Question: Our building insurance is due mid 2019. Is the Owners Corporation able to renew this themselves or must it go through the Strata Management Company? We would prefer not to pay our Strata Manager insurance commissions.
Answer: You need to check what your contract states with regard to strata manager insurance commissions.
If your strata manager uses the standard Strata Community Australia Strata Management Agreement, the commission’s position is outlined in clause 3.3 set out below:
3.3 In addition to the fees and charges in clause 3.1 and 3.2, the agent is entitled to remuneration for its services in the form of rebates, discounts and commissions disclosed in schedule C1 and schedule C2 as follows:
(a) If the first option in item 6 is selected, the agent may retain rebates, discounts and commissions paid to it by the providers of goods and services to the owners corporation described in the disclosure schedule C1 or schedule C2 or as otherwise notified in writing to the owners corporation from time to time and agreed in writing by the owners corporation.
(b) If the second option in item 6 is selected, the agent must pay to the owners corporation any rebates, discounts and commissions paid to it by providers of goods and services to the owners corporation within 30 days of receipt except for any rebates, discounts and commissions described in the disclosure schedule C2 which may be retained by the agent.
(c) If the third option in item 6 is selected, the agent must pay to the owners corporation any rebates, discounts and commissions paid to it by providers of goods and services to the owners corporation within 30 days of receipt.
(d) If the owners corporation:
(i) delegates the agent to arrange insurance cover;
(ii) selects the first or second option in item 6; and
(iii) later takes steps to arrange its own insurance or directs, instructs or passes a resolution that has the effect that the agent does not receive a commission or rebate for the placement of insurance, then the agreed services fee shall be increased by an amount equivalent to the commission the agent would have received had the agent arranged the insurance cover.
3.4 The agent must account to the owners corporation for money received by the agent on behalf of the owners corporation in the manner and with the frequency set out in item 8.
3.5 At any time, by written agreement between the parties, items may be added to or deleted from the additional services rates and/or charges.
So, whether or not the owners corporation or strata manager is entitled to receive insurance commissions depends on which option is selected in Item 6 on the front page of the contract.
Please note that this article is provided for information purposes only and is not a substitute for professional legal advice.