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16 Aug 2013

Body Corporate and third party agreements

Resident managers may enlist the help of third party contractors to provide services for the upkeep of common property.  When enlisting these services, the resident manager should be aware that they must not enter into a contract with an ‘associate’ without the proper disclosure.  In Queensland Section 309 of the Act describes what is considered an associate:

 

(1) For this Act, a person is associated with someone else if—

(a) a relationship of a type to which this section applies exists between them; or

(b) a series of relationships of a type to which this section applies can be traced between them through another person or other persons.

(2) This section applies to relationships of the following types—

(a) marriage, de facto relationship or registered relationship;

(b) the relationship of ascendant and descendant (including the relationship of parent and child) or the relationship of persons who have a parent or grandparent incommon;

(c) partnership;[s 310]

(d) the relationship of employer and employee;

(e) a fiduciary relationship;

(f) the relationship of persons, 1 of whom is accustomed, or under an obligation (whether formal or informal), to act in accordance with the directions, instructions or wishes of the other;

(g) the relationship of a corporation and executive officer of the corporation;

(h) the relationship of a corporation and a person who is in a position to control or substantially influence the corporation’s conduct.

 

Resident managers therefore need to be very careful and particular about whom they appoint to these service positions.  In a situation where there is potential for an ‘association’ (for example tendering for a contract) the resident manager must give written notice to the body corporate of its relationship to the potential provider.  If the resident manager has already granted a tender to an associate and the services have been accepted or already ongoing; the resident manager must give written notice to the body corporate.

If a breach of disclosure occurs the body corporate has a right to issue a remedial notice.  In extreme circumstances the body corporate can terminate an agreement.

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