NSW: Q&A Management Rights Agreement Renewal Process

This Q&A has been received from a NSW management rights owner and concerns the management rights agreement renewal process in NSW.

Table of Contents:

• QUESTION: Is our onsite building manager required to obtain a Police Check and Working with Children Check (WwCC)?


• QUESTION: How does the strata committee find a new building manager? What qualities should we look for?


• QUESTION: Our caretaker is also an onsite letting agent. An agreement exists for caretaking, however, there isn’t an agreement for the letting agency. Is the OC required to have an agreement with the letting agent?


• QUESTION: Our management rights operators have asked for a 10 yr extension on their agreement. This will result in a 25 yr agreement. What is the average management agreement in NSW?


• QUESTION: I am the owner of management rights in a NSW strata scheme and our agreement is due to be topped up. During negotiations with the committee, the strata manager has circulated the draft agreement to non committee lot owners. Is this the usual process?

Question: Is our onsite building manager required to obtain a Police Check and Working with Children Check (WwCC)?

I am the secretary of a strata committee for a 300-unit complex with pool, spa, and gym amenities. Is our onsite building manager required to obtain a Police Check and Working with Children Check (WwCC)? Is this best practice and part of our due diligence for ensuring the safety of our community?

Answer: I can see the importance of such a check to certain communities.

The legislation does not specify that a Working with Children Check needs to be provided. I understand requirements exist specifically when the role involves supervising children (e.g. schools, care centres, etc): Apply for a Working with Children Check (WWCC)

The Working with Children Check (WWCC) is a requirement for anyone who works or volunteers in child-related work in NSW. It involves a National Police Check (criminal history record check) and a review of reportable workplace misconduct.

With that said, the strata scheme/committee could stipulate to the building management group that the provision of such a police check is a mandate for performance under the contract.

I haven’t seen this as a requirement of a building management agreement for the reason that the work is not specifically child-related, however, I can see the importance of such a check to certain communities.

Andrew Terrell Bright & Duggan E: Andrew.Terrell@bright-duggan.com.au P: 02 9902 7100

This post appears in the March 2024 edition of The NSW Strata Magazine.

Question: How does the strata committee find a new building manager? What qualities should we look for?

The building manager for our building is leaving our large strata plan of around 170 apartments. How does the strata committee find a new building manager? What qualities should we look for in the new building manager?

Rather than rely on one person, we would prefer a company to ensure there is staff to replace the building manager when they are on leave or sick, etc.

Answer: The scheme should consider the outcomes when tendering for building management services.

Any strata scheme (and many could do with a building manager, even if they are not large) that is tendering for building management services should consider the outcomes:

• Are there remedial works/projects that need to happen soon or on-foot?


• Does the scheme have a detailed asset register/maintenance schedule, or do you need one developed?


• What are the scheme’s onsite needs in terms of inspections?


• What sort of company does the scheme want, e.g. use of technology, experience with similar schemes, availability of different managers 24/7?

The committee should prepare a request for tender (RFT) and seek proposals for what managers believe is appropriate after attending the site.

Andrew Terrell Bright & Duggan E: Andrew.Terrell@bright-duggan.com.au P: 02 9902 7100

This post appears in the March 2024 edition of The NSW Strata Magazine.

Question: Our caretaker is also an onsite letting agent. An agreement exists for caretaking, however, there isn’t an agreement for the letting agency. Is the OC required to have an agreement with the letting agent?

Our caretaker is also an onsite letting agent who operates onsite and uses common property. An agreement exists between the caretaker and owners corporation for caretaking, however, there isn’t an agreement for the letting agency. Does this leave the owners corporation financially and legally vulnerable? Is there a legal requirement for an agreement between the owners corporation and the letting agent?

Answer: Though not a requirement, an agreement protects the onsite letting agent and the owners corporation.

There is no common law that requires an onsite agreement between the owners corporation and the letting agent. However, it is highly advisable to have an agreement in place setting out the rights and responsibilities of the owners corporation, letting agent and the use of common property. This protects both the onsite letting agent and the owners corporation. There are likely further issues that need to be considered, such as insurance issues, particularly public liability insurance.

Similarly, if the letting agent is using parts of the common property for their caretaking duties, it is advisable to have an agreement in place. If they own a lot in the strata scheme, it would be by way of by-law. If they do not own a lot, it could form part of the caretaker agreement or be in the form of a lease or licence.

Matthew Jenkins Bannermans Lawyers E: enquiries@bannermans.com.au P: 02 9929 0226

This post appears in the November 2023 edition of The NSW Strata Magazine.

Question: Our management rights operators have asked for a 10 yr extension on their agreement. This will result in a 25 yr agreement. What is the average management agreement in NSW?

We live in a holiday accommodation/motel-based strata complex. Our caretaker lives onsite.

The management rights were bought 6 yrs ago. They have asked for a 10 yr extension. This will result in a 25 yr agreement. This seems a very long time!

Is the manager setting up to sell halfway through their term and trying to make it a better deal for themselves? The caretakers will not last another 25 yrs, so new people will come in and we have no say!

What is the average caretaker management agreement in NSW? In this situation, what options do we have?

Answer: You should check what the contract says about assignments.

1. Under the current laws (since November 2016), the maximum period a strata manager can be appointed is 1 year at the First AGM, and 3 years after that. A 3-year appointment is normal.


2. The maximum period for a caretaker/building manager is now 10 years, unless they had already been appointed for a longer period before 30 November 2016. Some older agreements were grandfathered. For some coastal motel-style units, longer periods happen, also where building managers have “purchased” a contract. It sounds like this was an older agreement for > 10 years.


3. For both strata and building managers, it can sometimes be appropriate to appoint them for a shorter “trial period” (eg 1 year), to see if they lift their game, or to allow the owners corporation to go to market and get tenders.


4. Leasing rights are different, and might be tied to the lease of the common property area they use. That is simply up for negotiation with no statutory limits. It is common and economical for one person to do both.


5. If you fear the current caretakers (whether the on-site workers are employees or owners of the caretaker company) are looking for a longer contract beyond the expected working life of the current operators, it could well be they are looking to increase the value of the contract and on-sell. That is the logical explanation. You should ask them why they want such a long contract in these circumstances. It sounds like you have a fair relationship with the current on-site managers but if the current contract still has a long time to run, I wouldn’t be recommending extending it this early on.


6. You should check what the contract says about assignments to new purchasers. Usually it says the owners corporation cannot unreasonably refuse but in this case, you might either agree to the extension with full discretion to refuse assignments, or simply refuse the extension.


7. One other point to raise could be this. Mention to the caretaker that under the new laws, the maximum period is 10 years. So as they already have a contract for that or more, it seems inconsistent with those laws to extend it further. Those new laws give you an excuse to refuse the extension (refer to section 68(1)(b) of the SSMA.

James Moir Madison Marcus E: Strata@madisonmarcus.com.au P: 02 8022 1222

This post appears in the October 2022 edition of The QLD Strata Magazine.

Question: I am the owner of management rights in a NSW strata scheme and our agreement is due to be topped up. During negotiations with the committee, the strata manager has circulated the draft agreement to non committee lot owners. Is this the usual process?

I am the owner of management rights in a NSW strata scheme and our agreement is due to be topped up.

At our last AGM, it was “RESOLVED that the owners corporation delegate to the strata committee the negotiation of a new 10yr Building Management agreement with the owner.

I tabled slightly alerted agreements to the committee, and they voted to get legal advice from a strata specialist.

Two owners, not on the committee, requested and received copies of the draft agreement from the strata manager. These agreements have not been approved by the committee. These two owners are using the draft agreements to work against our request for a top-up.

Is it legal for the strata manager to give out draft agreements to general owners?

My understanding was that once the committee approved an agreement, the approved documents were presented to the owners to vote yes or no.

Answer: It is not “illegal” for the strata manager to provide the draft building management agreement to non-committee members, though it is not routine.

It is not “illegal” for the strata manager to provide the draft building management agreement to non-committee members, though it is not routine.

Generally, as you suggest, the strata committee will negotiate the terms of the building management agreement for consideration by the owners corporation at a general meeting. That draft is usually attached to the agenda for the general meeting. Further, at the general meeting, there is nothing to stop owners from raising objections or seeking amendments to your agreement.

Leanne Habib Premium Strata E: info@premiumstrata.com.au P: 02 9281 6440

This post appears in Strata News #572.

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