C PI UN TO -R T RE O Y H TOR
The ofﬁcial newsletter of Unit Owners Association QLD
SEPTEMBER 2011 MARCH 2011
Who’s Eating your Pie..
Building Services $9,590
er k eta ,220 r Ca $24
6% 7% 8% 8%
Minor Expenses $4,190 Fire Control $4,842
Community Power $8,884
BCM Charges $5,282 R & M - Lifts $5,282
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Cover Story ..
This year’s QUESTION-
Who’s eating your pie !!
Unit Owners Assocation QLD 6th Floor. 333 Adelaide St, Brisbane Q 4000 E email@example.com P 3220 0959 uoaq.org.au
P 3220 0959 or www.uoaq.org.au and request to communicate to a particular person Sue Ekert, Bob Boundy, Elle Young, Paul Cassels. Published by Unit Owners Association QLD Editor Paul Cassels
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CTS Management Suite 35, Level 6. “Northpoint” 231 North Quay Brisbane QLD 4000 Telephone 07 3211 4445 Fax 07 3211 4410 Mobile 0419 741 066 Email email@example.com www.ctsm.com.au
(BA Dip Ed, Cert IV in BCM)
Director and Body Corporate Manager
Unit Owners Association QLD
Do you have an issue you would like UnitNews Online to address Email your questions to firstname.lastname@example.org Subject : Attention Paul The most frequently asked question to any committee member is why are we paying so much body corporate fees. It took me about 2 years to realise that roughly 60% of all the services that are provided to Body corporates are able to be competitively priced and are limited to 3 year contracts.The other 40% of the costs in Body Corporates are fixed at CPI plus increases for 25 Years minimum. Over the life of the Caretaking Letting Agreement (Management Rights MR) costs will increase 250% and from the start of the Caretaking/Letting Deed of Assignment contract that has never been competitively tendered to an open market. The UOAQ has made representations to the QLD government but to no avail, the rising costs of Body Corporates will destroy the QLD Tourism industry, Reduce investment returns and drive people away from high density living. Investment in QLD CTS schemes has dropped dramatically in the last 4 years from 4.7% to 2.6%. Buyers are starting to wake up to who is eating their pie. Who is eating your Pie is a pictorial view for people to see what words cannot explain. All costs can be summed up as the total and 40% are increasing out of control. For High density living to be Sustainable in QLD the Government has to listen to the
Help for Members
Members of the UOAQ are welcome to contact committee members of the association for any help on any body corporate matter.
Articles contributed to this newsletter are published as a service to members and do not necessarily reflect the opinion or policy of this Association. To contact the committee of the UOAQ for assistance with a body corporate matter please e-mail email@example.com
with Paul Cassels
UnitNews Online September 2011
35% 14% 13% 9% 8% 8% 7% 6%
only organisation that who cares about the QLD tourism industry and owners. The U.O.A.Q. Small unit complexes do not suffer this cost impediment to living in Units. They have other problems that in most instances are relatively easy to fix. The floods and cyclones have affected Units all over QLD causing stress on the Administration and Sinking Fund expenditure, insurance cost have dramatically increased in North Queensland and the UOAQ has represented this problem to the State Government. We are the only association that are providing consumer protection for Unit Owners in Queensland. We have a long and proud history fighting for Unit Owners Rights. I hope you all support the committee in its endeavours for the coming year. We thank you all for the encouragement throughout this year. I thank all the advertisers, volunteers and members who with their support the current committee are entering a positive era providing Consumer Protection for all Unit Owners in Queensland. Remember the AGM will be held on the 24 September 2011 at 9.30am. Come early and catch up with friends as the doors will open at 9.00am. L 6/333 Adelaide St Brisbane. We will be drawing a lucky door prize after the meeting read about the prize in this issue.
Caretaker Building Services Community Power BCM Charges R & M - Lifts Insurance Fire Control Minor Expenses
$24,220 $9,590 $8,884 $5,282 $5,282 $5,282 $4,842 $4,190 uoaq.org.au
And caretakers are appointed by .......? Whilst there are many complex issues to consider on the subject of Management Rights (MR), when the above simple question is posed to Owners, the range of answers often fails to come up with the correct position which is – CARETAKERS appoint the NEXT Caretaker, NOT Bodies Corporate (BCs). Whilst BCs are usually required to consent to any appointment, they cannot withhold consent unless the new Caretaker has a significant ‘black mark’ against them, such as a criminal record or similar negative in their background. (Does anyone ever give a bad reference?) The UOAQ is often wrongly quoted as being ANTI-CARTAKER and AGAINST Management rights. We clarify our position as – • •
We are only opposed to the PREMATURE extension of Caretakers’ contracts due to the CHOICE and OPTIONS DENIED to owners whenever this occurs; and We are in favour of MR contracts – buildings will always need good managers – but we are opposed to the CHOICE of new Caretakers being selected by the departing Caretaker, not continuing owners whose building is being managed.
Choices/Options Denied to Owners from PREMATURE extension of Caretakers’ contracts. (a) Usually the Caretaker’s cost is the largest single expenditure of a BC at approx 30% of total admin costs which ranges from $1,000 per lot per annum (plpa) up to $2,000+ for some buildings. (b) A usual condition in most contracts is for the Caretaker to use its best endeavours in its supervision of purchases for the BC to obtain the
So given all of the above, do Owners really believe the best course of action is to GRANT a PREMATURE EXTENSION to the Caretaker. Increasingly more buildings are saying NO to extension requests!
most economically available price or rates, including any commission, discount or rebates accruing to the BC. How does this discipline flow through to the Caretakers own contract price being administered? If extended, it never does unless it is also renegotiated. (c) The existing contract being extended is usually the original contract drawn up by the Developer before the building was completed construction, which after 15 or 20 years is unlikely to fully reflect the current needs of the building owners, with the remuneration, sometimes greater than inflation, but is seldom competitively re-negotiated and simply renewed with indexation. (d) A 5 year extension to an existing contract increases the value of the Caretaker’s asset by easily $500,000.00 or more in larger buildings. (e) These ‘Top-up’ extensions are frequently requested as soon as a few years drop off the term, to maximise both the duration of the contract, and its market value. This action ensures that – (i) the incumbent Caretaker never has to competitively tender on the open market and enjoys a ‘closed shop’ remuneration package that is never reviewed to open market values for the largest BC admin expenditure; (ii) The re-instatement to peak value of the Caretaker’s asset incentives him to sell as soon as is respectable (generally just after the following 2 years), despite the usual denial of any intention to sell prior to the extension being granted. (f) Under the Code of Conduct in the BCCM legislation, the caretaker is obligated to act in the BEST interests of the BC.
Why the Caretaker should NOT select its successor. In a large building complex, the value of the investment by the Caretaker will usually represent a small 2-3% of the total value of the complete site, with the balance and bulk of the value held collectively by owners. So why is this control of the owners’ building reserved to the Caretaker to select his successor? The performance of the current caretaker is not in question and there are many good caretakers managing our buildings. However, the departing caretaker has the following conflict of interest in exercising the CHOICE that best suits it, rather than what may better suit owners – •
Will its choice of the next purchaser more be influenced by maximising the price it can extract for the sale of its asset, or will it seek out and accept a better qualified purchaser paying a lower price in the interests of owners?
A fairer course of action is to just SAY NO to any extension request. Use the balance of the Caretaker’s contract term to consider the full range of options, including drawing up a current appropriate work specification, and go to open market tender in the LAST year of the contract. Inviting the existing Caretaker to tender on an equal basis with other service providers, no different than would be done with all other large BC expenditures. Having home ground advantage and with the best building knowledge, the current Caretaker should be in the best position to win the contract. Let’s hear from Owners who would like a FAIRER GO? Please send e-mail or contact the firstname.lastname@example.org
During this last month UnitNews is sad to announce the sudden passing of Advertising and Development Manager Brian Forbes. It was a pleasure to work with Brian and we pass on our sincere condolences to his family and friends.
26.08.2011 September 2011 UnitNews Online
The 6 Step Process to Developing the Best KPIs for Your Building Management Agreement Part 2 Continued from Last Issue
How useful is Wikipedia? I might give up writing articles and just take up cutting and pasting great slabs of its content (with appropriate acknowledgments to respect the Wikipedia copyright of course!) Proving that my articles are actually being read (something my wife disbelieves), people on committees and BMs have been ringing me and writing to ask – “send me the KPIs for the BM – Committee relationship and we will implement them”. Busted! I thought I could promote the use of KPIs without doing the heavy lifting, and it is heavy lifting:
1. 2. 3. 4. 5. 6. 7. 8. 9. 4
development of KPIs for the relationship of BM and Committee is no easy task. I have asked around and I am yet to find a working model for BMs/Committees and KPIs. Maybe this is a hallmark that the rights and responsibilities of the parties to a caretaking agreement are out of the ordinary. Caretaking agreements for management rights in strata property are in many respects a unique beast. Here are a few of the unique items that make the implementation of KPIs more difficult than one might otherwise expect:
The boss is not one person – it is a committee, the make up of which may change regularly, and their experience may be limited or extensive. The bosses may live on site, constantly reviewing the performance. Where the bosses have their home in the body corporate then their emotional investment might be higher than for other services. Regularly, the boss has not defined what they expect from the BM. BM businesses are small (even the biggest ones) – it is unusual to have more than 5 staff. BM operations contain duties extending 7 days per week, including after hours call outs, and the BM will invariably live on site. The wear and tear factor arising from 24-7 responsibilities should not be underestimated. It takes a unique individual to be switched on all the time. Operators of management rights may not be seasoned property professionals. Also, they may not be experienced in dealing with the public. Services provided by BMs may be both highly technical, yet require retail service of clients, including dealing with the public. Further, there is no educational institution in existence putting potential BMs through years of training so they have the necessary skills. BM owners invariable invest high percentages of their savings into the purchase of the business, making the subject of discussing performance a highly emotional issue. UnitNews Online September 2011
Need not be a feast
These factors should not discourage us from attempting to implement KPIs. They make the task more important. The enquiries I have received indicate there is a groundswell of support on both sides of the relationship (committee and BM). The market wants to take the committee – BM relationship to a more sophisticated level, where subjectivity is reduced to an appropriate level and where performance is measured. The unfortunate news for the application of KPIs to caretaking contracts is that there is definitely no “one size fits all” list of KPIs that we can roll out for every body corporate. If it was that easy then everybody would have already done it. Also, this “one size fits all” or “print them off the word processor” approach is part of the reason we have inappropriate caretaking agreements for bodies corporate. Let’s not make the same mistake twice. Bodies corporate have complex needs when it comes to managing the common property. Thought is required to develop venue specific and relationship appropriate KPIs. As the Wikipedia definition provides: choosing the right KPIs is reliant upon having a good understanding of what is important to the organization. The better news for implementing KPIs is that there is a simple step by step process SSKB has developed for creating your own Committee - BM KPIs.
To be continued next month ..
UOAQ - Become a Member Today!
User Pays is Fine, But is it working for you?
SSKB are striving to educate unit owners in all aspects of body corporate life
As we all know, water is a highly precious commodity. Water can no longer be taken for granted or considered free. We should value every drop, eliminate wastage, manage resources and monitor our costs. If you are managing sites with multiple water outlets; industrial or commercial complexes, domestic units, shopping centres, resorts, retirement villages and the like, you will want to operate in a professional and responsible manor, charging on a usage basis. On the other hand, if you are a tenant, you obviously only want to pay for what you use. It all sounds simple, and it should be. However, how do you know what is being used and by who? The utilities submit their regular bills, and the body corporate will generally divide the cost equally between users. Seems fair, but is it? Everyone uses different amounts, and should therefore be charged accordingly. As an example if a block of units comprises of twelve tenants, eight of which are owner occupied and manage their water usage properly; while the remaining four units are holiday rentals that are usually occupied by multiple people using spas, showers and washing machines to excess. Would you want to pay 1/12th as an owner occupier, when you are clearly using much less than the holiday makers? Alternatively if you were operating a small IT business in an industrial complex, would you want to pay the same water rate as an anodising company? It is widely accepted that metering is now an important part of the life. Most localities have a metering policy that covers residential, commercial and industrial users. These meters however are often installed, basically taken for granted and left alone, apart from periodic reading.
Australian Meter Solutions P 07 3217 9198
SSKB has just completed a new free e-Guide to assist all parties involved in a “management rights assignment”. The e-Guide forms part of the Strata Tools available on the SSKB website “Everybody’s Guide to the Assignment of Management Rights” provides all parties: lot owners, committee members and building managers, with an understanding of the processes involved where management rights change hands. Every prudent committee should have an understanding of the matters outlined in our e-Guide and answers to the questions raised, so they are comfortable with voting on the consent of the assignment.
For more information on how SSKB can assist your body corporate email us at email@example.com or call 07 5504 2000
Your Professional and Personalised Body Corporate Management Service
All areas of Body Corporate Management covered, including: Establishment of Bodies Corporate Prompt and efficient maintenance support Effective dispute resolution Mediation Consultancy work Body corporate administration Customised body corporate management plans
Our services include, but are not limited to:
Quotations and Discussions contact Coralie Mott on
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• • • • • •
Conducting meetings Formulating budgets Accountancy work Obtaining insurance quotations and assisting with claims Attending to correspondence Providing guidance regarding by-law breaches
Suite 35, Level 6 “Northpoint” 231 North Quay Brisbane Q 4000
September 2011 UnitNews Online
The Scary Adventures of Little Lottie, the lot owner A modern Fairytale
Body Corporate Record Search
Most Owners are unaware that the Body Corporate Books and Records are available to be searched by owners, mortgagees, perspective purchasers or interested parties that satisfy the body corporate they have an interest e.g. A Solicitor working for a perspective purchaser. It is a legislative requirement that as the custodian of your records the Body Corporate Manager must make these records available upon request unless the body corporate reasonably believes the record contains defamatory material. Searches are increasingly becoming more popular as perspective purchasers and owners within schemes wish to educate themselves more about their investments.Owners also have the option to request specific body corporate record without even having to attend the Body Corporate Managers Office. All that is required is the completion of a Form 12- Requiring Information from a Body Corporate. This form is available through the Justice Website- www.justice.qld. gov.au/justice-services/body-corporateand-community-management follow the links to Forms and Publications. As prescribed under the BBCM Act 1997 The Body Corporate Manager may charge a fee depending on the amount of documentation requested and who is making the request.
Hartley’s Body Corporate P 07 3379 7455
Continued from last issue .. Sometimes, he published information brochures. Lottie trusted that the information brochures were accurate. She immediately found a brochure which stated that GST did not apply to prescribed fees. There was even an asterisk next to each prescribed fee just to make it very clear that GST did not apply. Lottie was unhappy that the sorcerer had lied to her. She rang the Commissioner’s info line to confirm her understanding. Imagine Lottie’s shock when she was told by the information officer that it was impossible to confirm whether GST could be levied by the sorcerer/body corporate manager on prescribed fees, regardless of the information brochure. However, in order to clarify the matter, the information officer requested a copy of Lottie’s receipt and the legal letter the sorcerer had given her because, as many other lot owners had asked the same question, Lottie’s query would be escalated. Lottie immediately agreed to help and sent an email with attachments. Lottie was chuffed to think that she might be able to help others like her. In a few days, Lottie received a reply from the Commissioner’s office. After reading the reply, Lottie needed a cup of tea and a little lie down. The reply stated that any fees paid to the Commissioner’s office were GST exempt…Lottie had no recollection of asking whether GST
applied to fees paid directly to the Commissioner’s office. Further on, the reply stated that fees paid to a body corporate might attract GST subject to the taxation requirements of each body corporate…Lottie had no recollection of asking whether GST applied to fees paid directly to a body corporate but checked her original email just to make sure…. No, Lottie had definitely not asked those questions. Lottie had only asked if the sorcerer/body corporate manager could impose the GST on prescribed, legislated fees and oblige her to pay it. Maybe someone had hacked her emails? Just then Lottie noticed something. The reply stated that when fees had recently been updated on the Commissioner’s website, the asterisk had been incorrectly applied to some fees which caused some confusion. Lottie hurriedly logged on and checked….the asterisk and any reference to the GST had magically disappeared from the information brochure. Apparently, a mysterious place called Treasury had given a directive to the Commissioner. Where did that leave Lottie?….out of pocket of course. Lottie sighed deeply and put on a DVD of a popular television series called “Yes, Minister” hoping that it might shed some light on the matter. THE END
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UnitNews Online September 2011
Quick News In Queensland, body corporate legislation allows that a schemes by-laws (the rules by which occupiers must abide), may provide for the control of common property. The by-laws of most schemes in Queensland will include a by-law which controls the aesthetic standards of a building which of course must be maintained to maintain and increase values as well as providing a neat and tidy building to occupiers, whether they are owner occupiers or holiday guests. Some examples where by-laws may restrict peoples actions include prohibiting washing, towels or other items being being hung where the item(s) is visible, the type of furniture placed on balconies, items being stored on balconies and the colour of window dressings. Whilst these by-laws are much easier to enforce in permanently occupied units, because of the transient nature of guests in a large number of unit complexes in Queensland, the ability of the body corporate to control and issue by-law breach notices becomes much harder. Is stricter government control the answer? Whilst all body corporate managers will tell you that having clear and concise rules will improve how they are able to handle almost every situation, the enforcement of the rules can still be a problem. If people simply arenâ€™t willing to cooperate, or the person offending is only in the building for a short amount of time the body corporate needs to evaluate the problem being experienced and its affect on the building and how far they want to take the by-law enforcement process as outlined in the Body Corporate and Community Management Act.
- Is stricter control the answer? An interesting article in a Melbourne newspaper recently raised an issue that has probably caused problems in the majority of bodies corporate all over Australia. A residentsâ€™ group in Melbourne is calling on the State Government to step in and implement legislation to help clean up the mess caused by occupiers using balconies to dry clothes and store items. From drying clothes on balconies to hanging towells over balcony rails, if not controlled can lead to complexes looking very untidy and cause confrontation and disharmony within a strata-titled building. With the demand for inner-city living increasing and units being smaller than perhaps what was on offer 10-15 years ago, storage space in apartments is limited, leaving occupiers with little option but to use their balconies to store items. Whilst practical, this can lead to conflicts because on occasions storing items on balconies, and where those items can be seen from other units and from the street, can conflict with the schemes by-laws.
Are you going to be able to change a persons attitude that their balcony is part of their unit and they will use it how they see fit regardless of the affect on other occupiers? Perhaps not, but all occupiers in a body corporate need to realise that the essence of successful unit life is consideration and respect for others and living in a community situation does require some compromise and restraints. The use and enforcement of correct and detailed by-laws that are easily understood by all occupiers is one of the most effective ways of controlling behaviour in bodies corporate. If you live in a scheme that has experienced these, or indeed any other problems, carry out a review of your by-laws
Sinking Fund Forecast Insurance Valuation Builders Warranty Condition Assessments Safety Risk Reports Asbestos Reports Fire Safety Reports And much more
For Professional, Friendly assistance and quotes call
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September 2011 UnitNews Online
UOAQ - Become a Member Today!
Frances Asks ..
with Frances Ronnfeldt
Frances Ronnfeldt, a Brisbane based Body Corporate Manager hits the pavement to see just how much the general public knows about Body Corporate.
This months’s QUESTION-
What are the responsibilities of a Property Manager, Body Corporate Manager and an Onsite Manager? ANSWER - Property Manager A Property Manager is employed by an Owner to manage their investment. In the case of most Bodies Corporate the Property Manager would only be responsible for the internals of the lot. They collect rent, correspond between Tenants and Owners and process maintenance requests for items that are not the Body Corporate responsibility. Barbara Walker, Sherwood, QLD.
Dorothy Hardy, Calamvale, QLD. A Property Manager manages an owner’s investment, by insuring that the owners have the best possible return on their investment. This can be done by ensuring that the investment is well maintained and the best tenant and rental is achieved with as little down time as possible. A Body Corporate Manager facilitates the owner’s decisions with regards to the up keep of the common areas of their investment. This would include suggesting an annual budget, fees, and special levies. The owners then need to accept or change the budget and then collect the levies and fees to cover the expenses for the year. A Onsite Manager purchase the management rights on all the units in a complex from the developer and then performs all duties which a property manager (leasing, rent collection general maintenance for the units) would normally do, as well as ensuring that the common areas are well maintained.
A Property Manager is responsible for rentals and leases and collecting the rent. A Body Corporate Manager looks after the running of a complex. An Onsite Manager oversees the current residents at a complex.
Body Corporate ManagerA Body Corporate Manager only corresponds with the Owner of the lot within the Body Corporate scheme. They are responsible for the Administration of the Body Corporate Books and Records including the issuing of Body Corporate Contribution Notices. If the Body Corporate does not engage an onsite Manager the Body Corporate Manager may be requested to arrange maintenance items for the upkeep of Body Corporate Common Property. Onsite Manager-
John Cranley, Marooka, QLD A Property Manager manages property, collects rent, organises maintenances and the payment of Owners invoices. A Body Corporate Manager is responsible for running of complexes, drafting budgets, arranging grounds people, paying bills and collecting levies. An Onsite Manager is responsible for the letting and maintenance of a building in which they live.
An Onsite Manager resides onsite and has an Agreement with the Body Corporate to complete certain tasks at the property to maintain the Common Property and protect Owners investments. Most Onsite Managers are engaged to complete the Letting within the Body Corporate Scheme as well.
Do you have a question you would like Frances to ask? Email your questions to email@example.com Subject : Attention Frances
RESULTS ORIENTATED WEB DESIGN & MARKETING
UnitNews Online September 2011
Graphic Design, Branding and Identity danhancock.com.au
COMMUNITY LIVING SOLUTIONS Reducing Costs & Increasing Value for Unit Owners
PROUD SUPPORTER OF UOAQ
Quick News first place. The most common method is a sign designating a parking space with an owner or flat number. This will work some of the time, but visitors don’t always pay attention to those signs. Another alternative is a physical barrier such as a bollard or lift up gate. These are effective up to the point where a large four wheel drive backs over the bollard and damages it beyond repair. Then you are up for an expensive repair and your parking space is effectively unusable until the barrier is fixed. Plus, you always have the inconvenience of having to get out of your car to put the barrier up and down. This is where Reserve-A-Park becomes a great solution. It combines the deterrence of both a sign and a physical barrier without the hassle of having to get out of the car. It is robust and flexible enough to take even the hardest of knocks. Here’s how Reserve-A-Park works: The stainless steel unit is bolted to the roof of the car park. A flexible arm with large and clear signage extends down to indicate that the car parking spot is reserved for the unit owner. In order for a rogue vehicle to enter the spot, the driver has to drive into the flexible arm, risking a scratched car. When you come home to your unit, a keyring operated remote control electronically lifts the arm allowing you to drive into your spot. When you leave, you push the button again making the arm come down and secure your park. The arm also has the added feature of an automatic stop if you should accidentally activate it when still parked. The electricity is provided by a simple connection to the nearest fluorescent light.
Clever Solution to parking Problem Queensland based Reserve-A-Park has come up with a clever solution to one of unit owners’ most complained about problems. Units generally come with one or more designated parking spots. How frustrating is it then to come home only to find another vehicle in your space? Not only does it make things inconvenient, but someone else is taking the space that you have paid for. Your remedies are limited by law, you can leave a note on the car, but that doesn’t solve the immediate problem as you have to wait for the driver to leave. You can have the vehicle towed away, but that’s at your expense and any damage to the vehicle becomes your problem. The police are powerless as it is private property and therefore a civil matter. The simplest solution is to prevent the problem from occurring in the
• • •
A fully installed Reserve-A-Park will be the door prize at the Unit Owners Association of Queensland Inc AGM drawn at the end of the meeting. 24 September 2011.
P 07 3103 3536 W www.reserve-a-park.com E firstname.lastname@example.org
Financial aspects of improvements and major projects Office bearers insurance Sinking fund forecasts
• The Neighbourhood Disputes Act • Painting your building made easy • Open session
GOLD COAST COME & JOIN US Thursday 20 Oct 2011
And bring a friend
Coorparoo Bowls Club 32 Riddings St, Coorparoo
Southport Yacht Club Compass Room, Macarthur Parade, Main E
5:30pm Registration 6pm - 9pm Speakers
9am Registration 9:30am - 12:30pm Speakers
Seating is limited so book early by registering your interest now at email@example.com or by phoning Danni Hanns on 07 3622 3944
Monday 17 Oct 2011
2011 UNIT OWNERS SEMINAR INVITATION
Reserve-A-Park out thinks the illegal parker by providing a robust and flexible deterrent that creates both a physical and psychological protection for your parking spot.
firstname.lastname@example.org | www.capitolbca.com.au | 1300 55 10 19
September 2011 UnitNews Online
Management Rights | Levy Collection | Dispute Resolution Community Management Statements | Review of By-laws Establishment of Schemes | Construction Defects
Hartley’s Body Corporate Management
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