Flat Preloader Icon

– PART 1

1. Building Managers

Building Managers (previously known in NSW as Caretakers) are engaged by Owners Corporations to assist with:
• managing common property;
• providing access to common property, including for tradespersons and non-residents; and
• maintaining and repairing common property.

A Building Manager may be a person who is entitled to exclusive possession (whether or not jointly with any other person) of a lot or common property in the strata scheme, but this is no longer a prerequisite to qualify as a Building Manager.

2. Upfront Disclosure by Building Managers

Before they are appointed, Building Managers must advise the Owners Corporation if they:
• are connected in any way with the original owner (developer); or
• have any existing financial interest in the strata scheme.

3. Method of Appointment

To be engaged as a Building Manager, a majority vote is required at the annual general meeting (AGM) or an extraordinary general meeting (EGM) of the Owners Corporation. The engagement cannot be approved at the Strata Committee level.

All Building Management Agreements must be in writing and executed by the Building Manager and the Owners Corporation.

4. Length of Building Management Agreements

Building Management Agreements in NSW can no longer be for a term of more than 10 years.

Specifically, the Strata Schemes Management Act 2015 (Act) states that a Building Management Agreement (including any additional term under any option to renew it) expires (if the term of the appointment does not end earlier or is not ended earlier for any other reason) when 10 years have expired after it commenced to authorise the Building Manager to act under it.

This wording is significant for the reasons I refer to below.

5. Form of Top-Up

Unlike the situation in Queensland, NSW Building Management Agreements cannot be “topped up” from time to time by a deed, varying the existing agreement, by adding a further option or options for the Building Manager to extend the term of the agreement. This is because the Act states (as mentioned above) that the agreement ends 10 years after it commenced.

So adding options to the existing agreement makes no difference – as the agreement will still end 10 years after it initially commenced.

Consequently, any top-up in NSW has to be by way of a new Building Management Agreement or the re-engagement of the existing Building Management Agreement for a new 10 year term.

6. Procedure for Topping Up

Firstly, you need to find out from your strata manager the closing date for owners to submit motions for inclusion on the agenda of the next annual general meeting of the Owners Corporation.

Secondly, you should approach your Strata Committee with your top-up request. Obviously, if you have the support of your Strata Committee, the process will be much simpler and more likely to succeed.

Thirdly, if the Strata Committee want to make changes to the current agreement (including duties), you should use your reasonable endeavours to work through those changes with the Strata Committee and hopefully agree on the proposed changes without lawyers becoming involved. (If you can’t reach agreement, refer to the process I suggest you adopt which will form Part 2 of this article and included in next month’s magazine).

Fourthly, ensure that you advise you solicitor of your requirements for the new agreement in sufficient time for your solicitor to be able to prepare the new Building Management Agreement and motion and submit them to the strata manager, prior to the closing date for owners’ motions.

7. What if the Building Manager does not own a Unit in the Complex?

Only lot owners or the Strata Committee are entitled to submit motions to go on the agenda of an AGM of the Owners Corporation. Consequently, if you don’t own a lot in the complex and the strata committee won’t agree to include your motion on the AGM agenda, you will need to find a friendly owner in the complex who is prepared to submit the motion for you.

8. What if you don’t want to wait for the next AGM to come around?

Any lot owner can requisition the calling of and EGM if they have the support of lot owners with unit entitlements with value of at least ¼ of the total unit entitlement for the scheme. Consequently, you need to arrange for this number of owners to sign a form requisitioning an EGM to allow your motion to be voted on at the EGM.

This requisition form must then be sent to the Secretary of the Owners Corporation or the strata manager, who must promptly call the EGM. The meeting cannot be held until all owners receive at least 7 clear days’ notice (after postage time if the notices are mailed).

9. Use of Proxies by Building Managers

The Act limits the use of proxies by Building Managers.

A vote by a proxy who is a Building Manager is invalid if it would allow the Building Manager to obtain or assist in obtaining a pecuniary interest for, or confer or assist in conferring any other material benefit on the Building Manager.

“Material benefit” includes the following:
(a) an extension of the term or an additional term of appointment of the proxy as a Building Manager; and
(b) an increase in the remuneration of the proxy;

Consequently, Building Managers cannot hold proxies for topping up the term of their agreements. However, there is nothing to stop Building Managers from lobbying owners to support their top-up motion or for other owners to seek proxies to support the Building Manager (as long as they are not seen as “agents” for the Building Manager).

All proxies must be given to the Secretary of the Owners Corporation (or the strata manager) at least 24 hours before the meeting to be effective.

10. Will voting be by way of a Secret Ballot?

Voting on a motion at a meeting may be carried out by a secret ballot if:
(a) the Strata Committee determines that the motion is to be so determined; or
(b) at least one-quarter of the persons entitled to vote on the motion agree that the motion or matter is to be so determined.

Note – Part 2 of this article (in next month’s edition) will look at how Building Managers should go about seeking a top-up of their Building Management Agreements in circumstances where they have a Strata Committee who is opposing any such extension.

Article Written by Col Myers of Small Myers Hughes Lawyers

Liability limited by a scheme approved under Professional Standards Legislation
Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.