Most owners corporation’s in NSW will appoint a strata manager to assist them with the day-to-day running of the strata scheme. Appointing a strata manager is not mandatory, but can be useful to many schemes.
Strata managers can be appointed for a term (a length of time) of up to three years. However, if a scheme is brand new and a strata manager is appointed at the first annual general meeting, they can only be appointed for a term of one year.
A strata manager must be appointed by a resolution of the owners corporation and there must be a written agreement in place between the owners corporation and the strata manager. This is usually called a strata management agreement and is a contract. The strata management agreement sets out the terms of the agreement between the owners corporation and the strata managing agent. Note that most strata managers are companies or firms that employ persons who hold a strata management licence under the Property and Stock Agents Act 2002. Those persons are licenced agents.
An owners corporation can delegate a number of their functions to a strata manager. Functions of an owners corporation include maintaining bank accounts, keeping minutes, issuing agendas, updating the strata roll. However, owners corporations should be aware that just because a function is delegated to a strata manager, does not mean that the duty of the owners corporation is discharged – that is, an owners corporation is still responsible to ensure their functions are being carried out. Accordingly, it is recommended that owners corporation’s, including strata committees, owners and occupiers, familiarise themselves with the Strata Schemes Management Act 2015 (the SSSMA) and regulations thereunder.
Furthermore, strata managers may charge “schedule B” fees for carrying out functions. Schedule B fees are fees for services and the carrying out of functions that are in addition to the lump sum management fee. Not all agreements will use the term “schedule B” or include a schedule B, so lot owners should ensure they read the proposed agreement carefully to identify what is included in a lump sum management fee, what will be additional, and what is not included at all.
Most strata management agreements simply come to an end at the end of term listed in the agreement. Ending a term early, either by termination, agreement or some other way, is usually technical and we recommend that you seek independent legal advice.
The SSMA does allow for an agreement to be extended at the end of its term for a period of up to three months if it is the case that an Owners Corporation has not resolved to enter into a new agreement. However, if there is a dispute about whether an extension has been properly entered into, we recommend that you obtain legal advice.
This is general information and should not be considered to be legal advice. You should obtain legal advice specific to your individual situation.
Author: Gemma Lumley.