Ins and outs of understanding your body corporate agreement
Community living tends to come with many misconceptions about the responsibilities of a body corporate manager. Having and understanding a body corporate agreement helps to clarify responsibilities and set realistic expectations. The agreement can also be used to tailor services that are important to the committee and to ensure the body corporate is paying for what they use.
Find out more from our PICA Group team:
What to look out for when comparing service agreements?
Most reputable providers which are industry-accredited tend to use the supplied agreement template issued by Strata Communities Australia (SCA). This means that the core services listed below under Schedule F are generally the same. The differences come in what other services above the core services are included under the agreed fee and the differences in fees for additional services.
Comparing fees and services
Some providers offer a lower management fees to attract new customers but have higher fees for additional services. Take time to compare the differences in the additional service pricing when considering who to engage, as you may end up paying more in fees unexpectedly.
What is included in a standard body corporate agreement?
An important part of understanding your body corporate agreement is understanding the included ‘Schedules’. A standard body corporate agreement is sectioned into ‘Schedules’ and may contain the following:
- Schedule A: The reference schedule for terms of the agreement, agreed services fees, associated charges, manner of payment and review percentage.
- Schedule B: The fees for agreed services.
- Schedule C: Additional fees for services that are listed in Schedule F. Fees in this section are usually listed as an hourly rate or a set fee for a service.
This is an important section as it determines the cost of extra services such as the hourly rate payable for the body corporate manager to run meetings outside of business hours, or the accounting team’s time to prepare BAS statements.
- Schedule D: The percentage increase that the fees will increases per year.
- Schedule E: Disbursement charges (such as envelopes, reconciliation statement costs, incoming and outgoing phone calls) a body corporate will be charged for. Disbursements can be negotiated as a fixed or variable fee.