The best lawyers know that the true value of an agreement is not the legal rights it records. Rather, it’s the discussions that lead to the agreement being made that bring clarity to the relationship between the parties and their endeavours. After that, the only thing that really matters is how you get out.
The parties to strata management agreements skip this important step. Little attention is given to the terms of the agreement by strata committees, except the fee, and even then, that’s not well disclosed or understood. Rarely are the strata committees represented. If they are, it is probably by a lawyer on the committee without sector-specific insight to help them get the right result. It follows that the relationship between a strata manager and their prospective client suffers from the outset. Without debate, without independent representation and reflection, the relationship begins in a bad place.
Pro forma agreements produced by industry associations for strata managers are under scrutiny everywhere across the land, although this is more of an issue on the east coast than elsewhere. In NSW, the government has gone so far as to give itself the power to produce, and force parties to use, a standard form strata management agreement. Respected researchers and legal scholars have been retained to research and advise the government on how this power should be exercised, and to prepare an agreement. The decision as to whether this will be a mandatory agreement or a recommended model agreement is yet to be made. That it has come to this is another indictment on the strata management peak bodies, SCA NSW and REINSW. It’s only when bodies like these are unable to self-regulate in a responsible way that governments step in to do the job for them.
In other parts of Australia, where standard form agreements have been made somewhat fairer and easier to understand, there is less concern. However, still, managers are looking for alternatives. The ‘industry standards’ are long, convoluted, and unnecessarily complicated. Curiously, despite this, the public feels a sense of comfort that the agreements are in a standard format. Owners can erroneously think a logo on an agreement is some sort of official imprimatur that what’s within must be fair. This is another indicator of unequal bargaining positions.
Whatever government and strata managers associations do about their agreements, strata managers everywhere have an opportunity to do better when it comes to making owners, or at least committee members, better understand their rights and responsibilities under their strata management agreements. Don’t be afraid to discuss these, but first learn what the terms mean. Put ‘discuss our agreement’ as the first item on the agenda for the first committee meeting of each new committee term.
Clear agreements make for good friends, and in this game we all need good friends.
Michael Teys advises strata management businesses on improving profitability through professionalisation and streamlined operating systems.
He has more than 30 years’ experience as a strata lawyer and academic and has owned 11 strata management agencies throughout Australia. He has a Master of Philosophy (Built Environment) and Bachelor of Laws. He lectures and writes widely about strata management issues in Australia and internationally.
