These NSW Lot Owner have asked about appointing a new strata manager. Leanne Habib, Premium Strata provides the following response.
Question: We are lot owners in a small 8 lot commercial strata building. What is the procedure for appointing a new strata manager? What happens if this procedure is not followed?
We are lot owners in a small 8 lot commercial strata building.
What is the procedure for appointing a new strata manager?
What happens if this procedure is not followed?
Can an owner/occupier, who is licensed, become our new strata manager? Would this be considered a conflict of interest?
Can the executive committee vote themselves “absolute power”? ie. Basically what they say goes and they make decisions on behalf of all owners without discussion or meeting votes.
Actually, I’m wondering why I should bother voting as my vote is always overshadowed by a majority owner anyway.
Answer: It is critical that the termination of the current manager be effected strictly in accordance with the strata management agency agreement which is a legally binding contract.
The procedure for appointing a new strata manager
While the termination of the current and appointment a new strata manager must be done by ordinary resolution at a duly convened general meeting of the Owners Corporation, it is critical that the termination be effected strictly in accordance with the strata management agency agreement which is a legally binding contract.
Usually, contracts can be terminated by mutual agreement and otherwise, only in case of breach of contract by that strata manager and in case of breach, usually a period of time to permit the strata manager to rectify its breach must be given prior to taking the step of termination.
Take care to ensure the procedure for termination of the current agent under the existing contract is adhered to strictly and it is recommended you seek legal advice in this regard. If this procedure is not followed, the Owners Corporation might expose itself to a lawsuit for damages for the wrongfully terminated agreement.
An owner/occupier, who is licensed can become the new strata manager provided there is disclosure and proper contracts in place and absolute transparency. If this is adhered to, we see no problem. It would not be considered a conflict of interest if there is proper disclosure and that owner/manager complies with the duties of ethics and acting in the best interests of the owners corporation as a whole.
The executive committee cannot vote themselves “absoulte power”. The legislation clearly states that in the event of a conflict the decision of the owners corporation will prevail. Also, a strata committee cannot make a decision which the owners corporation must make by unanimous, special or ordinary resolution.
In addition, the owners corporation may restrict the strata committee’s power and determine that such restricted matters be determined only by the owners corporation in general meeting.
This post appears in Strata News #207.
NSW: Q&A Appointing a New Strata Manager Before End of Contract
Question: I require information on appointing a new Strata manager before the 12 month contract period is up. Our Strata manager rarely replies to emails and seldom ever replies to messages whether they are left on their mobile or sent via email.
Answer: Your ability to end your existing contract with your current strata manager depends entirely on the terms and conditions of the contract.
Your ability to end your existing contract with your current strata manager depends entirely on the terms and conditions of the contract, the requirements of the strata legislation and the specific facts and circumstances of your situation.
On the assumption you are bound by the standard SCA agreement, you can only terminate the agreement 1. With the mutual consent of the agent or 2. In case of breach of the agreement, and the agent failing to remedy that breach within 28 days after the owners corporation having served written notice on the agent providing particulars of that breach.
In case of the latter, termination of the management agency may only occur if authorised by a resolution of the owners corporation at a general meeting.
You will need very specific evidence of breach and clear evidence that the agent has failed to remedy it.
In the circumstances you describe and even if you issued a notice of breach, if the agent responded to your emails and phone calls, the breach would essentially be remedied and you would have no grounds on which to terminate.
This post appears in Strata News #197.
Question: When appointing a new strata manager, should the Strata Management Company attach a copy of their proposed Strata Managing Agency Agreement to the Agenda for all lot owners to view and question at either a General Meeting or AGM?
When appointing a new strata manager, should the Strata Management Company attach a copy of their proposed Strata Managing Agency Agreement to the Agenda for all lot owners to view and question at either a General Meeting or AGM? It was brought to my attention that the Owners Corporation had signed a Strata Managing Agency Agreement that purportedly was discussed at a General Meeting which I will say I attended, but for the life of me, I don’t recall that it was discussed nor did I receive in the mail a copy of the proposed Strata Management Contract prior to the General Meeting.
Answer: Under the strata legislation we are not aware that it is a mandatory requirement to include the strata management contract at either an AGM or general meeting.
Under the strata legislation, we are not aware that, when appointing a new strata manager, it is a mandatory requirement to include the strata management contract at either an AGM or general meeting, though, of course, best practice dictates that copies of agreements be attached to the agenda to enable owners to form a considered view of the contents etc of such agreement (including eg price and terms of appointment).
The fact that it was tabled may adequately discharge disclosure obligations of the Owners Corporation if in fact the full content of the proposed agreement was tabled
This post appears in Strata News #178.
Question: What are the implications of not having a licensed strata manager in NSW? Can a termination of a contract signed with a licensed agency be legal because the Strata Manager they put in place was not licensed? Are we able to appoint a new strata manager?
Can we terminate a contract signed with a licensed agency because the Strata Manager they put in place was not licensed? Or is this ok?
Our Owners Corporation has members asking for a termination of a contract and dismissal of Manager and they want a full refund of the money paid during 2015 and 2016.
A motion to look at Managers non-license status and not proceed with a new contract was not carried at 2016 AGM. Thus Owners Corporation signed a second yearly+ contract for a further 15 months giving the Agency Full Rights to act for Owners Corporation.
What are the consequences of terminating the contract and appointing a new strata manager?
Answer: An employee does not need to have both a licence and a certificate of registration and registration is generally sufficient if the agency is licensed.
These issues are governed by the Property Stock & Business Agents Act, 2002, (NSW). Given that the agency is licensed, the critical question is whether the manager has a “certificate of registration” under that Act. If not, the Strata Manager may be liable to a penalty of 100 penalty units and face disciplinary action by the Director General of the NSW Office of Fair Trading.
An employee does not need to have both a licence and a certificate of registration and registration is generally sufficient if the agency is licensed. Provided the Strata Manager is registered you will unlikely be able to terminate on this basis alone.
Also, provided the Strata Manager is registered, you will not be able to claim a refund. Refunds of expenses and commissions paid are generally limited to circumstances whether the agency agreement itself is flawed and in this instance, on the face of it, it appears that the agency agreement was properly signed by the licensee and the owners corporation.
Terminating any agreement should only be done in consultation with a solicitor to ensure there are lawful grounds for so doing. Otherwise, you may create a situation where the agency may sue you for damages.
This post appears in Strata News #147.
NSW: Q&A Appointing a New Strata Manager. Do We Wait For Our AGM?
Question: We are looking at resigning our current strata manager and appointing a new strata manager. What are the procedures we need to follow? Do we have to wait until our AGM to do this?
I’m after a step by step guide on the procedure to resign our current strata manager and appoint a new one. I understand that we do this before the AGM meeting. Our AGM is scheduled for mid-2017. Do we have to wait for appointing a new strata manager until then? We are a small strata complex (4xtownhouses) in NSW. Awaiting your reply when convenient.
Answer: Whether or not you can terminate before the AGM depends on the terms of your management agreement.
Whether or not you can terminate before the AGM depends on the terms of your management agreement. On the assumption your current strata manager uses the Strata Community Association‘s standard form of agreement, the provisions of Clause 5 will apply (reproduced below for your ease of reference).
Either you both agree to terminate the agreement or you have to wait until the expiration of the agreement or, if the agent is in breach, the provisions of Clause 5.4(a)(i) will apply.
5. Terminating the agreement
5.1 After the expiry of the term, the agreement will automatically end unless the owners corporation extends the agreement in accordance with section 50(4) of the Act.
5.2 The agreement may be terminated at any time with the mutual consent of the parties.
5.3 Any notice to terminate under this agreement can only be given by the owners corporation if authorised by a resolution of the owners corporation at general meeting.
5.4 Despite this clause 5 and without affecting any of its other rights, the agreement may be terminated with immediate effect by written notice given by:
(a) the owners corporation:
(i) if the agent is in breach of the agreement and fails to remedy that breach within 28 days after the owners corporation serves a written notice on the agent providing particulars of the breach; or
(ii) where the agent is an individual, the agent is declared bankrupt; or
(iii) where the agent is a corporation, the agent is wound up or placed in administration or liquidation; or
(iv) if the agent ceases to hold a strata managing agent’s licence; or
(b) the agent if:
(i) the owners corporation is in breach of the agreement and fails to remedy that breach within 28 days after the agent serves a written notice on the owners corporation providing particulars of the breach; or
(ii) an order by a Court is made for the variation or termination of the strata scheme under Part 9 or 10 of the Development Act; or
(iii) the owners corporation fails to pay any moneys owed under this agreement after the agent serves a written notice on the owners corporation providing particulars of the amount outstanding; or
(iv) the owners corporation fails to comply with any law or fails to provide adequate instructions or prevents the agent from carrying out its obligations under this agreement after the Agent serves a written notice on the owners corporation providing particulars of the breach.
5.5 The agreement is terminated on the appointment of a strata managing agent under section 237 of the Act to exercise or perform all the functions of the owners corporation and, if so terminated, the agent will not be entitled to:
(a) any remuneration by way of commission, agreed services fee, additional services fee, charges or otherwise in respect of any period after the termination; or
(b) any payment (in the nature of a penalty or otherwise) by reason of the early termination.
5.6 In the event of termination, the agent must provide all books, records, accounts, funds and property of the owners corporation in the agent’s possession to the secretary of the owners corporation, or persons nominated by the secretary of the owners corporation, within seven (7) business days.
You will need a form of a motion to terminate the current agency agreement and for appointing a new strata manager you will need a new management agency to provide their agency agreement for approval at a general meeting of the Owners Corporation.
In summary, the decision to terminate and appoint a strata managing agent can only be done at a general meeting, a decision for all owners.
This post appears in Strata News #142.
- Why are Strata Managers so difficult to get along with?
- NSW: Q&A The Tender Process: Changing Strata Managers
This article is not intended to be personal advice and you should not rely on it as a substitute for any form of advice.