This article outlines the steps an owners corporation (OC) should take when their strata manager requests early termination.
Question: Our strata manager has requested an early termination of our agency agreement. Can a motion to terminate be made at the AGM, or does this require a resolution at a general meeting of the OC?
Our strata manager has requested an early termination of our agency agreement. What steps does the owners corporation (OC) need to take? If we decide to self-manage, what do we need to request from the strata manager? Can a motion to terminate be made at the AGM or does this require a resolution at a general meeting of the OC?
Answer: The first step should be to review the executed agency agreement.
The OC must have a detailed understanding of the responsibilities they will be obligated to undertake should they choose to manage the strata scheme without the assistance of a licensed strata managing agent.
In this situation, the first step should be to review the executed agency agreement. This review will help confirm the conditions under which termination may occur. Specifically, you should look for clauses detailing the grounds for termination, the required notice periods, and the proper manner in which a termination notice should be served.
The agency agreement will likely also refer to the requirement for the agent to return all books and records to the secretary of the owners corporation within a specified period. According to Schedule 4 of the Property, Stock and Business Agents Regulation 2022, the agent must cooperate with the OC by making these books and records available and facilitate the transfer of functions.
If any part of the agreement or regulation is unclear, it may be prudent to seek legal advice or consult with a strata expert to ensure that all steps are correctly followed.
What must the OC request from the strata manager?
All books and records held by the agent relating to the strata scheme must be provided to the OC. This will include a large volume of documentation. To ensure the OC is well-positioned to effectively self-manage the strata scheme from day one, it’s crucial to obtain the following key documents:
- The strata roll, by-laws, strata plan, insurance policies, and copies of any contracts.
- Financial statements and accounts.
- Records of meeting notices and minutes, including proxies and voting papers.
- Correspondence including but not limited to emails, letters, notices, and reports.
NSW Fair Trading provide a helpful guide on the documentation that an owners corporation should hold: Record keeping requirements.
Upon termination, the current strata managing agent will close the existing bank account and arrange for the transfer of funds. It’s imperative to promptly open a new trust account to ensure the owners corporation can continue to manage the finances of the strata scheme. The closing balance recorded on the financial statements should be reviewed in conjunction with the funds received to ensure the amounts reconcile.
The owners corporation will also need to ensure annual reporting to Strata Hub: Strata annual reporting.
A motion to terminate must occur at a general meeting, therefore either an annual general meeting or extraordinary general meeting.
Ben Ruddell
Tender Advisory
E: ben@tenderadvisory.com.au
P: 0423743714
This post appears in the September 2024 edition of The NSW Strata Magazine.
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Read next:
- NSW: Q&A Strata Management Termination and Appointments
- NSW: Q&A Is it better to be a Self Managed Strata Scheme?
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