Considerations When Contemplating Use of Owners Corporation Advocates and Consultants
As in real estate where we have Advocates who have a professed desire to help the consumer when selling their home, we are now seeing a move by organisations identifying Owners Corporation Management as a potential new service area.
Real estate Advocates are not generally remunerated by the consumer under their advocacy model, but by sharing in commission proceeds with the selling agent that they nominate. Many body corporate / owners corporation consultancies have now sprung up attempting to replicate the real estate sales advocacy model. I guess it could be argued that in fact the consumer is ultimately paying for the advocacy service.
Scenario for Owners Corporation
Your Owners Corporation (Body Corporate) wishes to change its Manager and an advocate/consultant is approached to assist you. You can be pitched different methods of paying your advocate/consultant;
- The advocate/consultant indicates they can find you a manager and give you a separate invoice for their services. Nice and clean and everyone knows the cost.
- They indicate that they will find you a Manager and that they take a commission from the Owners Corporation Manager that they recommend for appointment. The Owners Corporation is not having to pay.
Yes this is a rather sad indictment on society in some ways that we don’t like getting a separate accountable invoice and often open our selves up to issues and have a whinge about any perception of a hidden fee when things go South. The Financial Planning Industry long feared that having to invoice separately for services would be detrimental to their business model, but if anything this fear has been turned into a positive marketing tool.
And a final thought to complicate matters. We find now that on a more regular basis, in an attempt to maximize the return on their developments, developers seek to sell management rights to Owners Corporations. I can plainly see that under the Owners Corporation Act that this creates a conflict of interest and one can also see that crunch time is coming for these types of practices (1 December 2021 in Victoria is a start in addressing some of these issues with a few changes to the OC Act). I get it that business is ‘business’, but from experience don’t like to see the future of peoples investment tossed under a bus for a few dollars, which ultimately can reflect poorly on a developer down the track.
Lesson from This Is
You are the Owners Corporation. You are in control. You can insist on being part of the tender review process if using an Advocate or Consultant. And actually discuss the remuneration for the process in front of the parties in the same room, both the advocate/consultant and the recommended manager.
If you are proceeding with using a Consultant or Advocate make sure you get an invoice addressed to the Owners Corporation for the service. Keep it transparent.
Yes, I was once an OC Manager some years ago and I created theOCguide due to many queries I would get from Committees of Management, Lot Owners and professionals in this ‘Industry’ which is ironic as you and your Owners Corporation are now part of an ‘Industry’ that house one third of the population in Australia. In fact I could easily have managed many more Owners Corporations if I had been willing to pay a Secret Commission or do a ‘deal’, but Probity and Transparency are needed as demonstrated by a number of these buildings contacting me later after running in to complications under their management agreements.