SA: Q&A Looking to Change Strata Management Companies?

These questions are about changing strata management companies in SA.

Table of Contents:

• QUESTION: How do we handle the transition period between terminating one strata manager and appointing a new one?
• QUESTION: If a corporation is not happy with clauses in a new Managing Agency Agreement, are they obliged to accept it as presented by a strata manager?
• QUESTION: The Chairman of our scheme wishes to appoint a body corporate manager. Levies will be held in a separate bank account in the name of our Strata Corporation. Is that sufficient or do the funds need to be held in a Trust managed by a lawyer and audited?
• QUESTION: We are unhappy with our current strata manager and I’d like to find out how to change strata management companies. What is involved in changing strata managers? How do we call a meeting? What quorum do we need to meet?

Question: How do we handle the transition period between terminating one strata manager and appointing a new one?

We are leaving our Strata management due to ongoing lack of communication and poor service, and we have not yet decided on another. Once the 28 days notice is up can the former management hand all documentation and funds to the Presiding Officer for holding until we either appoint a new manager or decide to self manage?

Answer: There is no requirement for your books to be passed onto a Strata Manager.

There is no requirement for your books to be passed onto a Strata Manager. I would request that they provide you with a bank cheque to enable them to close the corporation’s account. Many Strata Managers transfer funds via EFT, however, if you have not decided if you will be self-managing or appointing another manager you would not have a bank account to have the money transferred to.

The only other issue to be mindful of is that if you have accounts that require payment while you are making your decision you will not be able to pay these accounts. I also do not recommend having the funds transferred to the Presiding Officer or another owners bank account. Funds should be either deposited into a trust account or an account in the name of your corporation.

Carrie McInerney
Horner Management
E: [email protected]

This post appears in Strata News #440.

Question: If a corporation is not happy with clauses in a new Managing Agency Agreement, are they obliged to accept it as presented by a strata manager?

Is a corporation obliged to accept a management agreement as presented by a strata manager?

What is the situation if there are clauses that are unacceptable to the corporation? Is there legally any wriggle room or is it a matter of finding another Strata Manager?  

Answer: Firstly I would speak to the Strata Manager to see if they will agree to removing the clauses you are concerned about.

Firstly I would speak to the Strata Manager to see if they will agree to removing the clauses that you are concerned about. Each Strata Management Company can have different agreements, while some use the industry standard agreement prepared by the Strata Community Association. If the agreement is prepared by the individual company they may agree to remove some of the clauses you are concerned about, however if the contract is an industry standard agreement they may not be able to alter the contract they are using.

In the end, the Strata Manager is presenting their fees, along with Management agreement and if your Corporation does not find the clauses acceptable (or they won’t remove them), then it is probably a case of finding another Strata Manager, as there is no legal obligation for the Strata Manager to offer their services if you do not accept their clauses.

Carrie McInerney
Horner Management
E: [email protected]

This post appears in Strata News #440.

Question: The Chairman of our scheme wishes to appoint a body corporate manager. Levies will be held in a separate bank account in the name of our Strata Corporation. Is that sufficient or do the funds need to be held in a Trust managed by a lawyer and audited?

The Chairman of our 6 lot scheme wishes to appoint a body corporate manager from Queensland as he no longer has the time to self-manage the scheme.

They say the levies will be held in a separate bank account in the name of our Strata Corporation. Is that sufficient or do the funds need to be held in a Trust managed by a lawyer and audited?

Answer: Where and how the funds are held are dependant on how the group is setting up management.

Where and how the funds are held are dependant on how the group is setting up management. A lawyer is not required however, the group’s funds should be audited.

Whilst there is nothing inappropriate about having a Strata/ Community Manager who is based in Queensland, the group should be asking why? There are many good and reasonably priced Strata Managers based in South Australia who are familiar with the South Australian Legislation and how it affects your group.

Strata Community Association has many Members here in SA who would be across all facets of the requirements of such a group. If I was on your group, I would be looking at obtaining a quote from one or two SA based Managers even if you do obtain a quote from the Queensland based Manager also.

I would be asking the questions of the QLD Manager, whether they manage other properties in SA? What experience do they have with the SA legislation and requirements? How and where will they facilitate meetings of the members? You may find that this remains the best option for the group, but I think Members getting these and more questions answered would be due diligent and make sure everyone is comfortable and knows what is going on moving forward.

Tony Johnson
Stratarama
SCA (SA) Strata Community Manager of the Year 2018, 2017 & 2016
E: [email protected]

This post appears in Strata News #426.

Question: We are unhappy with our current strata manager and I’d like to find out how to change strata management companies. What is involved in changing strata managers? How do we call a meeting? What quorum do we need to meet?

I own a flat that’s in a group of 6 in South Australia. Our strata administration fees are high and two other owners and I want to change management as soon as possible as we have found alternative companies offering less than half our current administration fees.

I have spoken with two other owners who are in agreement to change. Another two are on a low income and would presume they would agree, however for some reason one of these people is the presiding officer and has ‘told’ us they do not want to change and they now presume that’s the end of the matter.

I’d like to find out how to change strata management companies:

1. What percentage of owners can call a meeting?
2. Can we write a letter to all the owners detailing: agenda item of change of strata management, include some quotes, giving 14 days notice, time and place (and book a room in a public place such as the local library)?
3. Can the president officer refuse to allow the meeting?
4. Do we minute the meeting as per the agenda?
5. Do we need to find out prior to the meeting how much notice our current management requirements to exit?
6. With 6 units, what’s the legal quorum to firstly hold a meeting and from that quorum how many need to agree before we can change management?

Answer: A general meeting can be called by the secretary, or any two members of the management committee, or one-fifth of the unit owners.

Please note, the answers below are based on the information I have been given. I have assumed for this response, that you are a Strata titled group, as you refer to paying Strata fees, however, if this is a Community Titled group, then some of the below comments will need to be changed as the legislation is different for each Title.

1. A general meeting can be called by the secretary, or any two members of the management committee, or one-fifth of the unit owners.
2. This is precisely the action to take. Don’t forget that you must make a reasonable effort to ensure that Owner who wishes to attend, can do so, by making the date, time and location as convenient as possible to a majority of Members.
3. Provided the above is met, to ensure that the meeting has been called correctly, ensuring every Member has the opportunity to attend, is given the required notice of the meeting (I would give more than 14 days to allow for postage time, to be sure) and enclosing the agenda item as it is to be voted on, the quotes and the proxy form. With all of this met, the Presiding Officer must accept the meeting as being duly convened.
4. Yes. Minutes must be taken showing the date, time, location, Members present, Resolution and outcome. These minutes should then be distributed to all in attendance and to any Owners who were unable to attend. Depending on the outcome the minutes can then also be sent on to the current Managers to notify them that at the end of their contract period their services will not be renewed.
5. Generally your group will have signed on to a 12-month contract at the last AGM, so their service will end at that time should the group not accept terms for renewal. Note that the Members can cancel service at that meeting should it not be possible to hold a general meeting prior to the AGM. The Manager will be able to provide you with a copy of your contract when requested.
6. A quorum of the Members in a Strata Corporation is 50% of the units eligible to vote (i.e 3 unit Members). All Voters must be paid up Members of the Corporation. Those unfinancial are unable to vote on matters in front of the group except those matters requiring a unanimous resolution (which this matter does not). This matter will require only an Ordinary resolution which is one passed by a simple majority at a convened meeting. i.e if 3 Owners only attend this meeting then a majority will be 2 in favour. Where 5 Members attend, a majority would be 3 Members in favour of the resolution.

Tony Johnson
Stratarama
SCA (SA) Strata Community Manager of the Year 2018, 2017 & 2016
E: [email protected]

This post appears in Strata News #181.

This article is not intended to be personal advice and you should not rely on it as a substitute for any form of advice.

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