Question: Can the strata manager force the strata company to switch from a direct insurer to an insurance broker?
Our strata company deals with a direct insurer. The strata manager wants us to transition to an insurance broker, which will see us incur a (as yet undisclosed) fee.
Our previous strata manager charged a $1500 commission on top of their management fee. We chose our current strata manager specifically because they administered our insurance directly with no additional cost apart from their management fee.
We don’t want to use a broker as our budget is already tight. Can the strata manager force the strata company to switch to a broker? Does the strata company have grounds to terminate the strata manager’s contract if it no longer performs the insurance function directly?
Answer: The council’s responsible for appointing and dismissing contractors as deemed appropriate.
The strata manager cannot compel the council of owners to switch to a broker. It is the council’s responsibility to appoint and dismiss contractors as deemed appropriate.
Review the management agreement to determine if directly arranging insurance is explicitly listed as part of the strata manager’s duties. If the strata manager ceases to perform this function, the council may argue that they are not fulfilling their contractual obligations.
If termination of the strata management contract is considered, Section 151 of the Strata Titles Act 1985 (WA) outlines the process for issuing a show cause notice. This procedure ensures the strata manager is given the opportunity to respond before further action is taken.
Jordan Dinga
Abode Strata
E: abode@abodestrata.com.au
P: 08 9368 2221
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