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How to change owners corporation managers
Published November 23, 2016
Changing your Owners Corporation (OC) Manager can be a simple or complex task which is dependent on the current circumstances. Find out what's involved in changing your manager.
The reason the OC is looking to change can be a factor in changing management. For instance, some OC’s are searching for a price comparison, some want to have meetings more locally, and some are unhappy with their current manager (for one or many a reason). Whatever the reason, it is a good initial action to discuss this with your current manager, to work through the issues. Often issues can be resolved with your manager (or management company), however, if it cannot, the change process may be the best option.
So who can decide to change a manager? It is the OC that can resolve to change a manager. Therefore a resolution of the OC (or of the OC Committee) can terminate (and appoint) a manager.
Another item you will need to be aware of is if you are in a current management agreement with your OC Manager? Many contracts have roll over clauses so may continue for an additional year or term. It is prudent to find out the current contract term, and the termination clauses within the contract.
A current industry misunderstanding is that if you are in a current contract term you are unable to change management. This is not the case.
The Owners Corporation Act dictates that “An owners corporation may revoke the appointment of a manager” (s.119). VCAT has also determined the OC can resolve to terminate the manager, this includes a committee with the appropriate delegations.
However, although the OC can resolve to terminate the manager within a contract period, the OC may still have financial ‘obligations’ under the contract. So contract law may dictate that there would be an appropriate payment to the current manager to pay out the term of the contract. This is usually not 100% of the Fees due, but more based on the profit from the Fees (commonly around 20%-30%).
Please note, this is general information and not legal advice so each circumstance should be looked at individually.
Therefore, if you are adamant a change is required, being in a contract should not preclude you from looking to change, and a frank and open discussion with the current and proposed manger may find a good solution for the OC.
If you are nearing the end of your contract, the termination clause within your contract usually indicates how to terminate the contract. A standard SCA (Vic) contract has a notice period of 28 days prior to the end term, however, this does vary in other contracts. Many contracts also may determine the type of resolution required, however, as mentioned, the OC Act dictates only a general resolution of the OC is required.
There is a lot of information and variances in the above, therefore, perhaps a quick call to Owners First is a good option. We would be happy to discuss your queries with a little more specificity.
Let’s assume you have no contractual arrangements and have successfully terminated your current manager. Selecting a new manager can also be done by the Owners Corporation or committee.
The OC can select a new manager at an AGM, or the committee can do so at a committee meeting. Once a new manager has been selected, they can then take over the change process on the OC’s behalf.
For instance, Owners First would contact the “old” manager to arrange the transfer of records and funds. Under the OC Act, the old manager has 28 days to provide the records to the new manager.
The old manager is ‘technically’ still responsible for the managing of the OC until the records have been transferred (as the new manager is unable to manage an OC with no information or funds). That being said, Owners First will definitely assist in any way during it can during the transfer period.
The easiest way to work out the best way to change your manager, is to contact Owners First for an obligation free chat.