For strata managing agents
A strata managing agent is required to exercise reasonable skill, care and diligence in carrying out their duties. They must act honestly, fairly and professionally with all parties. They must act in the owners corporation’s best interest at all times unless it would be otherwise unlawful to do so.
A strata managing agent must be licensed under the Property and Stock Agents Act 2002, and has duties and responsibilities under that Act, the Strata Schemes Management Act 2015, and the Community Land Management Act 2021.
Strata managing agents must not receive gifts or other benefits
A strata managing agent must not request or accept a gift or other benefit from another person.
However, a strata managing agent may accept the following:
- remuneration paid to a strata managing agent or an employee or contractor of a strata managing agent by an owners corporation
- a monetary commission provided to a strata managing agent, if the provision of such a commission is in accordance with the terms of appointment of the strata managing agent by the owners corporation or has been otherwise approved by the owners corporation
- a training service provided to, or paid for, a strata managing agent, if it was related to strata management functions and the provision or payment is in accordance with the terms of appointment of the strata managing agent by the owners corporation or has been otherwise approved by the owners corporation
- a gift or other benefit that is not over the amount of $60.00.
If a commission or training service is not in an agency agreement and the owners corporation’s approval is required, strata managing agents will need to give the owners corporation a written explanation when seeking approval at a general meeting. The written explanation will need to include why approval is in the owners corporation’s interest and other details including the commission amount. The owners will review and decide on the approval request at a general meeting.
Disclosures before a strata manager’s appointment
Before a strata managing agent is appointed, they will need to disclose to the owners corporation:
- whether they are connected with the developer
- any direct or indirect financial interest in the scheme
- connections with suppliers they routinely use, for example, an insurance company that is a subsidiary of the strata management company
- whether they have given advice about strata plans or a community land plan to the building developer in the last 2 years.
Failure to disclose this information could lead to court-imposed penalties up to $55,000.
Disclosures during the strata manager’s appointment
Annual General Meeting
At each Annual General Meeting (AGM), the strata managing agent is required to disclose whether any third party commissions or training services:
- have been received while exercising the functions of the scheme for the previous 12 months, and the particulars of any such transaction
- are likely to be provided to or paid for the agent in the following 12 months, and the estimated amount of value of any such commissions or training services.
They must also disclose any connections they have with:
- the suppliers of goods and services for the scheme including details about the nature relationship and the goods and services provided
- the original owners of the scheme including details about the nature of the relationship.
This includes if these connections happened during the past 12 months.
The disclosure of these details must be recorded in the minutes.
If a managing agent does not disclose commissions or training services that they have received, the owners corporation or NSW Fair Trading can apply to the Tribunal to make an order that any commissions accepted by the agent be paid to the owners corporation and could face significant court-imposed penalties up to $55,000 .
If there are changes to the commissions or training services disclosed at the AGM, the strata managing agent must disclose to the strata committee the variation and give an explanation. These requirements do not apply to training services or remuneration provided directly to a strata managing agent by their employer agency.
Disclosures before entering a contract for goods or services
Strata managing agents must give written notice to owners corporations before entering into a contract for the purchase of goods or services if:
- a commission or training service will be paid to the agent
- the contract is with a connected person, for example, a related supplier.
The notice must include details such as the amount of the commission and why the contract is in the owners corporation’s best interest.
Ongoing disclosures about relationships and financial interests
Strata managing agents must give written notice to owners corporations as soon as possible after becoming aware of the following:
- a supplier of goods or services for the scheme becomes connected to the agent
- the original owner of the scheme becomes connected to the agent
- the agent acquires a direct or indirect financial interest in the scheme, for example, they buy property in the scheme.
The notice must include details such as the nature of the relationship between the agent and the supplier or original owner.
Insurance related disclosures and obligations
Strata managing agents will need to provide clearly itemised quotes for insurance policies they give to owners corporations. Quotes will need to set out details including the insurance base premium amount, commission and broker fee amounts – and who these are ultimately paid to, and GST.
Agents will be banned from getting a commission on insurance if the owners corporation obtained the quote and arranged for its payment independently, without their help.
Disclosure of any personal or commercial relationships with service providers due to referral
A managing agent who refers an owners corporation to a service provider must disclose if they have a personal or commercial relationship with that service provider. They must also disclose the nature and value of any rebate, discount, commission or benefit they may receive, or expect to receive, and refer the owners corporation to the service provider. This enables the owners corporation to make a value judgment on whether they are getting a good deal on the services.
Disclosure of a potential agency
If an agent intends to act (or offers to act) for an owners corporation and is aware that another agent is already managing that property, the agent must disclose the agent’s intention to act or offer to act to the current agent.