- This topic has 7 replies, 5 voices, and was last updated 4 months ago by .
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Upon reviewing the strata report of our scheme before purchasing last year, I noticed that there is a motion on the AGM agenda every year to renew the management agreement for a term of three years. Each year it is approved. The term of the management agreement therefore is on a continual cycle of renewal, two years before it’s due. I can’t see any evidence of any termination clause being enacted. Are these agreements legally compliant or can they be terminated through breach of contract?
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Giving notice of an intention to terminate the current agreement is probably not a problem if both parties are happy to make a new 3 year agreement. By, in effect, the committee and the managing agent jointly proposing to make a new 3 year agreement, it might be argued that each party has, by implication, given the other party notice of their intention to terminate the agreement.
It does seem a bit odd though. Why not have a motion every three years to enter a new contract, either with the current manager or a different manager if the committee recommends either staying or changing.
Why not have a motion every three years to enter a new contract, either with the current manager or a different manager if the committee recommends either staying or changing.
As we discuss on this week’s podcast, this is a sneaky way for the strata manager to ensure they always have a three-year contract rolling over and renewed every year but I think the new rules in NSW may have put paid to that by limiting the time before a contract ends that the strata manager can give notice of termination or renewal. I will check.
The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
- This reply was modified 4 months ago by .
As I thought, the law changed earlier this year to narrow the window in which a strata manager can terminate thir existing contract and offer a new one. This Government website on the most recent changes to the law in NSW says:
- Managing agents are required to give notice of the expiry of their contract within three to six months before contract expiry.
To me that means not before six months and no later that three before the contract runs out. That should put a stop to any “rolling renewal” scam.
The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
- This reply was modified 4 months ago by .
I think this is equally as dodgy: A Contract of Appointment is signed before the AGM – with no notice that it has been placed on the portal and it is not given as part of the AGM agenda paperwork.
There are a few other dodgy practices out there when it comes to the renewal of strata management agreements / re-appointment of strata managers….Owners seldom understand and do not scrutinise strata management agreements, especially those for renewal with incumbent managers; so renewed agreements tweaked with a “small” change like a 15% fee increase can easily go undetected.
But it does not stop there…we’ve seen AGM agendas go out WITHOUT a copy of the proposed agreement and just a note that “a copy of the agreement will be provided to owners on application”. Hardly transparent but one of the consequences of leaving the preparation of the AGM Notice / Agenda to the strata manager….
As we say in this week’s podcast, if some of the dodgier strata managers applied as much energy and ingenuity to their job as they do to finding ways to squeeze more money out of their clients, a lot of apartment owners would be a lot happier.
The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
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