A NSW lot owner would like to know the procedure for renewing the management agency agreement. Rod Smith, The Strata Collective provides the following response.
Table of Contents:
- QUESTION: During the contract period, our strata management company was taken over by another larger strata management company. Are we free to appoint a new management company, or are we bound by the original contract?
- QUESTION: Our strata management contract expired 6 months ago. Where do we stand? Are we able to negotiate fees?
- QUESTION: Are we legally obligated to sign a new strata management contract after an AGM decision was made under duress, especially when the previous contract had already expired?
- QUESTION: Our strata manager is retiring. Can they charge our owners corporation for an EGM to change managers?
- QUESTION: Is the strata managing agent required to ensure they deduct invoices paid on behalf of the owners corporation from the correct fund?
- QUESTION: After the committee members have signed the management agency agreement, who has the right to hold a copy of the agreement?
- QUESTION: When renewing the management agency agreement, should the managing agent include all items on the agenda to be discussed at the AGM? Can they insert their fixed term prior to the AGM?
Question: During the contract period, our strata management company was taken over by another larger strata management company. Are we free to appoint a new management company, or are we bound by the original contract?
Answer: The original term of the agreement would need to reach completion before you can appoint an alternate strata management company.
Generally, the original term of the agreement would need to reach completion before you can appoint an alternate strata management company. Prior to considering this, you would need to review the agreement for termination procedures and notice requirements.
There may, however, be a provision in the agreement for early termination by way of mutual consent, or due to contractual breaches. Both would require negotiation with the strata management company.
The owners corporation or strata committee should consult a lawyer to ensure any early termination is legal.
Megan Parkins
Tender Advisory
E: [email protected]
This post appears in the February 2025 edition of The NSW Strata Magazine.
Question: Our strata management contract expired 6 months ago. Where do we stand? Are we able to negotiate fees?
Our strata management contract was for 3 years. The contract expired over 6 months ago. Where do we stand? The strata manager has asked us to backdate the new contract. Is this legal?
The fees on the new contract are over and above standard fees, including high out of hours payments and additionals. Can we negotiate the fees with the strata manager?
Answer: It is not legal to backdate an agreement.
Ultimately, it is not legal to backdate an agreement. The strata management company would require a valid agreement, either within the original fixed term or under an extension, to continue legally managing the building.
Until a new agreement has been appropriately tabled and resolved at a general meeting, the owners corporation and strata committee can negotiate the terms with the strata management company.
Megan Parkins
Tender Advisory
E: [email protected]
This post appears in Strata News #726.
Question: Are we legally obligated to sign a new strata management contract after an AGM decision was made under duress, especially when the previous contract had already expired?
Our AGM occurred after our strata management contract had concluded. Only one proxy holder attended, and they were coerced into voting for the current manager with the threat of immediate service cuts if we didn’t. Given these circumstances and since the decision was made during the AGM, are we legally required to sign the new contract and continue with this management company?
Answer: If the agreement’s end date was before the meeting notice/agenda was published, the strata management company has no authority to perform this function.
We are working on the assumption that a strata committee meeting was not convened within the agreement term for the purpose of initiating a three-month extension in accordance with Section 50(4) of the NSW Strata Schemes Management Act 2015.
Therefore, notwithstanding the consent to continue provided by the owner who attended, as the strata management contract was outside the agreement term prior to the Annual General Meeting, there is a question whether or not the notice/agenda for the meeting was validly issued.
If the end date of the agreement was before the meeting notice/agenda had being published, the strata management company has no authority to perform this function on behalf of the owners corporation. This would subsequently render the meeting and the motion for re-appointment invalid.
Megan Parkins
Tender Advisory
E: [email protected]
This post appears in Strata News #718.
Question: Our strata manager is retiring. Can they charge our owners corporation for an EGM to change managers?
Answer: You can find the answer to the question in the agreement.
We would need to review the specific terms of the agreement between the owners corporation (“the client”) and strata managing agent (“the agent”) to understand a few key elements to answer this question.
Typically, we would look for answers to these questions:
- When the agent was appointed, did the motion or their agreement grant them delegated authority to perform the functions and duties of the secretary (which extend to convening a general meeting)?
- Does the agreement grant the agent full authority to convene a general meeting? Or is the agent required to seek instructions from the client?
- Does the agreement stipulate whether or not the duty or function of preparing for, attending, chairing etc. is a service provided by the agent on an additional fee basis?
- Are there specific terms of the agreement that refer to the client’s rights in the event that the strata managing agent winds up their business? For example, the Strata Community Association (NSW) agreement (used by most strata management businesses) has clause 7 which specifically talks about the circumstances of transferring an agreement from one agent to another.
Ultimately, the answer to the question is found in the agreement. New South Wales does not have a mandated uniform agreement that must be used by all agents, so terms may vary.
Tim Sara
Strata Choice
E: [email protected]
P: 1300 322 213
This post appears in the August 2024 edition of The NSW Strata Magazine.
Question: Is the strata managing agent required to ensure they deduct invoices paid on behalf of the owners corporation from the correct fund?
Is the strata management company obligated under the conditions in the management agency agreement to ensure the invoices they pay on behalf of the owners corporation are allocated correctly to either the admin or the capital works fund? Are they required to ensure they deduct the invoice amount from the correct fund?
Answer: Yes. A strata managing agent is responsible for the accurate management of the books and records of a strata scheme.
In short, yes.
A strata managing agent is responsible for the accurate management of the books and records of a strata scheme, including the management of the financial records and transactions of the owners corporation, where they have been provided authority to do so under an executed strata management agency agreement.
A strata management agency agreement is required to include a schedule of the agent’s authority to act on behalf of an owners corporation and whether there are any limitations to that authority, pursuant to Schedule 4, Clause 2 of the_ Property Stock and Agents Regulation 2022 (NSW).
_
Where the strata managing agent has the delegated authority to undertake the financial management of the funds and books of accounts for an owners corporation, the agent is required to comply with the requirements for the use of each fund outlined under Part 5, Division 1 of the Strata Schemes Management Act 2015 (NSW). Specifically, Sections 73 and 74 of the Act outline the owners corporation’s responsibility (and the agent’s responsibility, by delegated authority) to pay money from each fund for their intended purposes. Where an agent has not complied with the requirements of the Act in accounting for the payment of invoices to the correct fund on behalf of the owners corporation, the agent may be in breach of the strata management agency agreement.
Andrew Terrell
Bright & Duggan
E: [email protected]
P: 02 9902 7100
This post appears in the February 2024 edition of The NSW Strata Magazine.
Question: After the committee members have signed the management agency agreement, who has the right to hold a copy of the agreement?
I asked for a copy of the Management Agency Agreement from the Secretary a few weeks ago but they have never replied to me. If requested, do they have to give the lot owners a copy of this or it is just available to the Committee?
After the committee members have signed the agency agreement, who has the right to have a copy of the agreement beside the secretary of the scheme?
Answer: The Management Agency Agreement forms part of the books and records of the Owners Corporation.
The Management Agency Agreement forms part of the books and records of the Owners Corporation. An owner is entitled to perform a search of the books and records at the prescribed cost of $34.10 per hour. This should be arranged directly through the strata manager.
Rod Smith
The Strata Collective
T: 02 9879 3547
E: [email protected]
This post appears in Strata News #426.
Question: When renewing the management agency agreement, should the managing agent include all items on the agenda to be discussed at the AGM? Can they insert their fixed term prior to the AGM?
When renewing the management agency agreement, should the managing agent include all items on the agenda to be discussed at the AGM? Can they insert their fixed term prior to the AGM?
If a Managing agent wants to change the structure of their management costs should they not include it on the Agenda and also discuss it with the owners corporation at the AGM?
Also if they want a fixed term of 3 yrs should this also not be discussed at the AGM and included in the Agenda?
Can the Managing Agent also type up their agreement with the fixed term inserted before the AGM?
The Motion on the Agenda was just for reinstatement of another fixed term which we have of 1 yr.
I have just received after asking for the 2018 Management Agreement to find out that they have got themselves 3 years.
Answer: The agreement should be sent with the agenda however it is not required to be circulated beforehand.
The agreement should be sent with the agenda however it is not required to be circulated beforehand. The agreement is able to be tabled at the meeting if the motion states that the agreement is to be tabled and accepted.
Yes, if they want a fixed term of 3 yrs this can be discussed at the AGM and included in the Agenda. Please see above. You can require an amended term down to one year. All that would need to happen is, you cross out the words ‘3 years’ and handwrite and initial ‘1 year’ in the agreement.
The Managing Agent can type up their agreement with the fixed term inserted before the AGM. However, this can be changed at the meeting.
Rod Smith
The Strata Collective
T: 02 9879 3547
E: [email protected]
This post appears in Strata News #358.
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.
Have a question about renewing the management agency agreement or something to add to the article? Leave a comment below.
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A body corporate committee and all interested owners need to be aware of their property’s status in terms of how important they are to a strata manager. For example, a large complex of 40 units which outsources all administrative responsibility to the strata manager is going to be treated more seriously than a six pack where the BC committee works to reduce admin costs by directly engaging contractors to maintain the property (eg. Gardening, roofing and plumbing) as well as handling VOCMs and EGMs. This is simply because the larger complex in this scenario represents a lot more revenue – a strata manager would likely bend over backwards to retain the larger client.
Another fact of body corporate life is the need to consider the possibility that “the devil you know is better than the one you don’t”. Will moving to a new strata manager meaningfully resolve all of the issues that you’re facing with the incumbent?
In any case, I believe that a proactive BC committee should carefully scrutinise a proposed strata management contract and call out items that are either unnecessary or overly expensive. For example, how much should a Contractor Compliance review cost considering all that is being done is to check that active ABNs are in place? Is after-hours contact really necessary? Should you be paying a yearly bulk fee for photocopying, printing, and postage when all records are handled electronically or via email?
Make amendments to the strata management contract and then make a decision based partly on whether or not the strata manager is willing to accept/negotiate the proposed changes.
Hi Samson
From my recent experience in SA, you need to know EXACTLY what you expect of your manager and fight to have it included in your agreement.
You also need to be quite clear with-in the Corporation -owners and committee (if you have one), of how involved you want to be in the running of the Corporation.
You need to investigate what software your proposed strata manager uses on their client portal and to what extent it can be manipulated to produce meaningful, easily found information for the owners. Files need to be accurately named to allow this.
If possible, ask the proposed Strata Manger to supply contacts from other Stratas that they manager. Speak to not just the Presiding officer but others within the Corporation, after you have CAREFULLY read minutes of AGMs and Committee. Select these contacts with similar size and apparent strata requirements that you have.
We are thinking of changing our Strata Management.
1) What process should we adopt to find and select a compatible. Professional Strata Management?
2) What activities, issues distinguish one Strata Manager from another?
3) Is there a list of and range of legitimate charges that is available to guide us in selecting a reasonable Strata Manager?
Thanks