QLD: Q&A Aren’t Resident Managers Bound to Disclose Commissions?

We receive quite a few questions about resident managers from QLD both from the Resident Managers themselves and also from lot owners and committee members.

Table of Contents:

• QUESTION: Our resident manager has been arranging services for residents without disclosing that they are receiving a commission. Aren’t they bound to disclose commissions?
• QUESTION: Our Body Corporate did not pay us for services carried out whilst we were Resident Managers. We liaise with 76 other resorts and managers in the area and it seems there is little protection or assistance for the owners of Management Rights.

Question: Our resident manager has been arranging services for residents without disclosing that they are receiving a commission. Aren’t they bound to disclose commissions?

Our resident manager has been arranging services for residents (e.g., aircon servicing, pest control) without disclosing that they are receiving a commission from the suppliers.

Is it within the Code of Conduct for the Caretaker Manager to be accepting these commissions without disclosure?

This has made us wonder whether the resident managers have also been getting any kickbacks from suppliers for materials and services to the Body Corporate they are sourcing on our behalf.

Answer: Be careful, these accusations have the capacity to be defamatory.

No matter what these things never smell right, but it always takes two to tango. A person cannot receive an undisclosed commission unless the supplier partakes in the same deception.

But, if the services are providers to owners there is probably no breach of the Code of Conduct as the Code applies just to services rendered under the persons engagement. The provision of services to lot owners is almost certainly never going to be covered by a caretaking agreement because that will ordinarily just deal with services provided to the body corporate as a whole.

As an aside, these accusations get thrown around a lot, and they do have the capacity to be defamatory. So, before anything further was said or done, I would be making I was 100% sure that I had hard evidence that these things were taking place.

Frank Higginson
Hynes Legal
E: [email protected]
P: 07 3193 0500

This post appears in Strata News #297.

Question: Our Body Corporate did not pay us for services carried out whilst we were Resident Managers. We liaise with 76 other resorts and managers in the area and it seems there is little protection or assistance for the owners of Management Rights.

We have an issue with our Body Corporate not paying us for services carried out whilst we owned the Management Rights in a complex for the last four years. The previous Resident Managers have been paid for these functions.

We have now pointed out all those invoices paid to the previous Resident Managers and Body Corporate still refuse to pay.

We have since sold the Management Rights. We experienced a loss of income from the unpaid invoices, meaning our sale price was also diminished by over $10,000. What recourse do we have?

Since putting in a second request for payment from the Body Corporate we have been told by the Committee chairperson we are no longer welcome at the resort complex.

This has seriously affected the business relationship we have with the new Resident Managers at the complex.

We also noticed during our 4 years, when we extended our lease we paid our legal costs plus the Body Corporate’s legal and administrative costs. We would like to know how the Body Corporate can charge us at a rate of $300 per hour for their services for the required meeting and administration etc. This seems excessive.

We now intend to proceed in forwarding this issue to QCAT for a decision. Are there any other avenues we can seek to further this claim?

We liaise with 76 other resorts and Resident Managers in the area and it seems there is little protection or assistance for the owners of Management Rights.

Thanking you in advance as any advice is appreciated.

Answer: Resident managers are usually paid a fixed sum for fixed duties.

This is all a question of contract and the issue comes up regularly. Resident managers are usually paid a fixed sum for fixed duties. There is always going to be grey about whether those duties extend to some of the things resident managers do. It is almost impossible to draft a document that covers every single eventuality for a strata scheme.

If the resident manager does work that is outside the scope of their duties then the expectation is they should be paid for those, but the caveat I put on that is that it should be by agreement with the body corporate before the work is performed. In that sense, it is no different from the relationship we have with our clients. We do a job, with a scope for a fee. If what we need to do extends beyond that scope, what we do is go to the client and say, ‘this has changed, here are the extra costs, do you want us to do it’? and go from there. I think if the same approach was adopted in management rights, it would save a lot of disputes.

In this one, any QCAT application is going to relate to a claim for services rendered and a key part of the claim is going to be whether the work was covered in the caretaking duties, and if not, why the work was done for four years without payment being pursued….

This post appears in Strata News #203.

Question: As the Body Corporate is not a business, is it the Caretakers or Resident Managers, as contractors, who are responsible for managing their workplace safety issues?

We have caretakers or Resident Managers in our Strata complex who are engaged under contract. Recently they declined to work in an area of our gardens because of a perceived workplace safety concern.

They have asserted that it is the Body Corporates responsibility to take whatever action is necessary to remove the danger. We assert that since the Body Corporate is not a business as defined under the Act it is the Caretakers or Resident Managers, as contractors, who are responsible for managing their workplace safety issues.

Answer: I suspect it is an issue for the body corporate.

I first wrote about bodies corporate being PCBU’s here:

What does a committee and the board of directors of BHP have in common?

If your body corporate is, what is now called, a Person Conducting a Business or Undertaking (a ‘PCBU’), then the statutory obligations of committee members are identical to those of the directors of BHP.

The short version is that I think any body corporate that has Resident Managers providing real estate activities from onsite is a PCBU. Its workplace is the common property.

The for Resident Managers, the height question I covered here:-

Working at Heights in Management Rights – so I suspect it is an issue for the body corporate.

The Code does not dictate what a safe working height actually is. What it does do is set out what safe working conditions are.

Question: As Residential Managers at a scheme, are we required to share our expenses with the chairman and the body corporate committee?

We have the management rights to a small block of holiday units.

Recently, the body corporate manager has instructed the committee to ask for details about what we are charging for advertising of units, expenses like travel and uniforms, professional fees.

As Residential Managers, are we required to give our advertising details to the chairman and the committee? We have nothing in our management agreement to suggest we have any obligation to show them these details.

Also, are there any rules around what we claim as advertising costs or is it a fair and reasonable rule?

Answer: Letting really has nothing to do with the body corporate.

Letting really has nothing to do with the body corporate. It has everything to do with individual owners who choose to engage the manager to let their units. If individual owners want to ask those questions, they can, and then it is up to the manager as to whether they answer them.

It is no different to a client asking us what we spent on travel last year. We can tell them if we wanted to, but there is certainly no obligation to do so. How we run our business is up to us, and the same applies to resident managers. If owners are not happy with that they will be able to terminate their letting appointments and take their business elsewhere.

In terms of what is charged for advertising, it can vary quite a bit. Most residential managers charge a percentage of turnover but some charged fixed fees, and in permanent complexes, it is sometimes just REA advertising at costs as required. Residential managers should not be afraid to account to their clients on how they spend the advertising monies that have been raised.

Frank Higginson
Hynes Legal
E: [email protected]
P: 07 3193 0500

This post appears in Strata News #140.

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