This Q&A is about what to do when you are coming up to the end of your owners corporation management contract in Victoria.
Table of Contents:
- QUESTION: Our owners corporation is going through the process of appointing a new strata manager. We were wondering if there a list of specifications we should provide when seeking quotes? What do we need to consider?
- QUESTION: If we wish to end our current Owners Corporation Management contract and appoint a new strata manager, the current contract states 28 days notice is required. Our AGM is scheduled less than 28 days of the contract expiring. How does that work?
Question: Our owners corporation is going through the process of appointing a new strata manager. We were wondering if there a list of specifications we should provide when seeking quotes? What do we need to consider?
Answer: We provide 5 overriding qualitative factors which should be at the forefront of your considerations.
Strata Management in Victoria
In Victoria there are:
This register of owners corporations Victoria ranges from:
When things go wrong or the strata management company (or individual strata manager) are unscrupulous… things can really become costly, stressful, and detrimental for Committees, owners, and investors alike.
What do the Best Strata Management Companies Have in Common: Our 5 Overriding Qualitative Factors
Strata Management Consultants Melbourne has formed the view that there are 5 categories that are essential when it comes to best practice:
- Strata management experience and the right qualifications of key staff;
- The people working in the strata management business and an emphasis on service (strata management is after all a services business);
- Sound integrity and the right set of values behind the strata management company;
- Proper systems and process – no point trying to do the accounting of strata buildings in excel or software intended for property management when there are hundreds of owners with different lot liabilities/entitlements; and
- Knowledge learnt through professional working experience and a focus on training and up-skilling of staff.
List of Specifications
I think a list of specifications is always going to differ – depending on the building, location, size, age, and the expectations/priorities of the owners and Committee.
If an OC is with a large company and not charging very much (for the cost of employing a management company) as it’s been more of a ‘cookie-cutter’ approach then maybe the emphasis is on paying a bit more and getting better service.
If the OC is new (built in the last 10 years) and there are building defects, maybe the emphasis is on getting an independent OC management company who has experience and resolve when it comes to finding a solution to fix the defects.
If the OC is a larger high-rise with multiple, significantly large sub-contracts (i.e. cleaning, building management, electricity, lift servicing) then the Committee should look to go through a proper and competitive tender process. Part of the criteria for prospective strata management companies can be to look to assist the Committee with tendering these sub-contracts in due course.
Regardless of the scenario, those 5 overriding qualitative factors should be at the forefront of your considerations.
This post appears in the February 2021 edition of The VIC Strata Magazine.
Question: If we wish to end our current Owners Corporation Management contract and appoint a new strata manager, the current contract states 28 days notice is required. Our AGM is scheduled less than 28 days of the contract expiring. How does that work?
I have had a close read of the existing Owners Corporation Management contract for the agent to provide their service. I note that in our contract there is an automatic renewal clause if the service provider is not notified within 28 days to the contrary. I note that it seems to be the practice of the service provider to call the AGM less than 28 days of the contract expiring. My understanding is that 28 days is required to advise an existing service provider/manager that the Owners Corporation wants to sign with another Management Company.
This current practice of scheduling the AGM within the required 28 day does not afford the Corporation a reasonable amount of time deliberate the question of a new provider at the AGM and terminate the contract appropriately if the automatic renewal is in place. Does a decision at then AGM nullify the auto-renewal clause?
Is the fact that the holding of the AGM less than the required 28 days and the contract simply auto-renews legal or at least unethical? It seems sneaky. Is the contract in VIC legislated or can it the auto-renewal clause be struck-out or only given effect if certain criteria are met by the service provider.
I wrote a friendly note and put it on the notice board in the common area, however, this has achieved nothing. I’ve also informed the owners corporation via email but have not received any response.
We don’t smoke but we are forced to clean up other people’s cigarette butts. We also have dogs and this can pose health risks to them if they accidentally eat one of the butts.
I would welcome any suggestions on how to best deal with this issue or what legal methods I could use to solve this.
Answer: Generally, the Committee will meet before the AGM is scheduled to discuss the current OC Contract and determine whether there are any actions they may like to take.
This is quite common with a lot of the Owners Corporation (OC) Contracts in Victoria.
Generally, the Committee will meet before the AGM is scheduled to discuss the current OC Contract and determine whether there are any actions they may like to take. This might include going out to tender to see what the market is offering to be sure that they are happy with the services provided and the management fee structure.
A decision at an AGM does not nullify the auto-renewal clause unless it is stated in the contract. In the SCA standard OC contract it is noted that “if no notice of it’s intention to revoke this appointment is given by the Owners Corporation to the Manager at least 28 days prior to the expiry date, the Appointment will continue until the expiration of one year after the expiry date (which date will then become the expiry), but will not exceed the date of the next Annual General Meeting at which time re-appointment must be confirmed’.
Yes, it is legal to hold the AGM less than the required 28 days and for the contract to auto renew.
We can confirm that while the auto renew clause is standard practise in the industry, not all OC Companies have the clause in their contract and it certainly can be edited if all parties agree. It should be noted that if the Manager has breached the contract, the OC can terminate the Manager at any time given 28 days’ notice.
This post appears in Strata News #357
Have a question about what to do when you are coming up to the end of your owners corporation management contract in Victoria or something to add to the article? Leave a comment below.
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.
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Looking for strata information concerning your state? For state-specific strata information, take a look here.