Management contracts come under scrutiny

APARTMENT OWNERS unhappy with a building manager’s longterm contract could be more likely to head to court after a recent High Court decision.

The latest court action follows an attempt by the body corporate of an apartment building in central Auckland, to have the building’s management contract cancelled on the grounds that its 35-year term made it ‘‘harsh and unconscionable’’.

Long-term building management contracts have been an increasing point of contention between bodies corporate (and the individual apartment owners they represent) and their building managers, in many modern apartment complexes.

Building managers perform a wide range of duties in unit-titled complexes, including cleaning and maintaining common areas such as entrance foyers, lifts, landings and hallways, service areas, gardens, parking bays and other communal facilities, such as swimming pools and gymnasiums where these are provided.

They are also usually responsible for organising the building’s overall maintenance and repairs, including the upkeep of security and fire-prevention systems and liaising with tradesmen such as builders, electricians and plumbers.

So their role is an important one, but many apartment owners are unhappy with the terms of their building managers’ contracts.

That is because many apartment developers used building management contracts as a profitmaking exercise, to rake in some extra cash at the expense of the apartment buyers.

That was generally done at the time when the building was completed, but individual apartment buyers had not yet taken possession of their units.

During this in-between period, the building’s body corporate would still be controlled by the property’s developer, who was still the sole owner at that stage.

The developer would often use this opportunity to sell the building’s management contract on terms that were very attractive to apartment managers.