OK, first things first. Strata insurance is compulsory in Tasmania (as it is everywhere else in Australia). However, you really don’t need a strata manager to arrange it for you.
Your mum may find that once strata insurance is in place, she can reduce the premiums on her home and content insurance and not have to pay any more. The strata secretary can arrange all this very easily. It doesn’t require a strata manager to do it.
For the sake of argument, let’s assume that the prospective strata managers merely said that hiring them would be a good idea. You would then want to look at their charges, including “extras” (like every time they lift the phone in some management contracts).
But it sounds like this strata manager is trying to scare and maybe even deceive owners into taking their contract and for that reason alone, I would send them packing.
So yes, you need strata insurance and you the owners should look at three quotes and choose the best.
If they feel they really need a strata manager – and maybe they do if they haven’t even got round to formally creating a body corporate – they should again get three quotes, look out for “extras” (we call then Schedule B charges in NSW) and only sign a contract with someone with whom they feel comfortable.
And even though this is not a legal requirement in Tasmania, I would not sign any contract for more than three years. That is more than enough time for all parties to discover if they are suited to each other.
It may be that the strata manager mentioned’s intentions were “lost in translation” but if there was the slightest hint of coercion or deception, I wouldn’t let them anywhere near a contract.
By the way, if the other owners at a properly constituted committee or general meeting decided to go along with this, your mum would be obliged to follow.
The question is, if there is no body corporate, how can they have a properly constituted meeting?