This article is about whether a strata manager in NSW is over-servicing and overcharging by commissioning an update to the capital works plan without notice or consultation with the owners corporation.
Table of Contents:
- QUESTION: Our strata manager charges a monthly fee for the WHS package without prior approval or notification. Are the implemented fees mandatory, and are the charges legal?
- QUESTION: Is our strata manager over-servicing and overcharging if they commissioned an update of our capital works plan without notice or consultation?
Question: Our strata manager charges a monthly fee for the WHS package without prior approval or notification. Are the implemented fees mandatory, and are the charges legal?
At our last AGM, we renewed the contract of our strata managing agent. In previous years, we asked for various charges to be removed from our strata fees, such as works orders, the WHS package, etc.
This had been approved previously, but at the time of signing the contract, the strata manager was away, and these were postponed for consideration after the meeting. Some time passed, and no correspondence was sent to us saying that our request was denied for this 3-year period.
I now note we have been charged new fees on top of our base fee. I would not have agreed to a 3-year agreement if I knew this.
I feel the pricing changes were not transparent. The renewal process exhibited poor behaviour by a strata management firm, especially because we were not informed and, therefore, were not allowed to reconsider the 3-year contract.
We’ve also been charged $23.17/month for a WHS package. The fee list states it is a compulsory fee. We have never had this package nor signed up for one.
We are a small block of 3 townhouses with no pool, no lifts, no corridors, no fire fighting equipment, just a front and back lawn, one garden at the front, and shrubs along the driveway.
I don’t see how there could be any safety issues with this community. I feel that any issues could be resolved with common sense and wouldn’t require a report. If we see a problem, then it will be addressed.
How can we be charged a fee for a package that currently does not exist? The strata management firm has not advised us that we need to do this report and didn’t give us a chance to approve it, but they are willing to charge the fee.
Is this WHS safety report required or compulsory under the Act. Are these actions legal?
Answer: There should be no charge for a service that is not provided, and the strata committee should formally seek justification from the strata manager.
To break this down, we will address the following points:
- The proposed agreement, including items the owners corporation had previously requested to be omitted.
- Whether the strata manager (SM) is within their right to charge a WHS fee and whether such a report is required.
- Your options moving forward.
1. Review of the agreement
Before a motion is tabled at a general meeting, there should be open dialogue between the strata managing agent and the strata committee regarding the terms of the proposed contract. The agreement would have also been included in the AGM notice, which owners must receive at least 14 days prior to the meeting, allowing time for review.
Additionally, it’s important to note that under the Strata Schemes Management Act 2015 (Section 50(6)(a) & (b)), the strata managing agent must provide written notice to the owners corporation regarding the expiry of the contract. This notice must be given:
- At least 3 months, but not more than 6 months, before the end of the term of appointment, and
- At least 1 month before the end of each extension of a term permitted by this section.
Amendments could have been made if this oversight had been identified before the meeting.
2. Legitimacy of the WHS fee & report requirement
The requirement for a Work Health and Safety (WHS) report depends on several factors, such as:
- Whether the owners corporation employs staff
- Whether all lots are residential, or some are used for short-term accommodation, which may impact safety obligations.
Regardless of whether a formal WHS report is required, the owners corporation has a duty of care to maintain a safe environment. However, if the fee is being charged without a corresponding service, the strata committee should request clarification from the strata managing agent.
Next steps
There should be no charge for a service that is not provided, and the strata committee should formally seek justification from the strata manager. If it is determined that the report is not required, the owners corporation should request an amendment to the agreement and reimbursement.
For future agreements, the strata committee should:
- Diarise a review six months before the contract expiry.
- Engage in early discussions with the strata manager about proposed terms.
- If seeking a new manager, request proposals based on a detailed scope of requirements for the scheme.
Ben Ruddell
Tender Advisory
E: ben@tenderadvisory.com.au
P: 0423743714
This post appears in Strata News #735.
Question: Is our strata manager over-servicing and overcharging if they commissioned an update of our capital works plan without notice or consultation?
Our strata manager commissioned an update of our capital works plan without notice or consultation with the strata committee or owners corporation (OC). The OC was charged for the strata manager’s time, with contractor charges still to come.
When challenged, we were advised that under Section 80 of the Strata Schemes Management Act 2015 NSW, owners corporations are required to review and renew (update) their 10-year plan for the capital works fund every 5 years.
The OC last reviewed our plan at our AGM in April 2024. There was no discussion or commitment to update the plan.
With regard to compliance with the legislative prescriptions of Section 80, is the strata manager able to justify proceeding to commission an update without the OC’s resolution at a general meeting, or is this over-servicing and overcharging?
Although not declared to the OC, the strata manager has a commercial relationship with the contractor.
Answer: Check the agency agreement.
Section 80(1) of the Strata Schemes Management Act 2015 (‘the Act’) requires an owners corporation to prepare a plan of anticipated major expenditure to be met from the capital works fund for a 10-year period.
Section 80(3) of the Act requires that the owners corporation review the plan at least once every 5 years.
A strata manager is an agent of the owner corporation and will perform the functions and duties they are instructed to undertake or have been delegated the authority to perform. This means a strata managing agent should be doing what they have been told to do by the owners corporation or strata committee and any functions or duties that they have been delegated under their agency agreement.
You should check the agency agreement as it may be that the strata manager has been delegated the function of reviewing the 10 year capital works fund plan or more generally, to undertake functions to ensure compliance. If they have not been delegated this function or have not been instructed to perform it by the owners corporation or strata committee, they should not be performing this function.
In regard to disclosures of a commercial relationship with a contractor, the strata manager is not permitted to accept remuneration from a contractor unless it has been disclosed in the agency agreement or has otherwise been approved by the owners corporation.
Greater disclosure obligations commenced on the 3 February 2025. Approval can only be given by resolution of the owners corporation at a general meeting, and the motion must be accompanied by a document setting out various details about any commission or training service.
Matthew Jenkins
Bannermans Lawyers
E: enquiries@bannermans.com.au
P: 02 9929 0226
This post appears in the March 2025 edition of The NSW Strata Magazine.
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Read next:
- NSW: Q&A Can we get a better return on our Capital Works Fund?
- NSW: New strata laws introduced to protect owners and make strata living easier
- NAT: Q&A Provisions in the maintenance plan / sinking fund
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