What to do if you think you need a compulsory strata manager

When do you need a compulsory strata manager header image

What to do if you think you need a compulsory strata manager

If your strata committee or strata manager is dysfunctional, it might be time to look for a compulsory strata provider to get things back on track

Mismanagement of a strata property not only affects your enjoyment but also affects the property’s market value – after all, no one wants to buy a problem.

Knowing this, it may be wise to have a compulsory strata manager appointed if your strata committee or strata manager is dysfunctional and does not maintain the property well.

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1. You will have to apply to NCAT for an order to appoint a compulsory strata manager

If an owners corporation, strata committee, or strata manager in New South Wales becomes dysfunctional or fails to carry out its obligations, a lot owner can apply to the NSW Civil and Administrative Tribunal (NCAT) for an order appointing a new strata manager. Referred to as a compulsory strata manager, they can exercise all or specific functions of the owners corporation, the strata committee, or its office bearers.

A compulsory appointment usually occurs when the owners corporation, strata committee or current strata manager:

  • is being negligent of its duties. They may be failing to insure the building, keep records, organise AGMs, or maintain common property)
  • is non-compliant with the state law and regulations
  • is mismanaging funds, or
  • is ignoring orders.


2. A properly-appointed compulsory strata manager can replace your existing strata manager or strata committee

The order can grant a strata manager powers to exercise all or specific functions of the owners corporation, strata committee or office bearers. These responsibilities are agreed upon by the owners. The contract is formalised by the Tribunal, so that there is clear authority and responsibilities outlined for the strata manager.

A “section 237 appointed” strata manager will replace any existing strata manager, and any existing strata managing agent agreement is automatically terminated.

A compulsory appointed strata manager owes a duty of care to act in the best interests of the owners corporation. However they are not obliged under s237 to consult with owners on matters before acting.

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3. It’s important to know your legal rights and responsibilities, and do your due diligence, before appointing a compulsory strata manager

When it comes to a compulsory appointment, you should define the terms of the contract and decide the responsibilities carefully. While it is okay to trust the strata manager’s expertise, you as an owner should not feel powerless. You own the property, and the strata manager has a duty of care to act in your best interests.

Here are PICA Group’s top three tips for appointing a compulsory strata manager:

  1. Be aware of strata laws
    Know your rights and responsibilities as per your state law. Strata properties have common areas that all owners jointly own. Hence, there must be a process and due procedure to maintain and manage the property correctly. If your committee fails to take care of repairs to common property, they may be putting the whole owners corporation at risk of being liable to a claim.
  2. Choose the right strata manager
    You have a say in who you appoint as a manager. It’s hard to be sure right of whether you are choosing the right strata manager so take time to evaluate strata companies and agents, look at their service history, Google reviews, and their systems.
  3. Try the strata manager’s services for a year
    As per New South Wales state law, strata managers can be appointed in an Annual General Meeting (AGM) for a 12-month contract term. If you’re happy with their work, you can choose to extend their contracts for a maximum of another two years.

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 Kemp Peterson team, click here. To find out more about the services we offer, click here for a free strata assessment.

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