What is a Body Corporate?

Welcome to Community Living

If you own a property with a body corporate you are part of the growing trend towards community living where you retain the benefits of privacy and lifestyle without the work and responsibilities of private property. Most of these community living properties have a body corporate which looks after caretaking, grounds maintenance and provides peace of mind on matters of insurance and the management of common property. When managed by a professional body corporate manager, your body corporate will provide maximum value and service to you.

What is a Body Corporate?

The process of subdivision of a property for multi-unit development results in the need for a managing body to manage common ownership aspects of the property. On registration of a Community Titles Scheme, a "Body Corporate" becomes incorporated. Bodies Corporate are regulated by legislation that has undergone many revisions both to deal with the changing property ownership trends and to adjust to the continually evolving body of knowledge and experience gained from regulating the industry. Bodies Corporate offer members more affordable property with reduced shared costs of property maintenance. There are different types of bodies corporate including apartment blocks, attached townhouses, double-storey villa units or mixed-use developments (residential and commercial).

As an owner, what part do I play?

If you are the owner of a unit in a property that has a body corporate, you are a "member" of that body corporate. When a lot is sold, the new owner becomes a member. A tenant paying rent to an owner is not a member of the body corporate and does not generally interact with the body corporate. The body corporate is responsible for a range of compliance, financial, insurance and essential services matters. These responsibilities are usually delegated to a professional manager who also looks after the insurance, manages the caretaking and handles the various body corporate administrative processes. An important part of being a member of a body corporate is that you must adhere to some guidelines to ensure that the group of people can live harmoniously together and that the buildings are maintained in an attractive and consistent way. This usually means that changes to the outside of buildings such as painting or the installation of air conditioners, satellite dishes, awnings etc must be done in collaboration with other members.

What is common property?

Most bodies corporate have "common property". This usually includes the driveway, facilities such as a laundry, gym or pool and also the open space on the property. This common property must be managed and have liability insurance so that it serves only the purposes intended and doesn’t expose the body corporate to unnecessary legal risks.

Insurance – the critical aspect of body corporate management

The body corporate normally pays for one insurance policy that covers full replacement insurance for all the buildings and adequate public liability insurance for the common property. When you own a unit in a property with a body corporate, you need to be absolutely certain that all building and liability risks are covered for the property – particularly when walls, facilities and services are shared. In the event of an insurance claim there is only one company to deal with and no doubt as to who will pay a claim. As a member of a body corporate you do not have to have a separate policy for building insurance if the Body Corporate has a policy. This arrangement is normally more economical than a member buying their own insurance and you are assured of adequate public liability insurance for the common property. Having adequate public liability cover for the common property is critical as a wide range of people have access to it and accidents often result in significant claims – not to mention the legal expenses. Members are still required to have insurance for their own contents and also public liability cover for car spaces and for visitors on their property.

How does the body corporate operate?

Bodies Corporate managed by Ace Body Corporate Management have an individual bank account for each body corporate. The manager is normally the sole signatory to that account under delegation from the members of the body corporate. An annual general meeting is held at the beginning of each financial year of the body corporate. This meeting sets the budget and addresses any concerns of the members. This sets the "contributions" which the members have to pay each year. The amount contributed by each member is worked out based on a table included in the plan. Other meetings may be held if required by the members. The main component of the budget is usually the insurance premium that covers the buildings and public liability risks. Other components are the caretaking, grounds maintenance, repairs, common lighting, maintenance of essential services and the manager’s fees. Bodies corporate vary in the extent to which funds are accumulated in body corporate account. Many operate on a small margin over the normal annual operating costs while others plan ahead and accumulate some funds for major works such as painting, guttering replacements, fencing, paving etc. Should a major unbudgeted cost occur without sufficient funds in the bank, it is normal practice to establish a special levy to pay for that particular works.

Where does the body corporate spend its funds?

The Body Corporate is responsible for ensuring full reinstatement insurance is in place for buildings together with insurance for public liability. It is also responsible for the maintenance of services that connect into the building and to ensure there is adequate public lighting and for the general upkeep of the exterior of the buildings and the common grounds. It is responsible for the upkeep of all common items such as car and pedestrian security gates, intercoms and public lighting

What is covered under the building insurance?

The Body Corporate insurance covers damage and consequential damage to the building itself and all fixtures within the units. The insurance is for reinstatement of buildings but does not cover normal wear and tear, but it does cover legal liability on the common property. Damage to carpets within a unit is specifically excluded. It is highly recommended that Landlord’s insurance be taken out to cover carpets and legal liability within tenanted units and car park lots. Owners and tenants must have their own contents and public liability insurance for their own units.

What does the body corporate manager do?

Provides continuity of management processes and record keeping for the body corporate. Without a professional manager, problems can arise with frequent changes in voluntary members who undertake the duties, resulting in different standards of record keeping and potentially inadequate or missing records.

Ensures body corporate legislative matters are being adhered to

Resolves disputes and provides an objective approach to dealing with members’ concerns or disputes. While disputes are rare, some situations can cause conflict; including tenanted units, parking, noise, adjacent developments etc. An objective, professional body corporate manager can assist in these situations.

Looks after body corporate administration and handles day-to-day paperwork and requests from solicitors etc. Organises annual and special general meetings including minutes, facilitates setting of budgets, collects members’ contributions and maintains a complete set of financial statements.

Administers insurance and deals with brokers and directly with insurance companies as necessary to obtain the most effective and economical coverage for the body corporate. Submits claims, schedules repair work and processes claims paperwork. Provides advice and options to members in relation to public liability issues. This ensures that necessary processes are undertaken for insurance cover and record keeping against possible future claims for public liability.

Administers the maintenance of body corporate facilities and essential services – obtains quotes and schedules works as required to ensure that the body corporate is maintained in good condition and presents no dangers to visitors or members. Schedules essential services reports as necessary and reviews compliance with current legislation.

Schedules grounds maintenance and liaises with caretakers, gardeners and tradespersons to ensure that grounds are maintained to members’ requirements.

For more information, please contact us.