Contracts are approved by ordinary resolution. Usually the chairperson will sign the contract on behalf of the body corporate.

The 2 most common types of service contracts are:

• contracting a professional manager to carry out administration services
• contracting a building manager to maintain the common property

Body corporate managers

A body corporate manager is a person who is employed by a body corporate to carry out 1 or more of the following services:

• record keeping and other administrative tasks
• financial services, including the handling of money belonging to the body corporate or its members
• regulatory compliance on behalf of the body corporate.

Terms that must be included in the contract or agreement with a body corporate manager

The agreement setting out the terms of engagement must include the following terms:

• the manager’s reporting requirements to the body corporate on the performance of the manager’s functions
• the requirement to comply with the code of conduct
• requirement for reviews of the manager’s performance at specified intervals, including performance targets
• the grounds for termination and the process for doing so
• the role, if any, of the manager at general meetings of the body corporate
• records, funds, or other things relating to the body corporate that must be returned by the manager when the agreement ends or is terminated
• the date by which things must be returned.

Building managers

A building manager will carry out the long-term maintenance plan. They may provide advice on the following:

• what the plan should cover
• when maintenance needs to be done
• how much it might cost
• how much money should be saved for future work

Unit title maintenance

Service contracts and signage agreements

The term of service contracts (for example, with body corporate managers or building managers) and signage agreements (for displaying signage) that a body corporate can enter into is limited to 24 months after the control period ends, unless specified protections are included in the contract or agreement.

A control period is when the unit title development is newly built, and a developer effectively still has control of it.

Signage agreements have the same protections that service contracts have, to make sure the conditions are fair for unit owners. Service contracts and signage agreements can be entered into for longer periods if the contract can be varied after the developer’s control of the unit title development ends. The service contract or signage agreement must also require the body corporate to agree to any renewals.

Provisions of service contracts and signage agreements

The developer must ensure that service contracts and signage agreements have a fair and reasonable balance between the interests of parties and the terms are appropriate for the unit title development. In addition, for service contracts, the powers and functions to be exercised need to be appropriate for the unit title development.

If a body corporate considers that a service contract or signage agreement does not meet the requirements of the Unit Titles Act, it can apply to the Tribunal or courts. The Tribunal or courts may require the other party to pay compensation to the body corporate if the body corporate has suffered loss or damage because the contract or agreement does not comply with the Unit Titles Act. The Tribunal or courts may also make an order terminating the service contract or signage agreement if the contract is harsh or unconscionable.

Things to consider

Whatever kind of service provider you’re thinking of, you should always:

• Decide exactly what you want them to do, and put it in a contract. 
• Shop around and find the one that’s right for you.
• Check references.

Entering and witnessing contracts(external link) (Unit Titles Regulations 2011, Clause 17)