Question: Is our strata manager over-servicing and overcharging if they commissioned an update of our capital works plan without notice or consultation?
Our strata manager commissioned an update of our capital works plan without notice or consultation with the strata committee or owners corporation (OC). The OC was charged for the strata manager’s time, with contractor charges still to come.
When challenged, we were advised that under Section 80 of the Strata Schemes Management Act 2015 NSW, owners corporations are required to review and renew (update) their 10-year plan for the capital works fund every 5 years.
The OC last reviewed our plan at our AGM in April 2024. There was no discussion or commitment to update the plan.
With regard to compliance with the legislative prescriptions of Section 80, is the strata manager able to justify proceeding to commission an update without the OC’s resolution at a general meeting, or is this over-servicing and overcharging?
Although not declared to the OC, the strata manager has a commercial relationship with the contractor.
Answer: Check the agency agreement.
Section 80(1) of the Strata Schemes Management Act 2015 (‘the Act’) requires an owners corporation to prepare a plan of anticipated major expenditure to be met from the capital works fund for a 10-year period.
Section 80(3) of the Act requires that the owners corporation review the plan at least once every 5 years.
A strata manager is an agent of the owner corporation and will perform the functions and duties they are instructed to undertake or have been delegated the authority to perform. This means a strata managing agent should be doing what they have been told to do by the owners corporation or strata committee and any functions or duties that they have been delegated under their agency agreement.
You should check the agency agreement as it may be that the strata manager has been delegated the function of reviewing the 10 year capital works fund plan or more generally, to undertake functions to ensure compliance. If they have not been delegated this function or have not been instructed to perform it by the owners corporation or strata committee, they should not be performing this function.
In regard to disclosures of a commercial relationship with a contractor, the strata manager is not permitted to accept remuneration from a contractor unless it has been disclosed in the agency agreement or has otherwise been approved by the owners corporation.
Greater disclosure obligations commenced on the 3 February 2025. Approval can only be given by resolution of the owners corporation at a general meeting, and the motion must be accompanied by a document setting out various details about any commission or training service.
Matthew Jenkins
Bannermans Lawyers
E: enquiries@bannermans.com.au
P: 02 9929 0226
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