What Should a Building Manager Disclose to a Strata Committee?

A building manager may be closely involved in a strata scheme’s daily operations. They might identify a safety issue, recommend a contractor or help coordinate work on common property.

Because those recommendations can influence how owners corporation money is spent, strata committees need to know when a building manager has a connection to a supplier or may benefit from a proposed contract. NSW strata reforms have strengthened these disclosure requirements.

Supplier connections and benefits

If a building manager recommends a contract for goods or services and will receive a benefit connected with that contract, they must give the owners corporation written notice. The notice must identify who will provide the benefit and its value or explain how that value is calculated.

A benefit could be a referral fee or commission. The important question for the committee is whether it has the information needed to assess a recommendation with its eyes open.

If the proposed supplier is connected to the building manager, the manager must also disclose the nature of that relationship. For example, a committee considering a cleaning proposal should know if the recommended company is connected to the person making the recommendation.

Other relationships and financial interests

A building manager must promptly disclose in writing if they are connected with a supplier to the scheme, connected with the original owner, or have a direct or indirect financial interest in the scheme. The disclosure should explain the relevant relationship or interest.

There are also disclosure requirements for a candidate seeking appointment as building manager. If the candidate may receive a benefit that affects the fees they propose to charge, the owners corporation should be told while it is considering the agreement.

Disclosure is only part of the role

The newer rules also require appointed building managers to act in the owners corporation’s best interests, subject to the law, and to act promptly and diligently when they know of a common property maintenance, repair or safety issue. They must bring the issue to the owners corporation’s attention and propose how it should be addressed.

That means a committee should expect more than a name on a contractor quote. It should expect clear information about relevant connections, alongside timely reporting of issues affecting the building.

Questions committees can ask

When reviewing a building manager’s recommendation, ask:

• Is there any connection between the building manager and the supplier?

• Will the building manager receive a fee, commission or other benefit?

• Has the relevant disclosure been provided in writing?

• What problem will the proposed work address, and how was the supplier assessed?

  
  

A disclosed relationship does not, by itself, tell the committee whether a proposal is suitable. It gives owners the information they need to consider the proposal properly and record an informed decision.

At Centric Strata, we believe clear disclosures and well-documented decisions help committees manage their buildings with confidence.