Managers: strata & community titles

In this chapter we look at managers, their appointment and common problems faced by unit groups. We also look at how to terminate and change managers.

Click on Legislation above, to view strata title legislation and hints.

Click on Legislation above, to view community title legislation and hints.

The business of properly running a body corporate, such as keeping records and running meetings, can be complex, particularly when there is a large number of units/lots in a group. Many body corporate choose to appoint a manager to assist in running the affairs of the corporation. Professional strata management firms charge for these services. Common Duties Compare Fees

Managers can be appointed or dismissed at a general meeting by a simple majority. In a Strata Corporation the power to appoint or dismiss may be delegated to a management committee. A body corporate which appoints a manager should carefully consider the terms of the contract of appointment. Some contracts specify a penalty if the appointment is terminated before the end of the specified term.

The legal responsibilities of the corporation do not change with the appointment of a manager. It must still have a Presiding Officer, a Secretary and a Treasurer (any two or more of these positions may be held by the same person), and is still legally liable for decisions made on its behalf.

A manager can only act in an advisory capacity and does not have any powers independent of the corporation. Managers have to act in the best interests of the corporation, and if they don't they can be sued by the corporation, but as a preventative measure it is advisable for the corporation to maintain an active involvement in its affairs.

Managers, Agents and Financial Records: Strata managers or any agent who is authorised by the strata corporation to receive and hold money on behalf of the corporation are under strict legal obligations. An audit report of the strata manager's trust account must be lodged with each corporation under their management (Strata Titles Act Section 36H and Community Titles Act Section 127). All unit owners are entitled to view the report. As well, financial records must be produced to the corporation upon request, and must be kept for at least seven years. Any manager or agent who fails to comply with these requirements is guilty of an offence under the Strata Titles Act.

" I have always believed that a Body Corporate management company is only as good as the chairperson and committee as elected by the owners at the AGM. It is this committee that drives the show and instructs the Body Corporate manager on all issues pertaining to the complex." ... www.propertyinvesting.com

Management - common questions

Right to inspect records. Some managers claim that the Privacy Act prevents them from allowing access to Corporation records. This is not true. The legal advice is that the records are the Corporation's and must be made available to owners if needed for the proper conduct of the Corporation, this includes a list of owners and their contact details.

How are they paid. Generally managers have the Corporation's funds in Trust. They draw their fees from the account as permitted under the management contracts with their clients. Many charge monthly, some quarterly and in the case of Strata Data annually in advance.

How do we appoint a manager at a general meeting? Click on Appoint to access our chapter on meetings and appointing a manager.

How long is the appointment. Usually from AGM to AGM or for a period of a year. Some managers may seek longer contracts. We strongly suggest caution in appointing a manager for longer than 1 year at a time.

Commissions: Most managers receive insurance commissions. In the case of Whittles the parent company is an insurance brokerage. Some managers receive commissions from maintenance firms or contractors. Some managers have a financial interest in maintenance firms or are owned by common directors.

Breach of contract: The following appears in Whittles contract, it spells out the grounds on which a client Corporation may terminate their agreement with their manager.

The Manager:

• does not carry out duties under this agreement and the Body Corporate has, prior to the resolution being passed, served a written notice on the Manager specifying:
• the conduct or failure said to constitute a breach of paragraph 12.3(a);
  
• that Manager must remedy the conduct or failure specified within 14 days of the date of the notice; and
  
• that the Body Corporate may terminate this agreement if the notice is not complied with; and the Manager has not complied with that notice

How do we change our manager? We have a page devoted to dealing with changing your manager.

How do we obtain our records and funds following termination?

Click on Legislation above, to view strata title legislation and hints.

Click on Legislation above, to view community title legislation and hints.

Some cautionary tales of mismanagement.

• Manager helps developer stitch up new owners
• Manager's carelessness sees owners at risk of bankruptcy
• Manager fiddles whilst balconies rotting
• Manager's advice puts lives at risk
• Refusal to provide owner list to Presiding Officer ( Privacy Act )
• Manager charges for services not delivered
• Refusal to hand over ledgers - funds short
• Fees drawn 1 year in advance – funds taken from sink fund
• Manager keeps bank interest
• Group left uninsured by manager

How can our group can help ensure we appoint an honest and reliable manager? We believe our Manager Checklist makes for a good start.

How to make a complaint? If your manager is a member of the Real Estate Institute you can make a formal complaint to them. Please ensure that you have exhausted all avenues with your manager.

The following may assist your group.

Our thanks to the Legal Services Commission of SA for some content in this chapter.