Body Corporate managers face legislative reform

A body corporate chairperson was unhappy with the performance of their body corporate manager and sought legal advice.  It transpired as part of that advice that the current body corporate manager was not aware of the recent changes to the Unit Titles Act placing additional duties on the manager, which raised further concerns for the chairperson.

Recent legislation changes in the Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Act 2022 introduced higher professional standards for body corporate managers, including compliance with a new code of conduct and requirements for management agreements.

The legislation came into effect on 9 May 2023.

Body Corporate Managers’ Code of Conduct

Under the code of conduct, body corporate managers are required to:

• Develop an understanding of the new rules;
• Conduct their roles with honesty, fairness, and confidentiality;
• Act in the best interests of the body corporate; and
• Disclose any conflicts of interests to the committee.

Engagement of Body Corporate Managers

Bodies corporate with 10 or more principal units are now required to engage a body corporate manager. A body corporate manager is a person who is employed by the body corporate to provide one or more of the services:

• Record keeping and other administrative services;
• Financial services, including the handling money belonging to the body corporate or its members; and
• Regulatory compliance services on behalf of the body corporate.

If a body corporate of 10 or more principal units wishes to opt out of the requirement to engage a body corporate manager, they may do so by special resolution.  We recommend that bodies corporate pass such resolutions as soon as possible if they do not intend to have a manager.

Management Agreements

There are certain terms which must be included in an agreement with a body corporate manager including:

• An outline of the manager’s reporting requirements to the body corporate and regular reviews of their performance;
• The requirement to comply with the code of conduct set out in the Regulations;
• The grounds and process for termination of the agreement;
• The role, if any, of the manager at general meetings of the body corporate;
• List of any records, funds, or other things relating to the body corporate that must be returned by the manager to the body corporate when the agreement is terminated and the date by which they must be returned.

Disclosing and Managing Conflicts of Interest

Body corporate managers are also required to disclose any conflicts of interest to the committee or its chairperson who will be required to manage an interests register to record the disclosures.

Body corporate managers acting for more than one body corporate will need to take precautions not to intermingle their funds.

If you are a body corporate and are unsure whether your body corporate manager is complying with these recent changes, it is recommended you seek legal advice. 

Equally, if you are a body corporate manager, it pays to be aware of your obligations, and update your management contracts accordingly.