How can I make sure our strata manager is being transparent about fees and commissions?
In this month’s Strata Q&A, we received a question from Fayez J, an owner based in NSW, asking what steps she can take to make sure her strata manager is being transparent about their management fees, the commissions they receive, and their affiliated businesses.
Q. How can I make sure our strata manager is being transparent about fees and commissions?
I’ve heard a lot of talk about some strata managers receiving commissions from insurance providers or not disclosing financial interests in “preferred” trades companies, but I’m not sure if ours does. I just want to know exactly what we’re paying for and whether there are any hidden kickbacks or markups. How can I make sure our strata manager is being transparent about fees and commissions?
A. In NSW, strata managers are legally required to disclose any commissions or benefits they receive in the agency agreement and at each AGM
In NSW, strata managers are legally required to disclose any commissions or benefits they receive in the agency agreement and at each AGM, as per the Strata Schemes Management Act 2015. The Act sets out clear rules for how strata management companies must handle fees and commissions.
Disclosure of Commissions
Strata managers are legally required to disclose any commissions or benefits they receive, whether it be through strata insurance policies, utility providers, or service contracts. This disclosure must appear in the agency agreement between the owners corporation and the strata manager, and it must also be confirmed at each annual general meeting (AGM). If an owner suspects hidden commissions, they can ask to see the current agency agreement, which should outline exactly what commissions are received and at what rate.
Management Fee Transparency
Management fees should be set out in the agency agreement, usually divided into a base management fee plus any additional charges for extra services. A good strata manager will also issue detailed tax invoices that clearly show what work was done and how much it cost. If fees are unclear, the committee or any owner can request that the manager provide a fee summary or itemised breakdown, and the owners corporation can negotiate changes when the agreement is due for renewal.
Accessing Records
Owners have a legal right to inspect the records of the owners corporation, including invoices, receipts, and the management agreement. This right allows owners to verify exactly what has been charged and whether commissions are being declared. Questions about fees and commissions can also be raised directly at AGMs or committee meetings, where the strata manager must provide answers on the record.
If you want to make sure that your strata manager is being transparent, be sure to check the strata management agreement, feel free to request an itemised list of invoices, and don’t be afraid to exercise your right to inspect records. These steps can make it much easier to confirm whether fees and commissions are being handled openly and in compliance with NSW law.
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