Some key changes to the Strata Schemes Management Act 2015 came into effect on 3 February 2025 with the equivalent changes that have been made to the Community Land Management Act 2021.
These changes were:
- New disclosure and approval requirements for accepting commissions, training or other benefits under s57 of the SSMA.
The requirements apply to strata managing agents when exercising functions or in connection to providing services to owners corporations and apply to accepting these benefits for themselves or another person. The new requirements are set out in s57(3A) & (3B) and they require strata managers.
Motions to disclose & obtain approval to accept these benefits must be made at general meeting and must also have a document prepared by strata manager setting out:
- For commissions – the $ amount of commission and method of calculation.
- For provision of training – the $ value of training service or if not known an estimate.
- Details of relationship between person providing commission/service and strata managing agent.
- Reasons why approving the commission/training is in the best interests of the OC; and
- A statement that strata manager believes accepting the gift / benefit does not contravene their duty under sch 1, s11 of the Property and Stock Agents Regulations 2022 (this is the provision prohibiting a conflict of interest).
The Code of Conduct under the Property and Stock Agents Regulations is here (for all agents and assistant agents) and here for (rules that are specific to strata and community title managers):
- New disclosure requirements under s60 requiring the strata manager to provide further disclosures.
They have the effect of follow up disclosure in that the strata manager must disclose:
- if during previous 12 months a person supplying goods & services for the scheme or an original owner has become connected with the strata managing agent, their details and details of the relationship.
- (in writing) before entering a contract for supply goods & services if under the contract commissions or training services are to be provided to the agent OR the contract is with a person connected to the agent.
The disclosure requirements for this are very similar to those under s57 in the previous slide:
- New requirements for disclosure (in writing) prior to the appointment of a strata manager or a building manager under s71.
The strata or building manager must disclose (in writing with details of the nature of the relationship and the goods & services) before strata manager or building manager is appointed the following:
- that the person is connected with another person (the supplier) who routinely supplies goods or services for other strata schemes for which the person is the strata managing agent.
- that the person gave advice, whether under a formal contract or not, to the original owner during the previous 2 years about the strata plan or another strata plan or a community plan.
- another interest prescribed by the regulations.
In addition to the pre-existing requirement to disclose that the person is connected with the original owner and any direct or indirect pecuniary interest in the strata scheme (other than an interest arising only from the prospective appointment).
- New insurance quotation requirements to supplement the existing requirement to obtain three quotations and, if three quotations cannot be provided the written reasons why under s166.
The new requirements are in s166(2) & (3) and they require that quotations must include:
- A breakdown of charges – base premium, commission (other than broker fee) as a $ amount and as a % of the base premium, broker fee as a $ amount and as a % of the base premium, stamp duty, levy, underwriting agent fees, GST and any amounts or %’s required by the regulations from time to time.
- The details of the person who will ultimately receive the commission and broker fee.
- A statement whether the person providing the quotation is connected with the agent.
And that the strata managing agent must provide written reasons and quotations as soon as practicable to enable the owners corporation to make a decision.
Why have these changes been made?
The purpose of these changes is to prevent a non- disclosure and ‘hidden’ commissions, benefits or services received by strata managing agents and building managers.
More reforms are before Parliament which are expected to be passed in the first half of this year.
This is general information and should not be considered to be legal advice. You should obtain legal advice specific to your individual situation.
Author: Allison Benson