Stuck with a Strata Manager and Building Manager that’s the same company

DCC said:

Is this by-law unusual or is it something worth trying to change? If so, how would I go about it? 

The developer/strata manager/building manager have locked the scheme into a 10 plus five plus five year contract with no reference to exit clauses or performance indicators and it seems to me that you have “lucked in” to one of the most underhand and surprisingly widespread dodgy deals that were once commonplace in NSW.

But that’s not to say it’s illegal.

If the developer did a deal with the service provider and that deal was then agreed at the first AGM of the scheme, then it is legitimate, but that doesn’t mean you are stuck with it.

That’s where you need to start.  When was this deal done? Did the developer accept a payment for organising the contract?  Did the developer pass the enabling by-law at the initial AGM?  Was the developer using proxies that had been acquired as part of a sales agreement (illegal now, but possibly not then)?

If there is any way your scheme can get out of this, then you should.  These contracts are often feather-bedded and the strata manager – the person you need to help you manage the facilities management side –  isn’t going to lift a finger if it costs their firm money.

Probably the easiest way to do this is to get agreement from the rest of the EC that you want to renegotiate the contracts so, at the very least there are performance indicators and exit clauses.  

Chances are this firm will refuse and then you have a choice – do you fight them or do you just wait for the contracts to run out? If you choose to fight them, get a good, experienced strata lawyer and just make sure that it doesn’t cost more even if you win that it would just to suck it up.

The other way is to make sure you get your money’s worth by pushing them to the limit of their contractual duties until THEY want out. 

Or, if the service provider has a permanent unit in the scheme – ie, is a caretaker –  you can seek an order from NCAT that the agreement and the payments related to it are unfair and should be struck out (and for this you really will need a lawyer). See section 183A below.  FYI, under strata law, a building or facilities manager is also referred to as a caretaker.

Have a look at THIS CASE where a a caretaker agreement was struck out for being unfair and unconscionable.  The circumstances may be different but it shows that it can be done.  As for lawyers, I can recommend our sponsors, Makinson d’Apice or Grac Lawyers who ran the case linked here.

To answer your other question:

How do other people assess the performance of their strata manager? What are some of the key things I should be looking out for?

The strata manager’s roles are quite clearly defined but they also vary, depending on the firm and the indiviuals.  A competent strata manager will organise levies collection and the distribution of minutes and agendas for meetings and will pay the strata schemes buiols out of its funds.  They often also deal with Notices To Comply and seeking orders at NCAT (but will charge more for doing so).  

A good strata manager mentors the EC, advising you on how best to run your building, what your aims should be and how to achieve them.  You still have to pay more for a better service but that’s how you get a better community.

Best of luck

183A   Orders relating to caretaker agreements

(1)  The Tribunal may make an order with respect to a caretaker agreement:

(a)  terminating the agreement, or

(b)  requiring the payment of compensation by a party to the agreement, or

(c)  varying the term or varying or declaring void any of the conditions of the agreement, or

(d)  confirming the term or any of the conditions of the agreement, or

(e)  dismissing the application.

(2)  An order under this section may be made only on an application made by the owners corporation for the strata scheme concerned on one or more of the following grounds:

(a)  that the caretaker has refused or failed to perform the agreement or has performed it unsatisfactorily,

(b)  that charges payable by the owners corporation under the agreement for the services of the caretaker are unfair,

(c)  that the agreement is, in the circumstances of the case, otherwise harsh, oppressive, unconscionable or unreasonable.

(3)  Any amount ordered to be paid under this section may be recovered as a debt.