NSW: Q&A The Management Agency Agreement

A NSW lot owner would like to know the procedure for renewing the management agency agreement. Rod Smith, The Strata Collective provides the following response.

Table of Contents:

• QUESTION: Are we legally obligated to sign a new strata management contract after an AGM decision was made under duress, especially when the previous contract had already expired?
• QUESTION: Our strata manager is retiring. Can they charge our owners corporation for an EGM to change managers?
• QUESTION: Is the strata managing agent required to ensure they deduct invoices paid on behalf of the owners corporation from the correct fund?
• QUESTION: After the committee members have signed the management agency agreement, who has the right to hold a copy of the agreement?
• QUESTION: When renewing the management agency agreement, should the managing agent include all items on the agenda to be discussed at the AGM? Can they insert their fixed term prior to the AGM?

Question: Are we legally obligated to sign a new strata management contract after an AGM decision was made under duress, especially when the previous contract had already expired?

Our AGM occurred after our strata management contract had concluded. Only one proxy holder attended, and they were coerced into voting for the current manager with the threat of immediate service cuts if we didn’t. Given these circumstances and since the decision was made during the AGM, are we legally required to sign the new contract and continue with this management company?

Answer: If the agreement’s end date was before the meeting notice/agenda was published, the strata management company has no authority to perform this function.

We are working on the assumption that a strata committee meeting was not convened within the agreement term for the purpose of initiating a three-month extension in accordance with Section 50(4) of the NSW Strata Schemes Management Act 2015.

Therefore, notwithstanding the consent to continue provided by the owner who attended, as the strata management contract was outside the agreement term prior to the Annual General Meeting, there is a question whether or not the notice/agenda for the meeting was validly issued.

If the end date of the agreement was before the meeting notice/agenda had being published, the strata management company has no authority to perform this function on behalf of the owners corporation. This would subsequently render the meeting and the motion for re-appointment invalid.

Megan Parkins
Tender Advisory
E: info@tenderadvisory.com.au

This post appears in Strata News #718.

Question: Our strata manager is retiring. Can they charge our owners corporation for an EGM to change managers?

Answer: You can find the answer to the question in the agreement.

We would need to review the specific terms of the agreement between the owners corporation (“the client”) and strata managing agent (“the agent”) to understand a few key elements to answer this question.

Typically, we would look for answers to these questions:

1. When the agent was appointed, did the motion or their agreement grant them delegated authority to perform the functions and duties of the secretary (which extend to convening a general meeting)?
2. Does the agreement grant the agent full authority to convene a general meeting? Or is the agent required to seek instructions from the client?
3. Does the agreement stipulate whether or not the duty or function of preparing for, attending, chairing etc. is a service provided by the agent on an additional fee basis?
4. Are there specific terms of the agreement that refer to the client’s rights in the event that the strata managing agent winds up their business? For example, the Strata Community Association (NSW) agreement (used by most strata management businesses) has clause 7 which specifically talks about the circumstances of transferring an agreement from one agent to another.

Ultimately, the answer to the question is found in the agreement. New South Wales does not have a mandated uniform agreement that must be used by all agents, so terms may vary.

Tim Sara
Strata Choice
E: tsara@stratachoice.com.au
P: 1300 322 213

This post appears in the August 2024 edition of The NSW Strata Magazine.

Question: Is the strata managing agent required to ensure they deduct invoices paid on behalf of the owners corporation from the correct fund?

Is the strata management company obligated under the conditions in the management agency agreement to ensure the invoices they pay on behalf of the owners corporation are allocated correctly to either the admin or the capital works fund? Are they required to ensure they deduct the invoice amount from the correct fund?

Answer: Yes. A strata managing agent is responsible for the accurate management of the books and records of a strata scheme.

In short, yes.

A strata managing agent is responsible for the accurate management of the books and records of a strata scheme, including the management of the financial records and transactions of the owners corporation, where they have been provided authority to do so under an executed strata management agency agreement.

A strata management agency agreement is required to include a schedule of the agent’s authority to act on behalf of an owners corporation and whether there are any limitations to that authority, pursuant to Schedule 4, Clause 2 of the_ Property Stock and Agents Regulation 2022 (NSW).

_

Where the strata managing agent has the delegated authority to undertake the financial management of the funds and books of accounts for an owners corporation, the agent is required to comply with the requirements for the use of each fund outlined under Part 5, Division 1 of the Strata Schemes Management Act 2015 (NSW). Specifically, Sections 73 and 74 of the Act outline the owners corporation’s responsibility (and the agent’s responsibility, by delegated authority) to pay money from each fund for their intended purposes. Where an agent has not complied with the requirements of the Act in accounting for the payment of invoices to the correct fund on behalf of the owners corporation, the agent may be in breach of the strata management agency agreement.

Andrew Terrell
Bright & Duggan
E: Andrew.Terrell@bright-duggan.com.au
P: 02 9902 7100

This post appears in the February 2024 edition of The NSW Strata Magazine.

Question: After the committee members have signed the management agency agreement, who has the right to hold a copy of the agreement?

I asked for a copy of the Management Agency Agreement from the Secretary a few weeks ago but they have never replied to me. If requested, do they have to give the lot owners a copy of this or it is just available to the Committee?

After the committee members have signed the agency agreement, who has the right to have a copy of the agreement beside the secretary of the scheme?

Answer: The Management Agency Agreement forms part of the books and records of the Owners Corporation.

The Management Agency Agreement forms part of the books and records of the Owners Corporation. An owner is entitled to perform a search of the books and records at the prescribed cost of $34.10 per hour. This should be arranged directly through the strata manager.

Rod Smith
The Strata Collective
T: 02 9879 3547
E: rsmith@thestratacollective.com.au

This post appears in Strata News #426.

Question: When renewing the management agency agreement, should the managing agent include all items on the agenda to be discussed at the AGM? Can they insert their fixed term prior to the AGM?

When renewing the management agency agreement, should the managing agent include all items on the agenda to be discussed at the AGM? Can they insert their fixed term prior to the AGM?

If a Managing agent wants to change the structure of their management costs should they not include it on the Agenda and also discuss it with the owners corporation at the AGM?

Also if they want a fixed term of 3 yrs should this also not be discussed at the AGM and included in the Agenda?

Can the Managing Agent also type up their agreement with the fixed term inserted before the AGM?

The Motion on the Agenda was just for reinstatement of another fixed term which we have of 1 yr.

I have just received after asking for the 2018 Management Agreement to find out that they have got themselves 3 years.

Answer: The agreement should be sent with the agenda however it is not required to be circulated beforehand.

The agreement should be sent with the agenda however it is not required to be circulated beforehand. The agreement is able to be tabled at the meeting if the motion states that the agreement is to be tabled and accepted.

Yes, if they want a fixed term of 3 yrs this can be discussed at the AGM and included in the Agenda. Please see above. You can require an amended term down to one year. All that would need to happen is, you cross out the words ‘3 years’ and handwrite and initial ‘1 year’ in the agreement.

The Managing Agent can type up their agreement with the fixed term inserted before the AGM. However, this can be changed at the meeting.

Rod Smith
The Strata Collective
T: 02 9879 3547
E: rsmith@thestratacollective.com.au

This post appears in Strata News #358.

This article is for reference purposes only and is not intended to be a comprehensive review of the developments in the law and practice or to cover all aspect of the subject matter. It does not constitute legal or other advice and should not be relied upon this way. Readers should take legal or other advice before applying the information containing in this publication.

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