Under section 180 of the Body Corporate and Community Management (Standard Regulation) 2020, the Body Corporate has a responsibility to ensure that the common property is maintained in a structurally sound condition. The Body Corporate has an obligation to ensure that all contractors engaged are qualified and compliant prior to the commencement of works within the scheme.
To meet this requirement Committees and Owners are often required to engage contractors to carry out maintenance, rectification works and/or improvements to the common property.
Items that are imperative to be investigated/reviewed prior to engaging a contractor include:
- Ensuring that the contractor holds the necessary licence for the works
- Ensuring that the contractor has the relevant and up to date insurance cover;
- Completing a reference check to ensure the contractor has a good record;
- Determining if a contract is required to be entered into; and
- Understanding the contractor’s claim payment schedule
Importance of Insurance
It is vital that Committee’s and Owners request confirmation that a contractor has insurance cover prior to engaging their services.
Responsible contractors carry a number of forms of insurance, from contractor’s liability insurance to workers compensation and Home Warranty Insurance. This is due to the fact that once a contractor takes on a job, they are responsible for the legal compliance, safety and quality of workmanship of the works.
Should the Body Corporate engage a contractor that does not have insurance in place the Body Corporate is then taking on these responsibilities and liabilities.
For example, should a contractor, engaged by the Body Corporate, get hurt and the contractor does not have insurance the Body Corporate can be held responsible for the medical expenses and liability of that contractor.
Importance of Licence
The QBCC (Queensland and Building Construction Commission) is Queensland’s Building industry regulator.
The QBCC Act requires a contractor to hold a licence to carry out the following:
- building work valued over $3,300.00;
- building work of any value where it involves drainage, plumbing, gas fitting, termite management (chemical), fire protection, completed residential inspection, building design and site classification;
- building work values over $1,100.00 where it involves hydraulic services design.
Works that do not fall within the above criteria do not require a licence therefore your handyman that completes small jobs is exempt from the above.
Should a contractor be engaged that does not hold the appropriate licence for the works being completed the Body Corporate may have no recourse should the works be defective.
When A Contract Is Required
A contract is required to be entered into between a contractor and the Body Corporate if the works are over $3,300 for residential works or over $10,000 for commercial works.
The QBCC classifies residential work as work relating to Town Homes, separate detached buildings or where a building is 3 stories or less. Whilst generally all else is determined to be commercial works.
The following checklist provides a guide to Commercial contracts:
- they SHOULD contain the following:
- name and contact details of the parties;
- any plans and specifications relevant to the scope of work;
- when the work is to commence;
- the amount and timing of any progress payments; and
- a procedure for dispute resolution; and
2. they MUST contain the following:
- scope of work covered;
- when the work is to be completed;
- the amount to be paid for the work (or how that is to be calculated);
- details of any agreement about retention and securities;
- name and licence numbers of contractors; and
- the address of the site where the work is being carried out.
Should a contract not be entered into the Body Corporate may have no recourse should the contractor fail to finish the works or finish them to the agreed standard.
Payment Claims & Schedules
Should a Body Corporate not have the means to pay a contractor or have reason to hold payment under the Building and Construction Industry Security of Payment Act the Body Corporate is required to issue the contractor a payment schedule within 15 business days of receipt of the invoice.
Should no payment schedule be provided to the contractor and payment not be made the contractor has the right to seek an adjudication order to enforce this payment. Bodies Corporate are then stuck with paying the cost of the adjudication and the balance of the works.
How SMG Can Help
Strata Management Group (SMG) has put together a list of contractors that are fully licenced and insured and familiar with the Strata industry.
Therefore, any works that you have coming up for your Body Corporate please contact SMG and we can help you.
Should a Body Corporate have works over $10,000 and are significant SMG will recommend that the Body Corporate Committee consider engaging an expert to assist with reviewing any contracts, supervising the quality of works, dealing with defects and assessing any payment claims for the works. SMG will provide a number of contractors that perform this service on behalf of the Body Corporate.