This article outlines the roles, powers, and legal obligations of strata managing agents under the Strata Schemes Management Act 2015 (NSW) (the Act), along with their duties and accountability to Owners Corporations. If you need a general understanding of strata management, please first read our previous articles explaining the key information about strata schemes found at www.mclp.com.au/understanding-strata-schemes-a-guide-for-owners-in-nsw/
An Owners Corporation may appoint a strata managing agent through a written resolution passed at a general meeting. Pursuant to s 50 of the Act, the term of appointment shall not exceed:
- 12 months if appointed at the first annual general meeting; or
- 3 years in any other case.
Any Strata Management Agency Agreement that exceeds these terms is liable to be held invalid.
Delegated Power
Pursuant to s 52 of the Act, the Owners Corporation may delegate its functions to a strata managing agent by including the delegation in the appointment instrument or through a separate written instrument such as Strata Management Agency Agreement (the Agreement). Delegation may include:
- All functions of the Owners Corporation
- Specific functions identified in the instrument
- All functions except those explicitly excluded in the instrument
The Owners Corporation cannot delegate:
- The power to delegate functions
- Decisions that must be made by the Owners Corporation
- Matters relating to levying or payment of contributions
Any delegation must be approved by a resolution passed at a general meeting, and such delegation may be revoked or varied as needed.
Contractual Obligations
Strata managing agents are bound by the contractual terms set out in the Agreement. These terms should clearly outline the scope of services, remuneration, and any specific conditions that the agent must adhere to when managing the strata scheme. The Agreement defines the responsibilities and limits of the agent’s role, ensuring clarity and accountability.
Even if the Agreement does not explicitly state a duty of care, the Agreement may ultimately include implied terms requiring the agent to perform their services with the reasonable care and skill expected of a professional in the field. This principle of implied duty of care was established in Bolam v Friern Hospital Management Committee [1957] 1 WLR 582, often referred to as the “Bolam principle” and codified in various legislation such as s 50 of the Civil Liability Act 2002 (NSW) and s 60 of Schedule 2 of the Competition and Consumer Act 2010 (Cth). Consequently, agents are expected to act competently, diligently, and responsibly in fulfilling their duties, ensuring they manage the affairs of the Owners Corporation to a standard befitting their professional role.
Statutory Obligations
Record-Keeping & Liability
Pursuant to s 50 of the Act, agents must maintain records of any functions performed on behalf of the Owners Corporation, including details of how each function was exercised. Further, strata agents must give a copy of the records kept for the preceding 12 months to the Owners Corporation at least once each year.
Restrictions on Receiving Gifts
Agents must not accept gifts or benefits in connection with their services unless:
- approved remuneration by the Owners Corporation
- monetary commissions or training services that align with the terms of the appointment
- gifts below a prescribed value.
Provision of Account Information
Upon request, agents must provide information related to:
- Trust accounts: including account names, numbers, balances, and details of cheques drawn
- Other accounts: account details, balances, and transaction particulars
Annual General Meeting Reporting
Agents must report at the annual general meeting:
- Details of commissions or training services received/provided over the past 12 months
- Estimates of commissions or training services expected in the next 12 months
Any variation from previously disclosed estimates must be reported to the strata committee promptly. Non-disclosure or misrepresentation can lead to penalties, including repayment orders issued by the Tribunal.
Compliance with Information Requests
Agents must comply with requests for information within 14 days of receiving written notice and ensure the accuracy of the information provided. Penalties apply for non-compliance or providing false/misleading statements.
Takeaway
Strata managing agents hold significant responsibilities and legal obligations under the Act and common law principles. They are tasked with acting in the interests of the Owners Corporation, adhering to contractual obligations, and maintaining transparency and accountability in their operations.
If an Owners Corporation believes that a strata managing agent has breached any of these duties, it is crucial to take appropriate action to enforce compliance. Owners should first communicate their concerns in writing, detailing the specific breaches and requesting rectification within a reasonable timeframe. Engaging the strata committee can further facilitate collective action, including holding meetings to address the issues.
If you have concerns regarding your strata managing agent, we invite you to reach out to us for expert legal advice and support. Our experienced team is dedicated to helping you assert your rights and ensure your interests are fully protected within the strata scheme.
If you are interested in discussing your options regarding the removal of strata managers, building managers or are concerned with how they are using your funds, please contact our office for a free consultation at (02) 9262 5495 or contact Mr Murdock at dmurdock@mclp.com.au, or subscribe to our newsletter by visiting https://mclp.com.au/publications/