In Australia it’s usually a relatively straight-forward process to change your strata manager (previously known as a body corporate manager).
While there are a few steps involved, the fact that you’re thinking about it probably means it's time to consider it in more detail. Here are the steps you need to change strata manager.
1. Get a copy of the current contract.
If you're a committee member, simply ask the strata manager for a copy of the existing contract. If you're not on the committee, you'll probably need to ask a committee member for a copy of the contract. If the contract has expired and not been renewed it may mean the manager does not want you to know the contract has expired and is worried at the reaction when a renewal is asked for.
2. Review the contract.
Read the existing contract and be sure you understand what you’re paying for. While some costs may be shown as optional, in practice you may find they’re impossible to avoid. It’s important to understand what you're paying for and any changes you want with your next manager.
3. Decide when to make the change.
An annual general meeting (AGM) is the easiest time to change your strata manager because generally the contract term will expire then. If your contract still has time to run, be sure you’re aware of what, if any, termination costs may be payable. A change in strata manager is authorised by passing an ordinary resolution authorising the termination of the old manager and appointment of the new manager. It is usually done at a general meeting such as the AGM.
4. How to decide who to appoint as your new strata manager.
Start by getting quotes and speaking to different strata management companies. However, when comparing quotes make sure you’re comparing the same services. The well-worn phrase ‘pay peanuts and get monkeys’ also comes into play here. While cost is important, it's only one of the deciding factors. Ask for a copy of their proposed contract. Above all, make sure you meet them! Remember, this is the person that you'll be trusting to look after your significant capital investment and regular levy payments.
5. Select your new strata manager.
Based on your comparisons decide who your new manager will be and then tell them. They can then advise you of the formalities of appointing them as the new manager and the appropriate resolution wording necessary. Timing is important here and you don’t want your old manager to derail your efforts. Any short-term pain will be worthwhile after you've made the change. After all, the reason you’re making the change is because you aren’t happy with your existing manager. Hold your ground!
6. Appointment & handover.
Following the confirmation of appointment at the AGM the new strata manager and the old strata manager need to arrange the handover of records. Most strata managers are cooperative with this process, but be prepared for delaying tactics in some cases. It's difficult for the new strata manager to act on your behalf until the handover is completed.
The old strata manager needs to tidy up all the records for handover and between the old and new manager they need to ensure that all statutory tasks such as distributing the AGM minutes get completed. Make sure you’re aware of who is doing what task at this crucial time. You should expect more than usual contact with your new strata manager during this time while the handover is undertaken.
The new strata manager will establish the records in their management systems, complete the opening of a bank account and deposit the balance of your bank accounts transferred from your old manager to the new account. A committee meeting is usually held to create authorisations needed for the new strata manager to complete administration tasks. Expect to receive lots of guidance from your new strata manager at this point.
Not a single step, but worth considering...
Changing strata manager can sometimes be a stressful process, especially if the existing manager feels an entitlement to continue to act on your behalf. Many committees put off making a change because they’re fearful of the reaction from their existing strata manager.
Sometimes having a conversation with your existing manager and making them aware of how their level of service is not meeting your needs can enable you to retain the existing manager and forge a more positive relationship. If you haven’t spoken to your current manager, we recommend you consider doing so before embarking on the path of changing managers.
David Byers is a strata expert from Abacus Strata with a background in corporate finance. His mission is to educate strata owners about the financial information they're presented. David is a member of Strata Community Australia (VIC) and is a workshop facilitator for the two SCA. Visit abacusstrata.com.au for more information.
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