NSW strata managers, owners corporations and lot owners should take note of the effect of the transitional provisions in the Strata Schemes Management Act 2015. Schedule 4, clause 14(1) has the effect that if your scheme entered into a strata management agreement prior to 30 November 2016 then it is in one of three situations which are:
- If the agreement was for a period of under three years then it will end on the date of the agreement. For example SP123 signed a strata management agreement on 1 July2016 for a period of 12 months. That agreement would end on 30 June 2017.
- If the agreement was for a term of three (or more) years then the agreement will end on the third year after it was entered into regardless of the term noted in the agreement, or if the agreement had been in effect for longer than three years it expired on 31 May 2017. For example, SP123 signed a strata management agreement on 1 July 2014 for a period of three years. That agreement will expire on 30 June 2017. If however SP123 entered into the agreement on 1 July 2013 for a period of four years then the agreement would have expired on 31 May 2017.
The Strata Schemes Management Act 2015 at section 50 caps the term of appointment for strata managers to a three year period. There are two options for extensions. The first is under section 50(4) if the strata committee resolves to extend the term of the agreement. This cannot be a long term solution however as the strata committee only has the power to do so for three month periods up until the next annual general meeting. The second option is under section 50(7) and only applies where the strata committee has not provided the strata manager with three months written notice that they will not be reappointed and the original agreement was for a three year term.
The key concern for strata managers is that under section 55(1) of the Property Stock and Business Agents Act they are not entitled to commission or expenses where there is no written agreement in place, or if the written agreement does not comply with the Property, Stock and Business Agents Act. Where their agreement has been terminated by the transitional provisions in the Strata Schemes Management Act 2015 they do not have a written agreement in place.
The key concern for owners corporations is that they ensure that they continue to have a strata managing agent who is authorised under a management agreement to act on behalf of the owners corporation. This ensures the continued smooth day to day running of the scheme with contributions continuing to be issued and collected, repairs conducted and queries answered.
Where a strata management agreement was entered into prior to 30 November 2016 we recommend it be checked and the expiry dates be diarised, if it is still current and if need be a new agreement entered into.