If you’ve bought off the plan, the strata manager that the developer has brought to your first annual general meeting to be approved will have been employed to set up accounts, records and insurance, and to call the meeting itself. You really have no choice but to appoint them as it is unlikely at this stage an alternative will be presented.
Now may come a point of contention. How long do you sign them up for at the first annual general meeting? The developer’s strata manager has the knowledge of the building, its records, plans, structure, operations – but they have not been chosen by the owners.
Knowing that you can give 3 months notice at any time after the initial contractual period the question remains as to how long should an initial period be?
Some schools of thought say that your very first strata manager should be confined to a three-month or, at most, a 12-month contract. Short initial contracts allow the service provider to be evaluated before committing to a longer term. The benefit of a short initial term is to be able to obtain recommendations from other buildings and tender competitive quotes before the end of the term. Of course, include the existing strata manager in the tender process.
It is probably not sensible to sign them up for 2 or more years without being able to canvass all the options and comparing alternatives quotes. At the end of the process, you may end up contracting the same company but you should not automatically hand over a long term contract for such a vital role as the smooth running of your building to a firm you have not examined and specifically selected. Even if the strata firm has been working and recommended from another building there will be differences in size, needs, costs and specific manager.
In the unlikely event that you have been able to do a complete background check and investigation of the strata manager (i.e. been able to have a tender process where they are measured against stated criteria and interviewed) you may feel more confident signing them up for a longer term.
Relevant NSW Legislation: Strata Schemes Management Act (1996)
Section 113: Initial period restrictions – An owners corporation cannot appoint a strata manager for a period extending beyond the holding of the first annual general meeting