Before You Sign: How to Read a Strata Management Agreement

The contract is where the relationship is decided

Most disputes between an owners corporation, body corporate or strata corporation and its manager are not really about behaviour. They are about a clause. The behaviour comes later; the clause was there from the start, in a document signed at a meeting where nobody read past the fee schedule. The management agreement decides how long you are committed, what it costs to leave, who pays when things go wrong and what the manager is permitted to do in your name. It deserves more attention than it usually gets.

One principle sits above every clause, in every state and territory. Whether your community is an owners corporation, a body corporate, a strata company or a strata corporation, and whether the person you engage is called a strata managing agent, an owners corporation manager or a body corporate manager, the manager acts under an appointment or delegation from the corporation, and the corporation keeps ultimate responsibility for its own governance. The corporation governs. The manager manages. No contract can reverse that, but a poorly drafted one can blur it in practice, and blurred lines are where trouble starts.

Eight jurisdictions, one direction of travel

Strata law is state law, so the rules around management agreements differ depending on where your scheme sits: the Strata Schemes Management Act 2015 in New South Wales, the Owners Corporations Act 2006 in Victoria, the Body Corporate and Community Management Act 1997 and its regulation modules in Queensland, the Strata Titles Act 1985 in Western Australia, and the Strata Titles Act 1988 and Community Titles Act 1996 in South Australia, with Tasmania, the ACT and the Northern Territory each running their own frameworks. New South Wales, Victoria, Queensland, Western Australia and South Australia are covered below in the most detail, because those are the states that have legislated most specifically on management agreements. Readers in Tasmania, the ACT and the Northern Territory should treat the principles as sound everywhere and check their own Act for the equivalent provision.

The details vary, but the direction does not. Every recent round of reform, in every state that has had one, has moved the same way: written agreements with prescribed contents, caps or statutory exits on the term, disclosure of commissions and conflicts, and clearer paths out of a relationship that is not working. South Australia rebuilt its manager provisions in 2013, New South Wales in 2015 and again in 2025, Western Australia in 2020, Victoria in 2021, and an ACT parliamentary inquiry recommended licensing and standardised contracts in 2025 (see Canberra Puts Strata Managers on Notice). Parliaments keep reaching the same conclusions because owners keep encountering the same clauses. The sections below walk through those clauses one at a time.

The term, and the quiet ways it extends itself

Read the term clause twice: once for the number, and once for what happens when the number runs out. A stated term means little if the contract rolls over automatically, or renews at the manager's option, unless someone remembers to object within a narrow window. Those clauses convert a short commitment into a long one by default, and defaults favour whoever drafted them.

Several states now legislate directly against this. In New South Wales, a managing agent appointed at the first annual general meeting holds office for a maximum of twelve months, and any other appointment expires after three years, with tightly controlled short extensions after that. In Victoria, section 119(1D) of the Owners Corporations Act 2006 prevents a manager being appointed for a period exceeding three years, and clauses allowing automatic renewal at the manager's discretion are void. Retirement village owners corporations are the one carve-out, and may appoint for up to five years under section 143E. In Queensland the term is set by whichever regulation module applies to your scheme rather than by the Act itself, so establish which module governs you before relying on any number. Under the Standard Module, the term of a body corporate manager's engagement, after allowing for any rights or options of extension or renewal, must not be longer than three years, and a longer term is read down to three. In South Australia there is no cap, but where a contract runs longer than twelve months and the corporation has been with the manager for at least twelve continuous months, the corporation may terminate on at least 28 days written notice, or a shorter period if the contract specifies one, and a renewal that occurs at the manager's option counts as part of the term when working out whether that right applies.

Wherever you are, ask the plain questions. How long are we committed? What happens at expiry? Who has to act to end it, and who benefits if nobody acts?

Termination and the cost of leaving

A fair agreement lets the relationship end without punishing the community for ending it. Look for early termination fees, obligations to pay out the balance of the term, and charges for handing back your own records. The records point matters more than it appears: the minute books, financial statements, insurance policies and correspondence a manager holds are the corporation's property. Western Australia's Act deals expressly with the return of records and other property when a management contract ends, and South Australia requires a delegate to return the corporation's records once all delegations are revoked. In Queensland, termination of a manager's engagement is a decision for the owners by ordinary resolution. A clause that puts a price on the handover of your own documents, or a timetable measured in months, is a clause designed to make leaving feel harder than staying.

Western Australia goes a step further and requires the contract itself to set out the circumstances in which the strata company has proper grounds to terminate, and gives the strata company a statutory right to terminate where the manager breaches their statutory duties. That is a useful benchmark even outside WA: if your proposed agreement is silent on when you can leave, ask why.

Indemnities and legal costs

Somewhere near the back of most agreements sits an indemnity clause, and it repays careful reading. In its reasonable form, an indemnity protects a manager who acts properly on the corporation's instructions from wearing the cost of the corporation's own decisions. In its unreasonable form, it requires the corporation to cover the manager's legal costs in a wide range of disputes, sometimes including proceedings that concern the manager's own conduct. That arrangement can leave owners funding both sides of a complaint against their own manager.

Legislatures have started reaching into this territory. Victoria's 2021 reforms rendered a set of previously common contract terms void, including clauses that made removing a manager needlessly hard, and Western Australia prohibits contracting out of the statutory protections altogether. But no state has legislated for every unfair clause, so the reading still falls to you. Ask what the indemnity would mean in the worst month of the relationship rather than the best. Does it carve out the manager's negligence, dishonesty and breach of the agreement? Who decides whether the manager acted within authority? If the answers are unclear, ask for them in writing before signing, and treat reluctance to answer as an answer.

Disparagement and confidentiality clauses

Some agreements include clauses restraining owners or the corporation from making disparaging statements about the manager. Whatever the intent, a broadly worded clause of this kind can discourage owners from speaking plainly about the manager's performance, including at their own general meetings, where candid discussion is not a courtesy but the mechanism by which a corporation governs. Owners comparing notes with other schemes managed by the same firm is ordinary due diligence, and a contract that chills it should prompt the question of why it is there.

Commissions, conflicts and your right to see the money

Across Australia, a strata manager handling a corporation's money and affairs owes fiduciary obligations to that corporation, and most states have now written specific duties into their Acts on top. South Australia states expressly that the manager stands in a fiduciary relationship and must act honestly and in good faith, exercise due care and diligence, and not use the position for personal advantage. Western Australia imposes general duties and conflict of interest rules and requires disclosure of remuneration and other benefits. Queensland requires a body corporate manager who receives a commission, payment or other benefit to disclose it to the body corporate. New South Wales has run hardest at this problem: its Act has required agent disclosure since 2015, and reforms commencing in 2025 tightened the regime around commissions, particularly on insurance (for the background, see What NSW's Strata Shake-Up Means for South Australian Owners).

The near-universal example is insurance commission: the manager arranges the corporation's insurance and receives a percentage from the broker or insurer. Disclosure obligations exist because the arrangement is so common. So before signing, ask for a clear statement of every commission and benefit the manager receives, and from whom. A manager confident in their own arrangements will answer clearly, and evasion is a signal. In South Australia, any owner may also apply to receive quarterly statements of the delegate's dealings with the corporation's money, a right that exists whether or not the contract mentions it.

Insurance the manager must hold

Ask every prospective manager for a certificate of currency for their professional indemnity insurance, wherever your scheme is. In several jurisdictions the cover is a legal requirement: in South Australia, maintaining compliant professional indemnity insurance is a condition of the manager being entitled to remuneration at all, and any member of the corporation may inspect and copy the manager's policy within three business days of asking. In New South Wales, managing agents must be licensed under the Property and Stock Agents Act 2002, and in Victoria managers must be registered. Diarise the renewal date of whatever certificate you are given. Cover that lapses mid-term protects nobody.

Assignment: who are you actually contracting with?

Strata management businesses are bought and sold, and when they are, the management agreements are usually the asset being purchased. Check whether your agreement allows the manager to assign or transfer it. Queensland's regulation modules deal expressly with the transfer of engagements; in most other states the contract decides. If assignment is permitted without your consent, the firm you chose after careful comparison can become a different firm without your community ever voting on the change. An agreement without an assignment clause, or one that requires the corporation's consent, keeps that decision where it belongs.

Before the meeting

Take your time, and take it formally. South Australia requires the proposed contract to be available for inspection at least five clear days before the meeting that decides on it; wherever you are, insist on at least that. Circulate the document to every owner, not just the committee. Ask the manager which other schemes they manage and speak with some of them; the response to that request is itself information. Put every question in writing so the answers arrive in writing too. And if the committee is recommending the appointment, ask it to walk the owners through the term, the exit provisions, the indemnity and the commission disclosures at the meeting, clause by clause, before the vote. A manager worth appointing will sit comfortably through that conversation.

If your group does not yet have a committee to do this work, see What Is a Management Committee, and Why Should Your Group Have One? For what the day to day relationship should look like once an agreement is in place, see What Does a Strata Manager Actually Do? South Australian readers changing managers can follow the step by step process in How to Change Your Strata Manager.

Where Acacia stands

We publish our terms so they can be compared before anyone sits in a meeting: a maximum term of two years, no exit fees, no assignment of the agreement, minutes of meetings delivered within seven days, and a one month fee credit under our Service Guarantee if we fall short, claimable in writing within 30 days. We think a management agreement should be a document the corporation is glad to have read. If you would like to talk through an agreement you have been offered, or the one you are currently in, call us on 1300 79 2255 or email hello@acaciacollective.com.au.