indicate a serious flaw in the meeting process if the claim was correct. However, you would need to substantiate what you mean when you say some owners did not receive notification. It is not unusual that some mail gets lost in the post, other mail is received and forgotten about, and some email gets blocked or pushed into spam inboxes. It’s difficult to control the delivery process completely, so unless there has been a systematic failure, it’s hard to say a vote is invalid. You can go back to your committee and body corporate manager with a list of owners who didn’t receive correspondence and ask them to check the records. If there is time, they can be resent the notice. And, for what it is worth, as a manager, I would recommend all owners sign up for email receipt of documents as it is far more reliable than snail mail.
William Marquand
Tower Body Corporate
E: willmarquand@towerbodycorporate.com.au
P: 07 5609 4924
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