Six steps to take when changing strata management companies

Six steps to take when changing strata management companies

If your committee is not getting the advice and service it requires, it may be time to make the switch to a better strata management company

A good strata management company will partner with the committee to ensure all the tasks needed to keep your strata property run smoothly to protect and grow its value and enhance community living.

They should also provide sound advice on legislative and financial matters, so your committee can make informed decisions that benefit all owners.

Changing your strata manager is easier than you might think and could be one of the best decisions you make. The owners corporation has a say in how your property is run and who should be appointed to manage it on your behalf.

1. Look out for warning signs

A strata management provider should ensure everything that relates to the maintenance and management of the strata property is run smoothly. This includes managing the payment of invoices, compliance with fire safety regulations, ensuring the common property is correctly and fully insured and dealing with disputes.

Although most of a strata managers responsibilities are behind the scenes, they should be easy to contact and be responsive. They should deal with issues that arise promptly and professionally and keep the committee informed of all progress.

If you notice the following warning signs, it might time to consider changing strata management companies:

• Licenses. Is your strata manager qualified and licensed? Licencing is not compulsory in every state, but it will give you peace of mind. If your strata management provider is not required to be licenced, they (and support staff) should still hold relevant qualifications.
• Finances. Your strata manager should manage the finances transparently and ethically. If the numbers don’t seem to add up or you find it difficult to get a clear financial report from your strata manager, you may need to investigate further.
• Responsiveness. If you struggle to get your strata manager to respond within a reasonable time, it could be a sign that they don’t consider your building a high priority
• Emergency management. If your strata management provider does not have an effective 24/7 emergency handling process in place, it’s best to avoid any future risk by confirming your strata managing agent is sufficiently resourced.
• Maintenance. If your complex’s pool is turning green, the grass is overgrown, paint is peeling off the walls, or damage goes unfixed for long periods of time, it’s an obvious sign you need a more effective strata management to help co-ordinate activities to address identified issues.

2. Review the terms of your existing management contract

It is critical that your committee has read and understood the terms of your existing contract. Typically, strata management contracts will specify when and how you can end a contract and how to undertake the termination process prior to changing strata management companies.

3. Evaluate which provider is likely to be the best fit for your needs

Assuming you have the all-clear to proceed and there’s agreement amongst the committee, your next step is to seek quotes from potential strata management providers and undertake due diligence to narrow down your options.

Before sourcing quotes, consider if desired expertise is required for your property type or to address current needs — for example if your property is a BMC or has issues with defects. Consider what technology is available for accessing property information or online voting, what support services are available and how they remain updated with legislation changes.

Next, compile a list of services and their respective prices to make sure you compare like for like. Ask for a copy of the proposed contract to determine how the strata provider will manage the relationship.
Importantly, ask to meet them in person, with a specific request to meet the potential strata manager who would most likely manage your property.

4. Seek committee agreement regarding changing strata management companies

A motion will need to be passed at a general meeting to terminate the existing strata manager and appoint a new one. Usually, this is done in person, by proxy or written vote at an Annual General Meeting (AGM), as this will typically coincide with the expiration of the existing contract. If you terminate a current contract due to a contractual breach, your committee may need to call an Extraordinary General Meeting (EGM).

At your AGM or EGM, make certain quorum and voting requirements meet state legislative requirements and strata by-laws and building rules. Also, make sure your meeting minutes record your resolution in detail.

Don’t forget to include a letter to the owners corporation as part of the AGM pack in advance of the AGM. Include information such as reasons for exploring changing strata management providers, the process you went through to seek alternatives, evaluation criteria that led to the preferred recommendation and any other useful information that supports this decision.

5. Appoint your new strata management company

Once a motion has been passed to terminate the contract with your existing strata manager, you need to formally notify the outgoing strata management company that their contract has been terminated. Unless a contract breach has occurred, written notice by mail or email will be sufficient.

Check relevant legislation in your state on how to terminate a contract due to a breach of contract.

A copy of your meeting minutes and a signed contract are usually all that is needed to engage your new strata management company.

6. Handover to your new strata management company

Once your outgoing strata manager has been notified, they will commence the handover process with your newly-appointed strata management company. This includes handing over important documents, the strata roll and financial information.

Ask your new strata management company for a list of items they will need at commencement and arrange a meeting to discuss your strata property’s day-to-day running, administrative duties and reporting expectations. At times, the incoming strata manager will communicate directly to coordinate the collection of books and records accordingly.

Once this information is received, the new strata management company is likely to arrange to come out onsite, meet with the committee, walk around the building and formulate a plan moving forward.

It may also be good to appoint a committee member to act as the liaison between incoming and outgoing strata management companies to stay on top of this process and expedite it.
This is the very final step required when changing strata management companies.

It can be uncomfortable having to break the news that you are terminating your relationship with a strata management company. While you can’t avoid it, there are some things you can do to soften the blow.

• Give them a heads up that your committee is taking action to appoint a new strata manager and the reasons why
• Keep things courteous and professional
• If you are terminating their contract due to a breach, outline details of the violation in a written notice.

Having set up the very first strata scheme in Australia back in 1948, we’ve come a long way in our knowledge and experience across a variety of property types. Whether you are new to strata management or an active committee member, we have developed an extensive library of resources to assist you. Click here to download our FREE Community Living guide on committee management. For a consultation to review your current by-laws with the Kemps Peterson Legal team, click here. To find out more about the services we offer, click here for a free strata assessment.