We need onsite security

The title is a phrase that committees will have heard uttered by their manager/caretaker. Often it is the result of multiple security incidents that your manager has advised you off, rowdy tenants, vandalism, bad behaviour, tenants outside of the letting pool not managed and outside of the control of the caretaker.

In order to keep the peace, that the body corporate is not held liable, to reduce vandalism etc. you need onsite security and the establishment of a security patrol contractor’s agreement (SPCA). This agreement will be set up between the body corporate and the manger for the manager to provide security services for the scheme. Often your scheme has an onsite manager or resident working manager in place. The lengthy discussions on the need, on how many hours and on how many security guards on what days of the week ensues, followed by negotiating the cost. The body corporate then signs the agreement for a set period, normally at least five years, with the possibility to extend for a further 5 years, sometimes up to 25 years, with the caretaker, who will then look after the security for the complex.

Security agreements – the devil is in the details (or lack thereof) In order for committees to understand what is involved and what are the consequences entering into such an agreement, let us focus on the agreements for two schemes. Both complexes have as part of their caretaking agreement the requirement of an onsite manager. Complex 1 had the following listed under Security Services of their SPCA: Complex 2 had the following

Agreement 1 was for a scheme of 91 units all investors no owner occupier with an annual charge to the body corporate of $105,000. Agreement 2 was for 132 units all investors no owner occupier with and annual cost of $215,000. Agreement 1 had no mention of times or hours, Agreement 2 had some mention of time and hours:

How the UOAQ can help - Detailed analysis of the agreement reveals the shortcomings Complex 1 contacted the UOAQ several years ago and took advantage of a financial analysis of its body corporate expenses. Complex 2 is aware of the UOAQ but sees no benefit in becoming a building member. The UOAQ identified the SCPA as a serious issue to be addressed for complex 1. A careful analysis of both agreements shows that they are very bland agreements, neither are detailed or specific, most if not all the services that are to be provided are caretaking functions. In agreement 2, all duties except for the random patrols are already part of the caretaking duties. You will note in agreement 2, more words are spent on rubbish collection than on security. Locking up gym, pool etc also are caretaking duties. Both agreements are not specific in the amount of time that onsite security needs to be present, whilst agreement 2 seems to make mention of time it is undone by the statement: are to be provided up to 120 hours per week. Agreement 1 had no mention of times, therefore it was up to the caretaker to determine how often if at all he/she was going to have onsite security. The services in agreement 2 are easily covered by employing a resident working manager or a night manager with a security license. Having joined the UOAQ and with our organisation drawing attention to the shortcomings in their security agreement complex 1 started to scrutinise the process. They received several pages of the log as part of an incident and quickly calculated that security was only provided for a few hours from Thu – Sun, which was against their expectation of having a uniformed guard on site from 8pm – 6 am during weekdays and two guards on weekends. Where did they get this expectation from? Well it was during the many hours of discussions with the caretaker to work out how much security was required. The committee of complex 1 requested to see the security log books (to ascertain how often guards where at the complex). This request was refused by the caretaker with the comment that they (the body corporate) were not entitled to seeing the logbooks. A closer look at their security agreement confirmed that the caretaker was correct in their statement, and that the body corporate had no rights with regards to security as it had engaged in a contract with the caretaker to provide security and it was up to the caretaker how they did this. The same was found to be for agreement 2,where, should the body corporate ever question security it has no rights as per the agreement, but both complexes are obliged to pay the caretaker the extra cost for security $105,000 pa for complex 1 and $215,000 for complex 2 with annual CPI increase. Security contracts increases managers income Several years ago, the management rights for complex 1 was for sale and the add read: ‘… The body corporate salary of $170,000 plus additional $100,000 for security is magnificent.’

It became evident to the committee of complex 1 that the security agreement was nothing more than another way for the caretaker to increase their income. That it had very little to do with security but everything to do with the caretaker increasing their income and therefore also increasing the sales price of the management rights. Once aware, the committee started to look at alternative options. They realised that they would not be able to cancel the agreement, so the best option was for it to run its course until expiry in three years and not to renew it. The committee was also aware that once the caretaker got wind that the contract would not be renewed, they would be bombarded with a propaganda campaign by the caretaker, insisting why the complex needed onsite security. The committee was correct in its assessment. It had prepared itself appropriately so when the campaign started, they were able to prove that there was no requirement for permanent onsite security, that the existing measures in place were already adequate with some tweaking such as the installation of a CCTV system. The deficiencies in the existing contract, such as the inability to check the logs, the large expense with no oversight were contributing factors in their reasoning that that onsite security was not a requirement and that the onsite manager had themselves an obligation with regards to security. Even though the onsite manager engaged their solicitor, the committee remained steadfast in its approach, having sufficient owner support - by remaining in touch with owners and appraising them of the process - and allowed the security contract to expire. Committee doing its own research saves money and delivers results Six months after expiry and having done their own research, the committee engaged their own security contractor to provide three nightly visits/foot patrols and assist with the CCTV at a cost of $370 per month. A saving of $100,000. This system has been in place now for numerous years, the committee has greater oversight of what occurs at the complex, the security firm reports directly to the committee and is employed by the body corporate. Through the security firm the committee has been made aware of additional inadequacies by its service contractors that they were previously unaware of. Complex 2 still has their onsite security in place @$215,000. The committee/body corporate have no control over it. At the 2018 AGM they decided to agree to a further 5 year term, except their agreement is in line with the caretaking agreement which was also extended for a further 5 years and is not due to expire until July 2043. The risk of long- term binding contracts when faced with an unplanned event Complex 2 has bigger problems now too because of COVID. As mentioned, both complexes are 100% investors. The tenancy in complex 2 since March 2020 has dropped from approx. 90% occupancy to 47%. And in January 2021 there is likely to be a further drop as they are heavily reliant on overseas arrivals and it is likely occupancy will drop to 25%. Many owners are now having difficulty paying their body corporate levies. The caretaker salary of $250,000 plus $215,000 for security are close to 50% of the body corporate levies. If only complex 2 could extract itself from its security agreement and duplicate what complex 1 has done, owners would save about 20% on their levies. Alas it is not possible because the committee there has supported a further extension in 2018 for an additional five years to expiry in 2043. How many owners by that time would have had to sell their investment at a loss because of their inability to pay their levies? Already there has been an increase in owners requesting reinstatement of the discount on levies. Units that sold two years ago for $250,000 can be now purchased for $200,000. So next time your onsite manager says we need onsite security, make sure you as a committee do your due diligence. If you do decide you need increased security, make sure you the body corporate have control and that there is no involvement from the caretaker. There is no need for a middleman. Do your research, complex 1 did and discovered that many similar complexes did not have onsite security, they had an onsite manager, they had security locks, they had gates and fences, some had CCTV and some had a security firm providing regular patrols at night at irregular intervals, but none had full onsite security. What to do when your managers says: “you need additional security in place” Recently we have been made aware of another complex, in this case the caretaker wants to place a gate to block of the entrance to the resort. As he says “vagrants/criminals are driving onto the complex and tenants from off-site real estate agents are troublemakers”. This resort is out of the way, it is not inner city, it has a very large beach front (you can actually walk onto the complex from the beach front and use the pool – especially on the weekend as the caretaker does not reside on site and is absent during the weekend. The busiest two days for a tourist resort. You can also jump the wooden fence, but somehow, according to the caretaker, it needs a car access gate. No mention who is going to open it when its faulty, or how guests on the weekend can access the complex when there is no one onsite or arrivals looking for a place to stay. Nevertheless, the manager is adamant he needs a gate. We can only speculate about the reasons. Nevertheless, there is a clear message to all body corporates: do your own research, do not trust at face value what you are being told by a party that has a vested interest. As they say, buyer beware, and like complex 1, do it right and you can save yourself $100,000 per annum. Do it wrong and you are stuck with a contract for 25 years costing you $250,000 per year to pick up rubbish, put the bins out and open and lock up a few facilities.