Terms and Conditions
The Institute of Strata Title Management Agreement 2008 is a currently widely used agreement. An updated version by the new representative body, Strata Community Association Agreement was released in 2012. Ask your strata manager to update the agreement to the latest agreement, however this will mean that you will be locked-in again for the period if the new contract’s term rather than an automatic 3 month writing in notice period. The 2008 version has 14 terms and condition clauses:
- Warranties and acknowledgment
- Appointment of and delegation to agent
- Fees and charges
- Review of fees and charges
- Terminating the agreement
- Indemnity by owners corporation and liability of the agent
- Point of contact
- Transfer of the agreement
- Service of notices
- Occupational Health & Safety
- Off Set
- Governing law
Read through the terms and conditions of the contract. It is not inviolable there are a number of positive and some negatives clauses that can be adjusted with negotiation. You can negotiate many of these. Below are some suggestions for departing the standard Institute of Strata Title Management agreement 2008-03 Version 3. In this sample set, the following sections have some deletions and clauses agreed in their place, all clauses not specified remained as per the standard.
1. Warranties and acknowledgements
4. Review of fees and charges
4.1 The agreed services fee, the additional services rates and the charges will be reviewed on the relevant review date to an amount agreed between the parties (not being less than the amount payable at the review date).
4.2 If the parties cannot agree before the review date, the agreed services fee, the additional services rates and the charges payable on and from the relevant review date will be increased to the greater of:
(a) A + (A multiplied by the percentage increase); or
(b) (A x B)/N
5. Terminating the agreement
5.2 The agreement will terminate on the expiry date if a party gives to the other party no less than 3 months' written notice before the expiry date (time being an essential term).
5.4 A notice under clause 5.2 or clause 5.3 can only be given by the owners corporation if authorised by an appropriate resolution of the owners corporation.
6. Indemnity by owners corporation and liability of the agent
6.2 The agent is excluded from all liability for any claim, liability or Loss in any case in relation to or arising directly or indirectly out of the services or additional services or arising from any cause of action including negligence and including, without limitation:
(a) inherent defect or danger in the owners corporation’s property whether as designed or constructed;
(b) loss arising from the owners corporation’s failure to supply adequate information, advice or direction when requesting work to be performed by the agent;
(c) loss arising from the services provided by 3rd parties including those instructed by the owners corporation or the agent; and
(d) loss arising from the handling of goods, products or chemicals, but except to the extent that the liability is caused or contributed to by the agent’s negligence, dishonesty or fraud.
6.4, 6.5, 6.6 Deleted.
8. Transfer of the agreement
[8.1 The agent cannot transfer the agreement without written consent of the owners corporation, which consent shall not be unreasonably withheld.]
8.2, 8.3, 8.4, 8.5, 8.6, 8.7 deleted
11. Occupational Health & Safety
[11.1 The parties covenant and agree that they will each comply with their respective obligations under the Occupational Health and Safety Act 2000 and the Occupational Health and Safety Regulation 2001 and any amendment or replacement of that Act or Regulation from time to time (OH&S Act and Regulation)]
[11.2 Subject to the provisions of the OH&S Act and Regulation, the owners corporation acknowledges that, as regards the owners corporation, the appointment of the agent under this agreement does not constitute the appointment of the agent as a principal contractor within the meaning of regulation 210 of the OH&S Regulation.]
11.3, 11.4, 11.5 deleted
12.1, 12.2 deleted.
13. Governing law
[The agreement is governed by the law of New South Wales]
Some specific example explanations
8. Transfer of the agreement
Make sure you strike out the clause on many Institute of Strata Title Management contracts that say your strata company is free to sell on its contract with you to another company. However, you may wish to retain the clause in some form as long as you are able to exercise reasonable powers to refuse. This would mean that in the event of a sale you could go through a tender process and choose the best tenderer – whether or not it was the new company or an alternate one.
11. Occupational Health & Safety
In the 2007/08 version of the ISTM Agreement, a new clause 11 and a number of new definitions were added dealing with Occupational Health and Safety. The extent, tone and effect do not fit with the drafting of the rest of the agreement. The effect of this new clause 11 is not only completely one-sided but may give rise to obligations on the part of the owners corporation which it otherwise might not have.
The fact is that if you have a liability under the Occupational Health & Safety Act 2000 and the regulations, you cannot contract out of that liability.
One alternative is to delete the whole of clause 11; the other is to substitute a new clause 11 which acknowledges the liability of both parties but does so in a way that does not expose the owners corporations to unnecessary risk. In either case, the definitions of construction work, high risk construction work, Non-Standard Work and Standard Work should be ruled through in the definition clause.
In drafting an alternative clause 11, I have sought to simply recognise that each party will bear the liability that it has under the OH&S Act and do the things that it is required to do under the OH& S legislation.
Bearing in mind that the pre-2007/2008 versions of the ISTM Agreement had no clause 11 or its equivalent, the deletion of clause 11 (and the associated definitions) will do two things:
It will put both parties in the position they would have been vis-a-vis OH&S legislation prior to this version of the ISTM Agreement; and
If either party has a liability under the OH&S legislation, which they cannot contract out of, they will have that liability anyway.