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We’re in a new Victorian building where owners took title earlier this year. The manager was appointed by the developer on a three-year contract, signed before the owners had any say. The developer is still on the committee.
At a committee meeting in October, the manager agreed to a list of actions with dates: upload invoices, bank statements and records to the shared drive, provide an asset register and defects list, circulate minutes, and prepare a draft budget for the AGM. Their own contract says they will “manage a shared drive of all OC documents” and that “records are available online”. Nine deadlines later, almost nothing has been delivered. There has been one reply apologising for the delay, with no dates.
Separately, an owner’s car was damaged by a leak through the car park slab. The manager knew about the leak for weeks and didn’t tell the affected owner. The owner lodged a formal section 152 complaint, and no decision came within 28 days. A section 146 request to inspect records was ignored. DSCV invited the manager to mediation three times and got no response.
Our questions:
Can an owners corporation get out of, or renegotiate, a manager contract the developer signed before the first AGM? What has worked for others?
Has anyone had Consumer Affairs Victoria take meaningful action against an unresponsive manager?
Has anyone got service levels added to a manager’s contract? How did you make them stick?
For anyone who has gone to VCAT for records access or over a manager’s performance, how long did it take, and was it worth it?Any experience appreciated.
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Replies
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Yes — in Victoria a developer can sign an owners corporation management contract before the first AGM, but it must comply with the Owners Corporations Act 2006 (Vic) and the statutory obligations that apply during the initial 10‑year period.
Governing rules and obligations
Under the Owners Corporations Act 2006 (Vic), an owners corporation is automatically created when the subdivision plan is registered http://www.feasly.com.au. For the first 10 years from that registration, the “initial owner” (often the developer) must:
- Act in good faith, honestly, and with due care in the interests of the OC Consumer Affairs Victoria.
- Take reasonable steps to enforce any domestic building contracts affecting the OC Consumer Affairs Victoria.
- Provide specific documents and disclosures at the first meeting of the OC (e.g. building maintenance manual, asset register, warranties, specifications, and any relationships or financial arrangements with the manager) Consumer Affairs Victoria.
The first AGM must be held within 6 months of plan registration ocresourcecentre.com.au. At that meeting, the OC elects its first committee, approves the budget and levies, and takes stock of the building’s condition ocresourcecentre.com.au.
Signing a management contract before the first AGM
The Act does not prohibit the developer from entering into a management agreement before the first AGM. In practice:
- The developer, as the initial owner, is entitled to appoint and contract with a manager during this period ocresourcecentre.com.au.
- However, the contract must comply with disclosure obligations at the first meeting — for example, the OC must be informed of any relationship between the developer and the manager, and any benefits arising from that relationship Consumer Affairs Victoria.
- If the developer remains a lot owner, the OC will still need to review the contract once the new committee is in place and may replace or renegotiate it ocresourcecentre.com.au.
Practical considerations
- Transparency: The OC’s first meeting minutes must record the date, time, place, attendees, voting, resolutions, and any disclosures made by the developer Consumer Affairs Victoria.
- Committee oversight: After the first AGM, the newly elected committee is responsible for managing the relationship with the manager and can vary or terminate the contract if terms are not in the OC’s best interests ocresourcecentre.com.au.
- Risk management: It is good practice for the developer to ensure the contract is fair, transparent, and compliant with the Act, so that the OC can continue it without legal challenge.
In summary: A developer in Victoria can sign a management contract before the first AGM, but must ensure it is transparent, compliant with the Act, and prepared for review and possible change once the OC’s first committee is elected Consumer Affairs Victoria+2.
In many industries, failure to deliver means not getting paid. You can’t get away with that if your manager is a sole trader because the manager is effectively your employee. But if you’ve engaged the manager through a company structure, then you should be able to renegotiate the contract and pay based on the company delivering to those service levels.
Can an owners corporation get out of, or renegotiate, a manager contract the developer signed before the first AGM?
This was in Victoria. In NSW, the newly formed Owners Corporation must approve any pre-arranged contracts at the initial AGM. You find out who the strata manager is really working for when you challenge some of the contracts they have arranged for the developer in advance. But you should do so, because otherwise you may be locked in to deals that favour the developer rather than the owners. A couple of years ago I challenged a 15-year contract that allowed the stormwater drain contractors to increase the fees by 10 per cent every year, and a lift maintenance charge of $60,000 for brand new lifts. The strata manager was Netstrata.
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