Due Diligence of Caretaker Performance prior to Review of Caretaker/Letting Agreements

When discussing forward planning in 2020 the Body Corporate Committee (Committee) recognised that the Caretaking and Letting Agreements rollover were due on 6 May 2021. The Committee agreed that the assessment of  the performance of the Caretaker was vital in order to provide the very best outcome for all owners.

Without performing this due diligence, the contracts would automatically extend for another 10 years in the absence of any notified breaches from the Body Corporate. The management rights of the current contracts provided for an initial 15 year period (ceasing on 5 May 2021) followed by a 10 year extension option if there were no breaches.

To enable the due diligence exercise to proceed, the Committee engaged recommended external contractors to assess the compliance of the Caretaker against the existing Agreement and in particular to assess their overall performance.

No such assessment had been conducted previously in relation to the Caretaking Agreement between the Body Corporate and the Caretaker (Oaks).  The Caretaker contract is the most significant ongoing expenditure item of the Body Corporate at approximately $600,000 (currently) annually.

The outcome of the assessments was highly disappointing, indicating that the Caretaker’s performance failed or was well below expectations in many areas.  The assessment reports are provided in the following links.

Caretaking Compliance Management Systems – Assessment  Report      by Diverse Group of Companies (2020)

The purpose of the exercise was to assess whether the Caretaker had sufficient supportive management practices in place to deliver the duties under the Caretaking Agreement, to the required standard.  A significant number of deficiencies were identified.

The Committee is currently actively monitoring the performance of the Caretaker at weekly meetings to ensure the issues identified are addressed.

Caretaking  Agreement – Review of Caretaker Performance by Diverse Group of Companies (2020)

The review of the Caretaker’s performance was conducted against the prescribed scope of duties and terms of the Agreement, with particular respect to the maintenance of the common property of the scheme.  This exercise identified a number of areas which were non-compliant.

The Committee is currently actively monitoring the performance of the Caretaker at weekly meetings to ensure the issues identified are addressed.

Aurora Tower Residential Stage 1 Remuneration & Duties Assessment  by MRSC Management Rights Advice & Service Consultants

This exercise examined the duties expected of a Caretaker and quantified the time required to undertake these duties.  This exercise informed the Committee’s discussions with the Caretaker about expected duties to be performed under future Agreements.

Review of Caretaker Performance by Diverse Group of Companies (2021) (redacted)

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