SHARED FACILITIES, BUILDING MANAGEMENT STATEMENTS AND CARETAKING CONTRACTS
The administration of strata schemes where there is a Building Management Statement (BMS) in place can be problematical. This is exacerbated when a caretaking contract covers shared facility items, but the BMS or the caretaking contract does not provide sufficient information to enable accurate determination of each party’s shared facility caretaking cost contribution.
If your scheme is part of Building Management Group with shared facilities, I recommend that you ask to see the contract document(s) that shows the value of the shared facility caretaking services.
- If what you pay your caretaker includes the cost of performing shared facility duties, you want to be certain that you are being appropriately reimbursed by the other benefiting owners.
- If you are being asked to reimburse part of the cost of someone else’s caretaking contract, you want to be sure that you are not contributing too much.
Unfortunately, there are developments which do not have a dedicated caretaking contract for the shared facilities or nominate a separate value for the shared facility components within the body corporate caretaking contract(s).
Not surprisingly, committee members who read these contracts, become concerned that they may be inappropriately charged for costs that the body corporate is not responsible for paying.
Building management statements cover a variety of situations. The most common being a complex where a residential body corporate shares building areas with commercial lot(s), or a complex with multiple residential or commercial bodies corporate sharing building areas.
Most Building Banagement Btatements clearly show the shared areas and state what proportion of the shared facility costs should be borne by the relevant parties. When it comes to caretaking contracts however, knowing the proportion of the shared facility cost each entity should pay is useless unless you also know the value of the caretaking service to which those percentages apply.
For this reason, we are frequently engaged to value the shared facility component(s) of caretaking contracts. This is the only method available for the parties to accurately determine how much each party should be contributing.
The determination of the value of the shared facility component of the caretaking contract is not the only benefit from commissioning a report of this type. The other big benefit is the clarification of the duties schedule. Most caretaking contracts that we examine contain duty schedules that are either ambiguous, include items that do not exist, or do not document work that is required. Duty schedules that are misleading or are deficient result in disagreements between the caretaking contractor and the committee regarding the performance of the contract.