How Do You Start Your Own Body Corporate? (Ep218)
The question I’ve got today is an email from Nick who asks, “Hi Ryan, how do you start your own body corporate?”
In case you don’t know a body corporate is the governing body that helps you manage a unit block or a group of townhouses. Basically a group of people that share common areas like driveways or gardens. So if you’re on a strata title and sharing with other people then you’re going to need someone managing the body corporate.
That someone can be yourself or it can be a professional company that does it for you. However it’s not legally required that you have a professional company do it so it is possible to do it yourself. It’s a very technical topic so if it’s not something that you’re actually interested in then I would suggest going through to another post. But if you are interested in running your own body corporate this will give you a good overview.
As I said before you can do it yourself but you do need to be aware that you will be taking on some responsibility and liability if things go wrong, you’re not keeping up with legislation or your insurance lapses. It can also be a lot of work. There is a steep learning curve and a lot of time needs to be put in to understand how to do it properly.
A great resource if you’re interested is Strataman and he has a do-it-yourself strata kit for people in New South Wales. It’s about $400 so it’s not cheap but that would give you a kit to go through everything.
Some Basic Responsibilities
The first thing that you’re going to need is a chairman who will be in charge. You’ll also need a treasurer to manage the finances and from my knowledge the chairman and the treasurer can be the same person. You will also need a secretary to minute the meetings. If you do decide to do it yourself then you’ll need to understand the basics.
Some of what you’re going to need to understand:
- What common property is
- What is the common property on the property that you are managing
- What insurances do you need
- What valuations need to get done on a regular basis to ensure insurances are kept up to date
- How to comply with fire regulations
- The legal requirements for safety audits for the property
- The difference between a sinking fund and an admin fund and how you manage them
- How to manage the body corporate accounts, bank accounts and all of the finances
There are quite a lot of things that you need to know about. You don’t need to have specific qualifications to run your own body corporate in Queensland but I’m not sure that it’s the same across every state.
I want to let you know that from what I’ve been researching running your own body corporate can work well if 1) you have a good relationship with the people and other owners in your block and 2) you have a lot of owner occupiers in your block. If you have a large percentage of people who own and occupy in the block vs. people who own it but rent it out (investors) then it seems to go better. This is because people who live there probably take more pride in the common areas and the unit block itself. Whereas people who are just renting don’t really see the areas as their responsibility.
If you end up dealing with investors that don’t care about the upkeep then you might want to consider paying the fees to avoid basically running everything by yourself.
Some Detailed Responsibilities
- Issuing bills–You have to do this on time for the fees and ensure that the money is paid. This also means that you would need to follow up with the other owners if they didn’t pay their fees on time. If they don’t pay then you’re going to have to deal with that confrontation and those legal issues.
- Arrange for an annual general meeting (AGM)–You have to make sure one is held each year and that every owner gets sufficient notice. You also have to ensure that the correct minutes are taken. So even if you are the chairman you need to make sure you have a secretary and that the correct minutes are being taken.
- Arrange maintenance–Make sure you schedule maintenance to occur on the property when it’s required and that someone’s on-site when the trades people come through. In some cases you may not have to have someone on-site for the trades people but there are other times where they might need access to locked areas in which case someone needs to be there.
- Deal with disputes–Let’s face it owners aren’t going to always be friendly to each other so you need to be prepared to settle disputes or disagreements between them.
- Handle land registry and settlement agencies–When an owner decides to move on and sell their property you’re going to need to know how to deal with the land registry and settlement agents.
- Know how to manage agents and tenants–If tenants are doing the wrong thing then you’re going to be the one to deal with that and make sure that they actually follow the rules.
Again there is a lot to learn but it can be done. I still suggest going to Stratman because it could be very useful to you. The Department at Fair Trading could also be very useful if you find yourself in a difficult situation when you are running it.
I haven’t gone through the specifics of how to run your own body corporate but I hope that this has been helpful. I suggest getting on Google and doing some searching if you want to set this up yourself.
If you’re desperate and want me to create a kit that will show you how to do this then that is definitely something I would consider. I’m about to launch a kit for owners who are leasing their properties themselves. Once I’ve done that if there is demand then I’d be happy to set up a body corporate kit to help people manage their own body corporate. It would be a couple hundred dollars so pretty expensive but if that’s something you want me to do then contact me at [email protected] or go to onproperty.com.au/contact and send me an email through the contact form there.
I hope that this helped answer your question Nick. I’m sorry that I couldn’t go into full detail but it should give you an overview so you can now assess whether or not you think you have the time to do this. If you still think it’s a good idea then keep pursuing it and I wish you the best of luck.
Until tomorrow remember that your long term success is only achieved one day at a time.