NSW: New strata laws impact building manager contracts

This article is about the changes to NSW strata laws that require building manager contracts to include new statutory duties and disclosure obligations.

NSW strata laws are redefining accountability for building managers, mandating that you update your building manager contracts to reflect these changes. These reforms are part of the ongoing commitment to enhance transparency and ensure best practices across all strata schemes.

Key takeaway: Building managers step into the spotlight

Just as strata managing agents have seen increased disclosure requirements, building managers will now be subject to new statutory duties that mirror those of strata managing agents. This critical development aims to significantly increase accountability for how our buildings are managed, ensuring that all parties involved act in the best interests of the owners corporation.

What this means for building managers:

While the specifics of these new duties are being refined, the overarching goal is to compel building managers to act with greater transparency, diligence, and in alignment with the owners corporation’s needs. This includes:

• Expanded disclosure requirements: Similar to strata managers, building managers will need to disclose any affiliations with suppliers or developers, providing owners corporations with full transparency regarding potential conflicts of interest.
• Enhanced reporting: Expect more stringent reporting obligations to owners corporations regarding their activities, maintenance schedules, and any issues impacting the scheme.
• Acting in the owners corporation’s best interests: This is a fundamental principle that will now be legally enforced for building managers, ensuring their decisions and actions prioritise the welfare of the strata scheme.

Increased powers for NCAT: A new era of enforcement

Perhaps one of the most impactful changes is the expanded power of the NSW Civil and Administrative Tribunal (NCAT). NCAT will now have the explicit authority to terminate both strata manager and building manager contracts if they are found to be acting unlawfully.

This is a significant shift. It provides a powerful mechanism for owners corporations to address instances of mismanagement or misconduct, offering a clear pathway for resolution and ensuring that contracts can be swiftly terminated where there is a breach of legal obligations.

Why these changes matter to you:

• For strata managers: These reforms reinforce the emphasis on ethical conduct and transparency across the entire strata ecosystem. Understanding the new landscape for building managers will be crucial for seamless collaboration and ensuring your practices align with heightened expectations.
• For building managers: This is a call to action. Review your existing contracts and practices to ensure full compliance with the incoming statutory duties. Proactive adaptation will be key to navigating these changes successfully and avoiding potential Tribunal intervention.
• For owners corporations and strata committees: These reforms empower you with greater oversight and a stronger voice in ensuring your building is managed effectively and lawfully. You will have more tools at your disposal to hold both your strata manager and building manager accountable.

Act now: Update your building manager contracts

The new strata laws are changing how building manager contracts are handled. With new duties and NCAT’s power to terminate unlawful agreements, reviewing your building manager contracts are crucial. Don’t risk non-compliance; to ensure your contracts are up-to-date and protect your scheme, contact our team of specialist strata lawyers, we’re happy to help.

Adrian Mueller
JS Mueller & Co Lawyers
E: adrianmueller@muellers.com.au
P: 02 9562 1266

This post appears in Strata News #752.

This article has been republished with permission from the author and first appeared on the JS Mueller & Co website.

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Read next:

• NSW: Q&A Can a Building Manager Be Removed?
• NSW: Building Manager Rights and Obligations
• NSW: Changes to Strata Managing Agent Contracts

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