2 What you can expect from your strata manager?

If you do contract a strata manager, how can you get the best out of them?

Good communication between the strata manager and the owners corporation is vital. Often disharmony over building management can be traced back to poor communication and lack of clear instructions by the owners corporation to the strata manager. At other times, it is because the wrong strata manager has been contracted to do the job.

Most issues a strata committee or lot owner may have with their strata manager come back to misaligned expectations. This section will cover the extent of your strata manager’s obligations, skills and authority and avenues of escalating and resolving if expectations are not being met.

2.1 Administrator, decision maker, legal advisor or building manager?

What do strata managers do? Your strata manager is mostly an administrator. They collect levies, pay bills and deal with compliance. They can also be useful guides on many process matters, drafting and financial reporting. But, with some exceptions, they have no special expertise in strata law or building management. Do not rely on them for legal advice, advice on important decisions, or to manage your building. A good strata manager will not purport to provide advice they cannot substantiate. If they advise on an issue that is substantial or may have unpleasant consequences (either for the committee, the owners corporation, an individual owner or occupier) ask them to supply the relevant acts, clauses, legal cases, web pages or detailed examples.

Do not accept ‘unsolicited’ legal advice from your strata manager on important courses of action. For example a strata manager incorrectly advised a strata committee, saying “it could not withhold consent to the application” and that “the committee may wish to reconsider its position following the threat of legal action.” On gaining expert legal advice both of these comments were found to be ill-founded. 

That said, some strata managers are attempting to differentiate themselves by offering advanced skills and experience in managing the building's affairs. Because of the number and style of buildings they manage, good staff hiring and ongoing training and communications, they may have some very good knowledge and experience that you can tap into. Large strata management companies often have legal experts on retainer. They may have other trusted service providers they can recommend, knowledge of the latest defect solutions or sample by-laws, building management templates, residents handbooks or operation manuals. If you have hired them for this purpose and they have proven they have the requisite skills, you may want these strata managers to be more hands on in their dealings and advice.

“Warring committees ... tight-fisted owners unwilling to pay to maintain their buildings ... plumbing emergencies in the middle of the night ... meetings that don’t reach a quorum ... legal stoushes. No one would seriously argue that strata managers don’t have a tough job.”

Gerry Chia Secretary, Owners Corporation Network of Australia

Always remember that your strata manager is contracted to the owners corporation. They can offer advice and direction, but final authority lies with the owners corporation or the strata committee that makes the decisions in the same way a board of directors does for a company. 

2.2 What you should expect from your strata manager?

The first step in knowing what to expect from your strata manager is to understand the contract duties as set out in the schedules of your strata management agreement (see Guide to the proposal schedules 4).

In addition to looking after your building, your manager probably has many other strata buildings to manage, all of which are a call on their time. If it's a larger company they will work with other departments within their company (e.g. marketing, secretarial, accounts, finance) to provide you with the contracted services. They often have a more junior assistant helping them with their portfolio who will be able to deal with your queries in their absence.

A strata manager must keep the owners corporation informed as to what they are doing. They must give details of trust accounts and financial transactions when requested in writing by the owners corporation. The owners corporation and its executive committee can still carry out its duties even if it has delegated them to a strata manager.

Relevant NSW Legislation: Strata Schemes Management Act (2015)

Sections 52 & 53: What functions of an owners corporation can a strata managing agent exercise?

Section 55: Strata managing agent to record exercise of functions

Section 58: Information may be required relating to strata managing agent's trust account

Section 58: Information may be required relating to other accounts of the strata managing agent

Section 59: Information may be required relating to money received and other transactions by the strata managing agent from the owners corporation

Section 61: Procedure for requiring information from strata managing agent

 

2.2.1 What to expect from your strata manager: as an owner

Queries- If you have a query you could write to the strata committee directly, if the strata committee elect to communicate with owners directly, or you could write to the strata manager and ask them to have it tabled at the next strata committee meeting.

It is always worth asking your strata manager to answer the question first, but ask the question in such a way that the strata manager can respond easily e.g. “I would like an a copy of xyz  – can you provide this information to me or should I come into the strata offices to view the records or request it at a strata committee meeting?”. Whatever the ability or obligations of the strata manager to meet your request, out of courtesy you should expect a reply that will give you some direction in resolving the issue.

Viewing the records- An examination of the strata records is often truly enlightening. As an owner you or your representative can book time to view any or all of the strata records at the strata manager's office. There is usually a nominal hourly cost for this service, as specified in the relevant act or regulations.  Currently in NSW it is $34.10 and an additional $17.60 for each half-hour or part half-hour. If you are a strata committee member the strata manager should not impose the fee as you are an appointed committee member doing research as you see fit.

There will be a number of physical or electronic files such as ‘Service Contracts’, ‘Financials’, ‘Correspondence’, ‘Current Issues File’, 'Invoices’, ‘Meetings’, 'Strata Roll’, ‘By-Laws’, ‘Proxies’. These will go back a year or so.  If you want earlier archived documents you need to ask the strata manager to leave them out for you (but be prepared for a large number of boxes to be there when you arrive!). Don’t be afraid to ask your strata manager for the information if you can’t find it – especially their ‘current file’ which may sit on their desk and not in the records provided to you. All the correspondence between the strata committee, the strata manager and any service provider or lawyers should be available for viewing. Some legal documents may be subject to legal privilege if ligigation is on foot and may not be available for inspection if you are a party in the proceedings. If something is missing the Act allows you to request that it be produced within 10 days. You are entitled to write notes or copy anything and take this copy away.

 

Relevant NSW Legislation: Strata Schemes Management Act (2015)

Section 183: Inspection of owners corporation documents

 

Relevant NSW Legislation: The Strata Schemes Management Regulation (2016)

Schedule 4: Fees

 

 

2.2.2 What to expect from your strata manager: as an officer / strata committee member

Liaison person– The strata committee may have a contractually designated ‘contact or liaison person’ through whom all communications with the strata manager should be filtered (usually the secretary). It is preferable that communications be funnelled through this person, but your strata manager will usually respond to every strata committee member out of courtesy, even if they don’t have to.

Inspecting records– a strata committee member can inspect the strata records without cost as part of their obligations and duties.

Budgeting– Your strata manager should be able to put together a preliminary annual budget and required levy estimate. The treasurer and the strata committee should then review this line by line and adjust as appropriate.

Spending– Depending on the agreement terms your strata manager can procure services, monitor and report on spending. If you have no building manager or caretaker the strata manager would be the person who ensures these things are done if it is specified in their contract.

Manuals– If you are creating any building manuals (operations manual, procedures manual, residents handbook) the first point of call is to ask your strata manager - they often have a 90% complete manual template and can tailor the last 10% for your building.

Establishing good service provider contracts– Strata managers may have templates or samples of good service provider contracts that they can share.

By-law samples– Your strata manager may have come across useful by-laws in their other clients schemes and may pass them onto you for ideas if you ask.

Special projects– You can also engage your strata manager in various projects and research over and above that in the contract. However, understand that work not included in the contract may be charged out at full commercial rates as specified in the agency agreement.

2.2.3 What you should not expect from your strata manager

A strata manager cannot be given the power to:

  • delegate their powers, authorities, duties or functions to others
  • make a decision on a restricted matter (ie. a matter that needs a special or unanimous resolution or which the owners corporation has decided must go to a general meeting)
  • set levies.

A strata manager cannot go beyond their contracted duties. If the owners corporation wish to extend the contracted duties the contract will have to be updated and approved by an ordinary resolution at a general meeting.

A strata manager cannot transfer the management of the scheme to another strata management business without the approval of the owners corporation.

Relevant NSW Legislation: Strata Schemes Management Act (2015)

Section 49 (3): How is a strata managing agent appointed?

 

2.3 Improving performance

Communicating with your strata manager is important. If you are experiencing performance issues, identify exactly what the situation is and what you would like to change. Differing expectations can often be overcome by having an open dialogue. However, in the end, your ability to enforce an improvement will depend on the terms of the specific agreement.

It is worth spending time and thought in setting up a good set of contract terms before you sign. For example contract terms could be sought to include Key Performance Indicators, although they are difficult to set and measure as they need to be accurately recorded. There are some that you can consider that will just be obvious in observing actions and outcomes. Things such as responding to and sending correspondence, following-up executive committee actions items, paying suppliers on time, being helpful to owners, providing transparent and understandable scheme reports (mainly financial), understanding what goes into your various expense categories etc.

Further considerations are covered in Selection criteria 3.8.3

 

2.4 What if I have a complaint?

If you have an issue with your strata manager, try to find out as much as you can before complaining. Ask questions first, rather than tell or demand, then escalate where necessary or appropriate: It may be a misunderstanding, it may not be in their powers, they may be on holiday, they may have been instructed by the stratacommittee, they may be right and you may be wrong! Ask why they did or didn’t do something, or why they believe they are correct. Ask for the appropriate legislation or regulations explaining their answer. Ask other strata managers for their opinion; they should be delighted to assist where they can as they may be first in line in a tender situation. Check out the Owners Corporation Network of Australia’s website and forum, relevant legislation and their contract terms. If you feel there are legitimate grounds for concern then escalate your complaint to:

  1. Your strata committee:They may have some additional information that will shed light on or resolve your concerns.
  2. The strata manager’s supervisor:It is always worth asking to speak with the manager’s supervisor – just so that you can explain your concern and see if it can get resolved or answered at this level first.
  3. An external accountant or advisor:Depending on the issue it may be worth getting a second opinion. For legal and process issues ask a legal expert or solicitor, for financial questions ask an accountant to peruse the finances.
  4. Strata Governing Bodies/Institutes/Licensing Authoritiese.g. Strata Community Association or Real Estate Institute of NSW (REINSW). Most of these licensing bodies have a code of conduct and a complaints resolution system.
  5. Department of Fair Trading:Strata managers are legally appointed as an agent of your owners corporation. This places quite significant legal responsibilities on them. If they are not fulfilling their responsibilities appropriately then the relevant government department in your state would likely be interested.
  6. Terminate and retender the role:If they are still within the contractual period you will need to consider this move carefully. See section 2.6: Dismissing a strata manager. If it is past any contractual period usually only 3 months written notice is required. See Dismissing a strata manager 2.6.
  7. NSW Civil & Administrative Tribunal: This is administered by the NSW Fair Trading. An Adjudicator can make decisions on disputes with a strata manager. An Adjudicator may appoint an alternative nominated person as your strata manager to carry out:
    • all the functions of owners corporation
    • all the functions of the executive committee and/or the chairperson, secretary or treasurer
    • only some of those functions.

 

Relevant NSW Legislation: Strata Schemes Management Act (2015)

Section 233: Order for settlement of dispute between adjoining strata schemes