4. Guide to the proposals

The Strata Committee Association Agreement is currently widely used. An updated version by the new representative body was released in 2017.

  • Strata Management Agency Agreement 2012
  • Building Management Committee Agency Agreement 2012
  • Community Scheme Management Agency Agreement 2012
  • Company Title Management Agency Agreement 2012

However this will mean that you will be locked-in again for the minimum term of the new contract rather than the legislated 3 month writing in notice period after the old contract minimum term expires.

4.1 Guide to the Standard Terms and Conditions

The Strata Management Agency Agreement 2016 version has terms and conditions:

1.      Warranties and acknowledgment

2.      Appointment of and delegation to agent

3.      Fees and charges

4.      Review of fees and charges

5.      Terminating the agreement

6.      Liability of the agent

7.      Transfer of the agreement

8.      Service of notices

9.      GST

10.  Work Health & Safety

11.  Definitions

12.  Interpretation

4.2 Guide to the Schedules

Whilst ideal it may not be feasible to write your own contract. However it is far easier to use the strata manager’s draft contract as a base and make as many changes, deletions, additions as you can negotiate. The proposals you receive will likely have many pages with lists and inclusions/exclusions, activities and dollars.

The schedules, apart from the list of items in A1 (which reflects the duties under legislation), are unique to every company and can even change between contracts from the same strata manager.

Cover pages:     Details important information not provided in the schedules or the terms and conditions.

Schedule A:      Are the duties that absolutely must be carried out as required by Strata Schemes Management Act and Property Stock & Business Agents Regulations (Schedule 6 Clause 6). Agents elect here as to whether they accept a delegation or otherwise.

Schedule A2:    More clearly defines how agents agree to meet the obligations accepted in Schedule A1 and whether they are part of a standard charge or an additional charge.

Schedule B:       Sets out the additional charges for either unit costs or hourly charges.

Schedule C:       Sets out any other financial benefits received by the agent in this contractual relationship.

Schedule D:      Are the disbursements and associated fees.

You need to be clear about what is in the ‘Agreed Services’ and what constitutes ‘Additional Services’ as detailed in Schedule’s A1 and A2 and the fees and charges set out in Schedules B, C and D. Note, because the contracts that strata companies supply are templates used for all their proposals, Schedules B and D are usually just lists of standard charges and fees – it is up to you to determine whether they are relevant to your quote or not. For example many charges and fees may not be relevant if you have obtained a ‘Fixed Price’ or ‘All Inclusive’ proposal (however see the Tendering pitfalls and tipssection 3.11 for some words of caution).

There is no magic to getting a good understanding. It just warrants careful reading. For example, Schedule A might include attending the annual general meeting and a stated number of committee meetings as part of an inclusive price, but require that they be held at the strata manager's offices during ordinary business hours. Whereas, Schedule B might detail the fees for attending meetings outside office hours at an hourly rate.

4.2.1 Cover pages

The first few pages of a standard proposal will detail important particulars that may vary from contract to contract such as:

  • The name and address of the strata management company and the strata manager
  • Particulars
  • Item 1: Professional Indemnity
  • Item 2: commencement date
  • Item 3: minimum term
  • tem 4: review date
  • Item 5: percentage increase p.a.
  • Item 6: agreed services fee p.a.
  • Item 7: fee payment method
  • Item 8: manner of accounting
  • Signatures of the strata and the strata manager and owners corporation seal.

4.2.2 Schedule A1

Lists the duties that absolutely must be carried out under the Strata Schemes Management Act and Property Stock & Business Agents Regulations, 2003 (Schedule 6 Clause 6). Agents elect here as to whether they accept a delegation or otherwise and the ‘Extent of Authority’ of the agent in acting for the owners corporation. There are generally 3 options for each item.

1. Full authority with no limitations

2. No Authority

3. Full Authority Subject to Limitations as Disclosed in Schedule A2

Relevant NSW Legislation: The Property, Stock and Business Agents Act (2002)

Schedule 6 Clause 6: Confirmation of specific instructions-strata manager or community strata manager

(1) Before or at the time of entering into an agency agreement under which the agent will exercise the functions of a strata manager or community strata manager, the agent must prepare for inclusion in the agency agreement written confirmation of the extent of the agent’s authority to undertake the following duties in connection with the exercise of those functions and any limitations on the agent’s authority to undertake those duties:

a)     undertaking the financial management of funds and books of account,

b)     holding documents and maintaining records relating to the scheme (for example, the strata roll, notices, and minutes of meetings),

c)     arranging building inspections and reports,

d)     effecting repairs to and maintaining common property or engaging appropriately qualified tradespersons to do so and limitations on expenditure that may be incurred by the agent without obtaining the principal’s approval,

e)     paying disbursements and expenses incurred in connection with the agent’s management of the scheme,

f)      arranging insurance cover for the scheme,

g)     serving notices to comply with a by-law,

h)     managing the capital works fund and the administrative fund,

i)      undertaking steps necessary to recover any money owing in relation to levies,

j)      representing the owners corporation or community association in tribunal or court proceedings,

k)     paying accounts in relation to the scheme (for example, water charges, council rates and maintenance),

     i)      arranging and undertaking administrative duties in relation to annual general meetings and other general meetings.

 

4.2.3 Schedule A2

This schedule more clearly defines how agents agree to meet these obligations and whether they are part of a standard charge or are an additional charge. Provides agent specific commentary about how they will or will not meet the items listed in Schedule A1. It is important to understand this schedule as it is here that an agent may include / exclude activities you may want them to perform and where they specify fees they will charge! For each of the items above Schedule A2 should specify:

1.       Details of how the agent will meet the functions

2.       Any limitation to the authority

3.       Fee method - Agreed or Additional (see Schedule B and D for rates)

4.2.4 Schedule B

Schedule B sets out the additional charges for either unit costs or hourly charges. If any items in schedule A2 specify additional fees for their performance then this is what you will be charged. There are usually a large number of items in this schedule ranging from $/hour for staff members time to the cost of photocopying, stamps and telephone calls.

4.2.5 Schedule C

Sets out any other financial benefits received by the agent in this contractual relationship. Discloses details of any providers who pay a rebate, discount or commission to the agent. Usually lists the strata management company's insurance commission agreements.

4.2.6 Schedule D

This schedule specifies the disbursements and associated fees. These are generally administrative activities and stationery charges.

Be on the look-out for any charges that are classified as an ‘Allowance’, ‘Per Lot’ or a ‘Per Month’ charge. If there are any here check whether they apply to your proposal as they can add up to significant costs. For example, if your strata is 150 lots a seemingly small $5 per month per lot ‘Fixed Disbursement Allowance’ will amount to $9,000 per year on top of whatever other costs are charged!

4.2.7 Detailed schedule checklist

Below is a comprehensive list of the types of duties, functions and charges that you would see in Schedules A1, A2, B and D. It also references the section for each duty and function as described in the Property Stock & Business Agents Regulations (Schedule 6 Clause 6). This can be used as a template to fill in and compare each proposal. To complete the template fully you may need to discuss and agree line items that are unclear from the contract. The completed list can be agreed upon and attached as part of the contract for clarity. 

Schedules A1 and A2

 

Schedules B and D