A lot owner from NSW is wondering about the tender process for changing strata managers in NSW. Andrew Terrell, Bright & Duggan provides the following response.
Question: We are looking at changing Strata Managers in NSW. What is the process to carry out? How can we call for quotes for the Strata Management of the scheme? There are some ‘scare tactics’ going on with the current Strata Manager.
I live in a strata complex for over 50’s where the average age of owners is 80. The complex was built pre 1974.
We are looking at changing Strata Managers in NSW. At the last AGM held in October, there was a motion put to the meeting with a process to follow for calling for tenders for the Management of our Strata Complex as our current contract comes due this October. Historically there has been no other quotes sought for the Management of the complex.
The process was to compile a committee with the chairperson of the Strata Committee and 3 other owners not those of the Strata Committee. (So that it was removed from the Strata Committee.), that this committee take control of the compiling of the information and what is required, receiving tenders and these not to be opened on receipt but opened on a date advertised where all owners have the opportunity of attending. That the committee peruses these tenders and makes further inquiries as may be required. That the chairperson then takes the recommendations of this committee to the AGM.
The current Strata Manager was present at the AGM when this motion was presented and she stated – vote for this and we will increase our fees.. I have been told that this was taken by those present (aged persons) that they would increase the fees for this year and they voted no to the motion.
My questions about changing Strata Managers in NSW are:
- can this be legally done – that is vote down a motion to call for quotes for the Strata Management of the Complex?
- if this is so, how can we now call for quotes for changing Strata Managers?
- and if time is not our friend this year, can we insist that we only vote on a 12-month contract where the others have been 3 years?
Answer: The process you wish to go about using to tender seems to be very sound.
The process they wish to go about using to tender seems to be very sound.
If the current manager has made a statement along the lines of “vote for this and we will increase our fees” in order to stop a tender process occurring that would seem like scare tactics at best – contract lengths are now statute limited and good managers welcome competition.
In relation to the questions posed:
- Yes the owners can of course vote down a motion at the AGM to call for tenders. That is not to stop the committee conducting their own process in calling for tenders (unless the meeting for some reason decides to restrict them from doing so in the compulsory motion about placing restrictions on the committee).
- Per my above advice, the committee is able to call these tenders and should do so by way of a motion at a committee meeting.
- The owners can negotiate any term of a contract they wish up to a maximum of 3 years.
This post appears in Strata News #186.
Question: There is a discrepancy around the term of appointment of strata manager. How should we proceed?
I am hoping you can please provide some advice about our term of appointment of strata manager.
Our medium sized block of apartments was only completed towards the end of last year and at our first AGM the Strata company put in place by our developers signed us up for a 3-year term even though we agreed at the meeting that the first term is for 12 months only. The minutes reflect 3 years. The commencement date of the agreement was the beginning of November 2016.
I have been told that as this was our first AGM, a strata manager may only be appointed for 12 months.
Can we contact the agent and advise them that their contract is in breach of the Act? Is this grounds for immediate termination of their contract and changing strata managers in NSW?
Answer: I suggest you look to meet with the principals of the business to raise your concerns.
The new legislation which came in on 30 November 2016 statute limited contracts to 3 years or 12 months, if at the First AGM – see the bold highlighted area of the Legislation below.
As the AGM and commencement date of the agreement occurred prior to the commencement of the new legislation, the agreement falls under the old legislation, so it can be for a 3 year agreement.
If they agreed at the meeting the appointment was 12 months and the minutes reflect 36 months, a number of owners should look to call a meeting and clarify that via the minutes (and also be willing to sign a statutory deceleration to this point).
(1) The term of appointment (including any additional term under an option to renew) of a strata managing agent for a strata scheme expires (if the term of the appointment does not end earlier or is not ended earlier for any other reason):
(a) if the strata managing agent is appointed by the owners corporation at the first annual general meeting, at the end of the period of 12 months following that appointment, or
(b) in any other case, at the end of the period of 3 years following the appointment.
(2) A person may be reappointed by the owners corporation by resolution at a general meeting as the strata managing agent for a strata scheme at the end of the person’s term of appointment.
I suggest you look to meet with the principals of the business to raise your concerns. If you look to go down the avenue of changing strata managers in NSW, I note the tribunal now has the power to terminate agreements where it did not previously.
- NSW: Q&A Can Installation of Blinds or Sun Shades for Apartment Balconies be refused?
- NSW: Q&A Strata approval for renovations – What is the process and how do we start?
This article is for reference purposes only and is not intended to be a comprehensive review of the developments in the law and practice or to cover all aspect of the subject matter. It does not constitute legal or other advice and should not be relied upon this way. Readers should take legal or other advice before applying the information containing in this publication.