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[esb]

We’ve got a situation in our plan where a management agreement was signed for a fixed term (less than 36 months), and for whatever reason, the agent did not include a motion for the renewal of that agreement. A couple of months after the AGM, the agreement expired, but we’re being told that since the agreement contained a “holdover” clause which specifies that the agreement just keeps going after the term expires, the agent still has full authority and everything continues as normal.

Now, my research seems to indicate that this sort of clause is not really legal.

Section 50 of the act sets out the expiry and continuation mechanisms, and it would appear that a contract clause saying it “remains in force beyond the term” is inconsistent with the defined statutory scheme for appointment/expiry.

In other words, the contract can’t really override the stautory definitions.

Has this sort of thing been discussed before?

 

 

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[Jimmy-T]

This is covered by section 50 of the Act which basically allows the maximum three-year contract to be rolled over three months at a time, in the absence of a strata scheme’s decision to terminate or renew. Once you are in the roll-over period, you have to give the manager one month’s notice of a decision to terminate.  It is designed to ensure schemes have a manger in place even when the maximum term is up and they haven’t got round to re-appointing or choosing a new one. These roll-overs can’t extend beyond the next AGM.

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[esb]

Hi,

I guess I didn’t make my question clear.

The management agreement includes a clause that appears to try to override Section 50 in that it states that the agreement “remains in force beyond the term” without any action by the committee.

My point would be that I don’t believe it’s valid for a management agreement to try to override the legislation with it’s own rules, as the inteneded outcome of this clause is that once the original term expires, then the agreement just keeps going without any action on the part of the owners or the committee.

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[Jimmy-T]

Whatever the strata management contracts says, and whatever the intent is, it can’t over-ride strata law.  That means that as long as you scheme follows the law, there can be no comeback when you find a new strata manager and get rid of this current one.

By the way, the contract may have been written before the new laws came in so it may be an accident rather than a deliberate attempt to subvert the legislation.

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