This article discusses strata manager charging fees in advance in Victoria, outlining why owners corporations should rely on the management contract to check if upfront or overlapping fees are being correctly charged.
Question: How should a strata manager’s fees be calculated when management payments appear to overlap?
Our owners corporation (OC) engaged a new strata manager who applied the annual management fee at the start of the engagement. Six months after the OC paid the previous year’s fee, the manager has asked owners to pay an additional six months’ fee.
It appears to be a duplication of the agreed yearly fee paid in advance. This has caused confusion about the manager’s total fees.
I also have concerns about the manager’s financial record keeping. The chairperson, who has other properties managed by this manager, told owners the new fees would be lower than the previous manager’s, but then signed the owners corporation up to a higher fee than advised. How can owners check that the correct amount is being paid?
Answer: The management contract should be very clear on payment terms and fees.
There are a few elements to unpack here. The first principle is always the same – the signed contract of appointment is the only document that matters for an owners corporation paying the manager. The key parts of that contract for this context are:
- Date of commencement
- Remuneration elements
- Management fee inc. GST
- Disbursements fee inc. GST
- Let’s set aside insurance commission and any as-incurred Professional Services fees at this point, as they don’t appear to be the subject.
- When the remuneration is paid
- E.g., quarterly in advance, monthly in arrears, etc.
The management contract should be VERY clear on these items, regardless of whether it is a management-industry body template agreement or a customised contract.
For example, you should be able to easily read the contract and confirm that your engagement commenced on 1 April 2025, paying $5,000 in management fees, $2,000 in disbursement fees, and this is paid monthly in arrears.
It is very unusual for a manager to ask (and then be paid) for a full year’s remuneration in advance. Even more unusual is that, halfway through, the manager is now seeking an additional 6-month payment of fees. It seems they are asking for a total of 18 months’ payment after only 6 months’ engagement. I can’t imagine how the contract wording could support this. Generally, payments are either monthly or quarterly, which helps maintain the client’s cash flow and means the client is only paying for work as they go, rather than being at risk of prior payment and without leverage if the standard of service is poor.
Without having the physical contract document, I can’t add much more. Certainly, any concern about the financial record-keeping or the appropriateness of the budget would require a deeper review of the finances. As a starting point, ask the manager for a copy of the contract. I’m sure the LookUpStrata network would be very obliging in providing further assistance if more specific details are gleaned at that time.
Alex McCormick
SOCM
alex@socm.com.au
P: 03 9495 0005
This post appears in the March 2026 edition of The VIC Strata Magazine.
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