Questions to Ask a New Strata Manager

Excellent question:

Ask them about …

• Schedule B or ancillary charges on top of the fee?
• How much contact they expect to have with owners
• Names of current or previous chair who will vouch for them.

… anyone else?

Fromthenorth wrote:

Is there a catch I should be looking for or beware of ? For example are future management fees going to be much higher ?

As I wrote previously, ask about schedule B or ancillary fees.  Are you going to be slugged for every phone call and email?

If you are being offered a discount for the first year, then you should expect to pay full fare thereafter, otherwise it wouldn’t be a discount.

How long is the term of the full contract on offer (I’m not sure if Vic has the same limit on strata management terms as NSW).

You should ask for a copy of the proposed strata management agreement and read it carefully.  You can ask them to change the terms of the agreement.

I recently went through the process of seeking a new strata manager.  I received about 8 quotes.  There was a big price difference between them.  I used a spreadsheet to compare them.  Some have a management fee plus disbursements (postage, calls, photocopying etc) plus GST.  With a spreadsheet, I could add all these costs.

Check your state’s licensing authority to make sure they are a licensed strata manager.

Some of the strata managers use a template strata management agreement.  That template had an annual increase of 5% p.a. and a minimum term of two or three years.

Ask about exit conditions.  If you are not happy with the new manager after six months, and the contract says you have a term of three years, you may struggle to get the strata manager to agree to an earlier termination.

Some contracts allow the strata manager to incur expenditure up to $500 or $1,000 without notifying the owners corporation.  Make sure you are comfortable with that idea.  I’ve seen a lot of invoices for $495 – intended to avoid the attention of the owners corporation.

Also, they almost always want to have unlimited spending for an emergency situation.  I think you should find out what they consider an emergency situation to be or work out a plan that does not leave you in bill shock.

Ask them about their debt collection process:  how they handle non-payment of levies.

See if the strata manager expects to do all or most of your communications via email / SMS / phone call instead of paper mail.  This would help reduce costs and be faster.

Be clear about what is included and what is NOT included in the basic management fee.  There may be a long list of tasks which incur extra costs.

The cost of holding the annual general meeting should be included in the basic management fee.  Some strata managers allow one extraordinary general meeting at no extra cost.

How much does an extraordinary general meeting (EGM) cost?  Is it cheaper if electronic pre-voting is allowed?

Check the cost of updating your by-laws.  My previous strata manager charged $550 for adding a by-law change to an EGM agenda.  Even though I wrote the by-law myself, they wanted to charge $550 plus the cost of registering it ($141).

I would want to know how they keep the Strata Committee records and how much access is given to owners.  In Victoria we have an Owner’s portal and has a maximum of about 25 documents, and our complex has been going for at least 30 years.

On another site, the question is asked who determines what documents form the OC records.  The answer seems to indicate that there is no discretion about what is filed.  Is this only in NSW?  I suppose even if it is in VIC, the argument would be that it is not on the portal, but the records are somewhere and you could look at them for a cost?  In our case one committee member had luckily kept lots of “paper” records.

What is a Strata Manager Broker?