This question came in from a NSW Lot Owner asking about the implications of not having a licensed strata manager NSW. Leanne Habib, Premium Strata provides the following response.
Question: What are the implications of not having a licensed strata manager NSW? Can a termination of a contract signed with a licensed agency be legal because the Strata Manager they put in place was not licensed?
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Can a termination of a contract signed with a licensed agency be legal because the Strata Manager they put in place was not licensed? Or is this ok?
Our Owners Corporation have members asking for a termination of a contract and dismissal of Manager and want the money paid during 2015 and 2016 refunded.
A motion to look at Managers non license status and not proceed with a new contract was not carried at 2016 AGM. Thus Owners Corporation signed a second yearly+ contract for a further 15 months giving Agency Full Rights to act for Owners Corporation.
What are the consequences of terminating the contract?
Answer: An employee does not need to have both a licence and a certificate of registration and registration is generally sufficient if the agency is licensed.
These issues are governed by the Property Stock & Business Agents Act, 2002, (NSW). Given that the agency is licensed, the critical question is whether the manager has a “certificate of registration” under that Act. If not, the Strata Manager may be liable to a penalty of 100 penalty units and face disciplinary action by the Director General of the NSW Office of Fair Trading.
An employee does not need to have both a licence and a certificate of registration and registration is generally sufficient if the agency is licensed. Provided the Strata Manager is registered you will unlikely be able to terminate on this basis alone.
Also, provided the Strata Manager is registered, you will not be able to claim a refund. Refunds of expenses and commissions paid are generally limited to circumstances whether the agency agreement itself is flawed and in this instance, on the face of it, it appears that the agency agreement was properly signed by the licensee and the owners corporation.
Terminating any agreement should only be done in consultation with a solicitor to ensure there are lawful grounds for so doing. Otherwise, you may create a situation where the agency may sue you for damages.
This post appears in Strata News #147.
This article is not intended to be personal advice and you should not rely on it as a substitute for any form of advice.
Are you interested in more about the implications of not having a licensed strata manager NSW or information particular to NSW legislation? Visit our FactSheet: Strata Managers OR FactSheet: Strata Legislation NSW.
Looking for a Strata Lawyer in your area? Search within our Strata Services Directory in the category Legal Services NSW for the best list of contacts available.