Management Agreements

There has been a widespread practice of extending caretaking or building management agreements to get around the 10 year cap in the Strata Schemes Management Act 2015 (SSMA 2015). In the recent appeal decision of Australia City Properties Management Pty Ltd v The Owners – Strata Plan No 65111 [2021] NSWCA162, Chief Justice Bathurst affirmed on appeal that deeds of variation used to extend the term of the agreement for a period of greater than 10 years by adding option periods were, in fact, capped at a term of 10 years.

Building Management Agreements

• The Strata Schemes Management Act 2015 (the Act) uses the term “building manager” in place of the term “caretaker”, which had been used under previous legislation. The definition of building manager is also somewhat different to the previous definition of caretaker. The Act applies to a personwho assists the owners corporation in managing common property, controlling the use of common property by persons other than the owners and occupiers of lots or maintaining and repairing common property, other than as a volunteer or strata committee member. He or she no longer needs to have exclusive possession of a lot or common property area. Section 66.

Management rights issues

There have been a lot of enquiries about community associations and strata schemes being dissatisfied with caretaking/building management rights arrangements put in place by the developer and what the association or scheme can do about these arrangements.

Strata managing agents provide a broad range of services to their owners corporation clients, ranging from accounting and other administration to property repairs and maintenance. This frequently necessitates involvement in highly specialist areas, such as work health and safety and occupiers liability compliance, maintenance to parts of the building containing asbestos contaminated materials and building defects litigation and remedial works.

A number of legal and practical issues arise when one proposes to acquire a strata management agency business and wishes to obtain the full benefit of the business acquired.

Introduction

In a democracy, majority rules even if those decisions are bad. If you are in the minority, there is not much you can do until the next election (or annual general meeting) at which time you may try to become the majority.

Lifts and escalator refurbishments and upgrades are amongst the largest items of expenditure that owners in strata schemes commission. Yet such works are excluded from the consumer protection provisions of the Home Building Act (NSW) 1989. This requires strata managers and executive committees to be particularly vigilant to protect the owners’ interests when entering into lift contracts. Because such work is inevitably expensive it is tempting to be lured into false ‘upfront’ economies at the risk of incurring more serious costs later on.

The new strata laws have made significant changes to the appointment and role of strata managing agents.

Many agency agreements are due to expire on 29 May 2017 due to the operation of Section 50(1) and clause 14(1) of Schedule 3 of the Strata Schemes Management Act 2015.

The majority of strata schemes across the country have builder managers, caretakers and strata managers in place to assist the owners corporation in managing and maintaining common property. Under legislation, these management companies are required to be appointed by a written instrument, normally a written agreement, which can have a maximum term of 10 years.