The committee of an Epsom apartment building voted to change body corporate managers after years of dissatisfaction. They gave notice to the existing manager, set a transition date, and started interviewing replacements. Then their solicitor read the existing contract. It had auto-renewed for a further three-year term four months earlier — a clause buried on page seven that nobody had noticed. The exit clause required 12 months' notice after the renewal date. The fee to terminate early: $14,000.
Body corporate management contracts have historically been something that committees sign at the start of a relationship and never look at again. That is changing — partly because the Unit Titles Act changes completed in May 2024 introduced specific requirements about what these contracts must contain, and partly because the gap between what those contracts say and what owners expect has produced enough expensive surprises that people are paying more attention.
What the Act now requires in every management contract: the manager's reporting obligations to the body corporate; a requirement to comply with the body corporate manager code of conduct set out in the Regulations; reviews of the manager's performance at specified intervals, including performance targets; the grounds for termination and the process for it; the manager's role (if any) at general meetings; and exactly which records, funds and other property must be returned to the body corporate when the contract ends — and by when.
Those requirements represent a floor, not a ceiling. Any contract entered into from 9 May 2024 needs to include them. But they don't prevent contracts from also including terms that are unfavourable to the body corporate — like auto-renewal clauses, or exit fees that make changing managers prohibitively expensive.
What to watch for in the fee structure: a base management fee should be clearly defined and should include a specific list of what it covers. Additional charges — for things like attending extra meetings, handling one-off legal correspondence, or managing specific maintenance projects — should be set out at a defined hourly or per-item rate. The practice of 'marking up' contractor invoices (charging a percentage fee on top of what contractors invoice) needs to be explicitly disclosed. Undisclosed mark-ups are a red flag and, under the manager's code of conduct, potentially a breach.
The termination provisions deserve careful attention. Three months' notice is a reasonable baseline for a well-run building. Contracts that require 12 months' notice, or that have rolling terms that auto-renew before you can give notice, effectively make switching managers very difficult even when the relationship has broken down. The Act now requires contracts to include specific termination grounds, which should include persistent poor performance against the agreed KPIs.
Records handover is worth focusing on too. When a management relationship ends, the departing manager must return all records belonging to the body corporate — financial records, meeting minutes, owner register, maintenance history, insurance documents, contractor agreements. Contracts should specify what 'all records' means and within what timeframe they will be transferred. Ten working days is a reasonable expectation. Longer than that creates risk.
If your current contract predates May 2024, it is worth reviewing it against the new requirements. A contract that was entered into in 2018 and has auto-renewed twice since doesn't automatically become compliant. Getting clarity on what your contract actually says — and whether your manager is operating consistently with it — is a reasonable thing for any committee to do.
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