This article discussing WA strata manager’s duties under the Strata Title Act reforms has been supplied by Anthony Quahe, Civic Legal.
Owners of strata titled properties can expect changes to strata management when the amendments1 to the Strata Titles Act 1985 (WA) (the Act) become law. One of the major changes to the legislation is the introduction of statutory duties for strata managers.
This article will look at some of the new standards imposed on strata managers, and what this means for strata council members.
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Key Points
- Strata managers will be subject to new statutory duties
- If breached, their contract with the strata company may be terminated
- The reforms aim to clarify strata managers’ duties and provide a higher level of protection for lot owners
Why the reforms?
The previous legislation did not acknowledge the role of strata managers, nor were there any regulations in place to govern strata managers.
Until now, good strata management has been the result of diligent work by strata managers who happened to subscribe to high standards. There were no minimum standards for strata managers to be held to, nor were they held accountable by any statutory obligations. As a result, the rights and duties of strata managers and lot owners were not always clear.
The reforms will make strata managers more accountable and require them to deliver high standards of professional services to strata companies.
What are the new duties for WA strata managers under the reforms?
The new statutory duties will establish a set of standards that will contribute to the effective management of a strata company.
The new duties for strata managers will include:
- minimum education requirements (which will be set out in the regulations);
- an obligation to have a strata management contract signed with the strata company. These contracts must contain requirements outlined in the amendments;
- holding the strata company’s funds in a trust account that can be audited;
- disclosing any conflicts of interest or commissions received;
- obtaining policy clearance and professional indemnity insurance;
- avoiding improper use of information or their position as a strata manager; and
- having a substantial working knowledge of the Act.
“The reforms will make strata managers more accountable and will require them to deliver high standards of professional services to strata companies.”
Why is this important for strata council members?
To best fulfil their role, council members should be aware of the statutory duties owed by the strata manager to the strata company. This will enable the council to select a suitable strata manager. Furthermore, if the strata manager does not comply with their statutory duties, the council can resolve to take legal action against the strata manager.
For lot owners, the reforms will provide a higher level of protection, as well as greater clarity as to what the duties and obligations of a strata manager actually are.
What can be done if strata managers are not fulfilling their duties?
Once the amendments are in place, the strata company will be able to terminate the strata management contract if a strata manager breaches any of their statutory duties. This is in addition to the rights they should have under the strata management contract.
The strata company will also have the right to seek remedies from the State Administrative Tribunal if there has been any wrongdoing by the strata manager. Those remedies may include obtaining orders that the strata manager pay damages to the strata company. This could apply where the strata company has suffered a financial loss resulting from a breach by the strata manager.
When do the strata reforms come into effect?
The amendments are expected to come into effect at the end of 2019. Those amendments will be accompanied by a range of regulations to assist in the operation of the legislation as a whole.
Conclusion
In order to make the most of the reforms, strata councils should make themselves aware of the new standards and statutory duties of strata managers.
This will enable strata councils to be better equipped to oversee strata managers and protect the interests of lot owners.
Have a question about strata manager’s duties under the WA reforms or something to add to the article? Leave a comment below.
This post appears in Strata News #275
A PDF Version of the article can be accessed here.
Footnotes
1. Strata Titles Amendment Act 2018 (WA)
For more information please contact:
Anthony Quahe
Managing Principal
Civic Legal
T: 08 9200 4900
E: [email protected]
Disclaimer: This article contains references to and general summaries of the relevant law and does not constitute legal advice. The law may change and circumstances may differ from reader to reader. Therefore, you should seek legal advice for your specific circumstances. The law referred to in this publication is understood by Civic Legal as of publication date.
Read next:
- WA: Relationship between Strata Manager and Strata Council
- WA: Resolving Strata Disputes Under the Strata Title Act Amendments
- WA: Q&A Where can I make strata manager complaints in WA?
1 May 2020 Update:
The amended Strata Titles Act 1985 took effect in Western Australia on 1 May 2020. It includes grace periods for some new requirements to ensure those affected have adequate time to meet them. This information has been taken from Landgate: Timelines for Change.
Improving strata management and by-laws: Changes to the role of strata managers
| What’s new? | Timeline for change | Who needs to know? |
There will be clear statutory duties for strata managers which require them to:
| Started 1 May 2020. |
|
Strata Managers Will Also Need To:
| a) Attain educational qualifications. | By 1 May 2024. (Four years after commencement). |
| b) Have a written contract between them and the strata company, specifying the functions they are contracted to perform. | Starting 1 May 2020, all new contracts must meet the new requirements. There is a six-month grace period for existing contracts to reflect the new requirements (to 1 November 2020). |
| c) Obtain a current national criminal record check for themselves and employees who perform strata management functions. | Starting 1 May 2020 for all new contracts. There is a six-month grace period for existing contracts (to 1 November 2020). |
| d) Have professional indemnity insurance coverage. | Starting 1 May 2020 for all new contracts. There is a six-month grace period for existing contracts (to 1 November 2020). |
| e) Lodge an annual return to Landgate with general information about the schemes they manage. This annual return will enable the government to determine if the licensing of strata managers is viable or required in the future. | The first annual return will need to be lodged with Landgate between 1 January 2022 and 31 March 2022, and then annually after that for the next four years. |
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Given the council bears ultimate responsibility for the performance of the strata company and the SM can always assert “we work as instructed”, it would be rare for the Trubunal to be able to hold a SM accountable for anything especially when the SM controls access to strata records and refuse to accept that they include all communications.
Thank you Anthony for taking the time to reply. Your responses to my questions are clear and helpful.
Thanks Danny. We have another article from Anthony in the pipeline discussing this topic in even more detail. Stand by….. We should have it up on the site sometime next week.
Update: the article has been published and can be accessed here – WA: Relationship between Strata Manager and Strata Council
It’s very welcoming and about time strata managers are held more accountable. I imagine that under the reform strata managers will change their attitude, conduct and standard of service to strata companies very quickly, particularly to owners who are not on the council committee. The reform should also apply heavy fines on strata managers not doing the right thing and for being bias in strata company business.
Do the Council of Owners also have a responsibility to fulfil their responsibility as office bearers? For example, responding in good time to give strata manager directions when a matter arises that require their approval? what sort options under the new Act do strata managers have in a situation where a council who insists on spending money where it is not budgeted for or act in contravention of the Act? Can a strata manager take the strata company to SAT under the new Strata Titles Amendment Act?
Check out this article on the Council of Owners duties that may be of interest.
https://www.lookupstrata.com.au/wa-strata-reforms-strata-council-member-duties/
Hi Danny
We have received the following reply back from Anthony Quahe, Civic Legal:
Thank you for your questions, which I will address in three parts below.
Do the Council of Owners also have a responsibility to fulfil their responsibility as office bearers? For example, responding in good time to give strata manager directions when a matter arises that require their approval?
Previously, there were no formal requirements for a strata council to act in the best interests of the strata company. However the legislative amendments create new standards of accountability for council members’ conduct.
Section 137 of the Strata Titles Amendment Act 2018 (the Act) provides that council members, including office bearers, must at all times act honestly, with loyalty, and in good faith.
In performing their functions, council members must also at all times, exercise the degree of care and diligence that a reasonable person in their position would be reasonably expected to exercise. They must also not make improper use of their position to directly or indirectly gain an advantage or cause detriment to the strata company, and must declare any conflicting interests to other members of the council.
In short, the answer is yes. Responding in good time would appear to be an example of how to exercise the degree of care and diligence that should be expected of a reasonable council member.
What sort options under the new Act do strata managers have in a situation where a council who insists on spending money where it is not budgeted for or act in contravention of the Act?
Strata managers would be in a difficult position. Councils make decisions and bear the responsibility that goes with that role. Strata managers merely carry out those decisions under instructions from their council.
However, section 146 of the Act now imposes duties such as having to exercise a reasonable degree of skill, care and diligence in the performance of their functions. So if they identify that the council’s insistence amounts to contravening the Act, they could warn the council against doing so. By checking if a contravention has occurred (e.g. by taking legal advice), and then giving the warning, the strata manager would show that they exercised such care and diligence.
If the council does not heed the strata manager’s warning, the strata manager could terminate their contract with the strata company, depending on the wording of their contract. The strata manager could say that they would not be acting in compliance with their (new) duty under section 146 to act honestly and good faith toward the strata company if they knew they had to carry out the instructions of a council that was exposing itself to risk by the contravention.
Can a strata manager take the strata company to SAT under the new Strata Titles Amendment Act?
Yes, but not for the kind of situation you have described.
Strata managers provide services to the strata company. It is not their role to enforce the law on erring strata companies in the SAT.
I hope these responses help.
Regards,
Anthony Quahe
Managing Principal, Civic Legal
Disclaimer: This comment contains references to and general summaries of the relevant law and does not constitute legal advice. The law may change and circumstances may differ from reader to reader. Therefore, you should seek legal advice for your specific circumstances.