This article is about who in WA strata instructs the building manager.
Table of Contents:
- QUESTION: Is there a limit on the term of a building management contract? At what point can we terminate the contract?
- QUESTION: We are not happy with our building management company. Can we employ our own building manager?
- QUESTION: Our building has an on-site caretaker. Some owners are concerned about the legality of this engagement.
- QUESTION: Can Council of Owner members instruct the Building Manager to undertake duties or must instruction come through the Chairperson?
Question: Is there a limit on the term of a building management contract? At what point can we terminate the contract?
Under the latest revision of the STA 1985, is there a limit on the term of a building management contract?
Our building manager was engaged by the strata company. They have five years left on a ten year contract. The CoO wants to revisit this contract.
The original 10+10 contract was executed 15 years ago and assigned to the current manager two and a half years ago.
If the current contract exceeds the term limitations, can a change in term be enforced under the Act?
Answer: The strata company may be able to terminate the contract five years after the contract was made.
The Strata Titles Act 1985 as amended 2020 provides the following provision:
Section 115. Power to terminate certain contracts for amenities or services
- There is implied in every contract to which this section applies a provision that the strata company may terminate the contract, by written notice to every other party to the contract, after 5 years have passed since the contract was made.
- No cause of action against any person arises from the exercise of the power referred to in subsection (1).
- A contract or any other agreement or arrangement must not exclude the operation of subsection (1) and to the extent that it purports to do so it is of no effect.
- This section applies to a contract if —
- it relates to the provision of amenities or services to the strata company or the owners of lots; and
- it is made after the commencement of section 41 of the Strata Titles Amendment Act 1995; and
- it was made before registration of the strata titles scheme or when any owner held 50% or more of the unit entitlement of the lots.
- The Tribunal may, on the application of a person made in respect of a contract, by order extend the period of 5 years provided for by subsection (1), so far as it applies to that contract, if satisfied that the contract —
- is fair to all owners of lots in the strata titles scheme; and
- will remain fair to all those owners during the extended period.
- An extended period under subsection (5) is not to exceed the term specified in the contract or a period of 10 years from the time when the contract was made, whichever is the lesser.
Under the above section of the Strata Titles Act, if the contract was made after the commencement of Section 41 of the Strata Titles Amendment Act 1995 (which we believe it was), and was made before registration of the strata titles scheme (which we assume it was), then the strata company may terminate the contract, by written notice to every other party to the contract, after 5 years have passed since the contract was made (which we assume is the case).
We recommend the council address their issues with the building manager of the complex directly seeking new negotiations in relation to the contract entered 15 years ago to ensure that it satisfies the requirements of the strata scheme at competitive costing; if no agreement in amending the contract can be reached, written notice may be given to terminate the contract under Section 115 of the Strata Titles Act 1985 as amended 2020.
This advice does not constitute legal advice, and we recommend the Strata Company seek legal advice considering all circumstances.
Marietta Metzger magixstrata E: marietta@magixstrata.com.au P: 08 6559 7498
This post appears in Strata News #680.
Question: We are not happy with our building management company. Can we employ our own building manager?
I’m on the Council of Owners for a 200+ apartment complex. We employed a building management company that is not meeting expectations. Their staff do not appear to be experienced and they are causing a host of issues.
An owner has suggested we employ our own building manager directly. How hard is this and is this something that other strata companies have done? Is employing our own building manager a viable option?
Answer: You would be wise to seek advice from an accountant as to what basis you may employ a building manager.
The standard Schedule 1 Governance By law 8 (2) (b) states the Council may employ or engage, on behalf of the strata company, any person it thinks is necessary to provide any goods, amenity or service to the strata company.
So, in essence, the answer would be yes, however, you would be wise to seek advice from an accountant as to what basis you may employ a building manager. If they are engaged as a direct employee, the Strata Company would become an employer and have to meet all the legal obligations such as tax, superannuation and ensure the reporting met the ATO standards.
You would also need to check your own scheme by laws and AGM minutes for any restrictions that may be imposed regarding employment and ensure that your budget allows for the expense.
Andrew Chambers Chambers Franklyn Strata Management E: andrew@chambersfranklyn.com.au P: 08 9200 4200
This post appears in the December 2022 edition of The WA Strata Magazine.
Question: Our building has an on-site caretaker. Some owners are concerned about the legality of this engagement.
Our building has an on-site caretaker. Some owners are concerned about the legality of this engagement. There is a concern about the possibility that the Strata may be in contravention of superannuation laws and may become liable for long-service leave and back payment of other leave should the contract be terminated.
The caretaker is employed on a contract and has an ABN. He is paid bi-weekly on the submission of an invoice.
He does not work for any other entity.
He provides his own equipment to perform his tasks but is reimbursed for costs incurred, e.g., garden items, maintenance items, etc.
He lives on-site in an apartment provided for him by the strata. He is not required to be on-site personally and is permitted to employ a replacement person to be available.
He must work four and a half hours per day, Monday – Friday and two and a half hours on Saturday. The hours are not specified.
The contract provides for a 90 day notice period.
He is paid a fixed annual amount. From this, the monthly market-related rental is deducted for the apartment in which he resides.
- He is paid no superannuation contributions
- He is given no annual leave or sick leave
- He accrues no long service leave
Are there any irregularities with this arrangement?
Answer: I strongly encourage the owners in this scheme to refer to the Fair Work Act and actually seek legal advice around this matter.
I strongly encourage the owners in this scheme to refer to the Fair Work Act and actually seek legal advice around this matter. I’m not an employment lawyer or specialist in that field, but, the warning bells that are going off for me is that he doesn’t work for another entity and that he has fixed hours on site. I’m not gonna say any more than that, but I would really encourage the owners to quickly seek some advice on this. There could be some significant ramifications and liabilities that they may incur.
It’s always a difficult one. I don’t think owners appreciate what it means when they employ a caretaker or an employee for the strata company, but effectively, they become an employee of all the owners and the owners have an obligation as an employer to adhere to the Fair Work Act, particularly around how they’re managed and any concerns or breaches that may come up. It’s not a simple matter to decide you’re going to terminate him. You can’t do that to your staff, you actually have to go through workplace management requirements and you have to handle it very carefully.
Scott Bellerby B Strata E: scott.bellerby@bstratawa.com.au P: 08 9382 7700
This post appears in Strata News #507.
Question: Can Council of Owner members instruct the Building Manager to undertake duties or must instruction come through the Chairperson?
Answer: A building manager is engaged by the Strata Company to carry out duties and tasks on their behalf.
I note that we are only able to provide some comments on the query below, noting that we have no specific information on this particular Strata Company, the contract with the Building Manager and any intimacies of that contractual arrangement.
A building manager is engaged by the Strata Company to carry out duties and tasks on their behalf.
The contractual arrangement with the Strata Company should provide specific details of those duties, tasks, hours of operation, reporting requirements etc.
In most cases, the Building Manager would be providing regular reporting to the Strata Company on any matters requiring their attention, however, there is normally a requirement for a specific person to be the liaison or the one point of contact for the building manager. To be effective, the building manager has to have one point of communication/instruction. The Strata Company can put specific instructions around that liaison, including expenditure or time limitations.
The liaison person does not have to be the Chairperson of the Strata Company, it can be another member or any other person that the Council delegates that responsibility to. This person would normally have strong communication skills, maybe some professional background in areas of building maintenance or management, skills in employee relationships and obligations, and time availability.
There are still many items that may need to be referred back to the Council of Owners at different intervals, such as large expenditure items that require additional approval, any changes/upgrades to common property, new installations, etc
The council of owners can consist of 3 to 9, or more members. As a contractor or employee of the Strata Company, the Strata Company has an obligation to ensure the Building Manager has a direct line of communication and responsibility.
Shelley Fitzgerald Emerson Raine E: shelley@emersonraine.com.au P: 9330 3959
This post appears in the May 2021 edition of The WA Strata Magazine.
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