We Live Here has been campaigning for years against blatantly unfair building and facilities management contracts.
Many unconscionable contracts have opaque costs, embedded commissions and irrevocable terms of many decades. The Financial Review reported this month a case of a 99-year embedded network contract! This type of inequity needs to be eliminated.
The government has drafted a clause in the proposed draft legislation to prevent onerous long-term contracts that “benefit the applicant for registration of the plan of subdivision”, i.e. the developer.
The huge loophole here is that the developer can offer a benevolent gift of a lucrative multi-generational contract to a “mate” who happens to be in effective control of an unrelated company or entity. Different company, different directors – too easy.
Many of the unfair contract examples we are being sent by disaffected owners corporations show that the developers and contracted companies are well known to each other but legally unrelated.
The reform required is simple: just limit the term of all third-party owners’ corporation (OC) contracts to three years, renewable at the OC’s option – regardless of who benefits. Otherwise the proposed reform will be just ludicrously simple to rort.
This legislation needs to allow owners to seek a ruling from Victorian Civil and Administrative Tribunal (VCAT) on fairness and equity principles for all existing contracts of more than three years, not just new contracts signed since 2017. Many of these unfair “mates” deals for 25, 30 and 99 years obviously still have many years or decades to run.