How to Read a Strata Contract with Confidence
Navigating a strata contract shouldn’t feel like decoding a puzzle. Yet, many property owners find themselves facing vague terms, hidden commissions, and restrictive exit clauses. At Bettr Strata, we believe that transparency is the foundation of trust—and it starts with understanding your contract.
Three Essentials to Check Before Signing
1. Commission clarity
Commissions should never be a mystery. If they’re not mentioned, ask how they’re handled. Some providers receive insurance commissions that go directly to their bottom line. At Bettr Strata, we don’t – because transparency is part of our DNA.
2. Service breakdown
Know what you’re paying for. A contract should clearly outline the services provided—not just a generic “general admin.” Vague terms can lead to unexpected fees. Always ask for a full breakdown to ensure you’re getting value for your money.
3. Exit terms
Fair exit terms protect you. Every contract should include a clear and reasonable way to exit. If leaving feels like a battle, it’s worth reconsidering the agreement. I know of many strata companies will allow you to exit, sure, but you will be paying out your remaining contract term. All perfectly legal, but I don’t like to do business that way, and I am confident that we will deliver on our service promise which makes such discussions a trivial concern.
Common Pitfalls to Avoid in Strata Contracts
Even experienced property owners can overlook key details in strata agreements. Here are some common pitfalls to watch out for:
- Hidden fees
Look out for vague terms like “miscellaneous charges” or “additional services.” These can mask extra costs that aren’t clearly defined upfront. - Lack of performance metrics
Without clear service standards or performance benchmarks, it’s difficult to hold your strata manager accountable. Ask for measurable outcomes and reporting expectations. - Limited communication channels
If the contract doesn’t specify how and when you’ll receive updates, you may find yourself in the dark. Ensure there’s a commitment to regular, transparent communication.
Common Mistakes to Avoid
- Not reading the fine print
It’s easy to skim through a contract, but the fine print often contains critical details. Take the time to read every clause carefully. - Assuming all Strata Managers operate the same way
Each provider has their own approach. Don’t assume standard practices—ask questions and compare. - Failing to ask for clarification
If something isn’t clear, don’t hesitate to ask. A good strata manager will welcome your questions and provide straightforward answers. - Signing under pressure
Never rush into signing a contract. Take the time to review, consult if needed, and make sure it aligns with your expectations.
Legal Considerations When Reviewing Strata Contracts
Understanding the legal implications of your strata contract is essential to protect your rights and responsibilities as an owner. Here are several key legal aspects to keep in mind:
- Compliance with NSW Strata Legislation
Ensure the contract complies with the Strata Schemes Management Act 2015 (NSW) and associated regulations. This includes requirements for financial transparency, meeting procedures, record keeping, and the duties of the strata managing agent. Contracts should also reflect any updates to legislation and be reviewed periodically to remain compliant. - Authority and delegation
The contract must clearly define the scope of authority delegated to the strata manager. This includes specifying which decisions they can make independently (such as arranging minor repairs) and which require approval from the owners corporation (such as entering into long-term service agreements or initiating legal proceedings). Ambiguity in delegation can lead to unauthorised actions and disputes. - Conflict of interest disclosure
Strata managers are legally required to disclose any conflicts of interest, including financial relationships with contractors, insurers, or brokers. The contract should include a clause mandating full disclosure of such interests and outline the process for managing them. Transparency in this area helps maintain trust and ensures decisions are made in the best interest of the owners. - Termination clauses
Review the termination provisions carefully. A fair contract should allow either party to terminate with reasonable notice (typically one to three months) and without excessive penalties. Look for clauses that outline the process for termination, including notice requirements, final reporting obligations, and the handover of records. Avoid contracts with automatic renewal clauses that limit your ability to change providers. - Dispute resolution mechanisms
The contract should include a clear process for resolving disputes. This may involve internal resolution procedures, mediation, or escalation to the NSW Civil and Administrative Tribunal (NCAT). A well-defined dispute resolution clause can help prevent minor disagreements from escalating into costly legal battles.
If in doubt, seek legal advice before signing. A solicitor experienced in strata law can help you interpret complex clauses, identify risks, and ensure your interests are protected.
Examples That Highlight the Importance of Transparency
To illustrate why these contract elements matter, here are a few examples drawn from common industry experiences:
- Hidden commission surprise
A Sydney-based owners corporation discovered their strata manager had been receiving insurance commissions for years – without disclosure. These commissions were built into the premiums, costing the owners thousands annually. This practice was highlighted in an ABC Four Corners investigation, which revealed widespread use of opaque insurance fees and undisclosed kickbacks in the strata industry. When the owners switched to a transparent provider, their insurance costs dropped significantly. This underscores the importance of asking direct questions about commissions and demanding full disclosure. - Vague service terms leading to extra charges
One building signed a contract that listed “general administration” as the primary service. Months later, they were billed separately for meeting minutes, contractor coordination, and document storage—services they assumed were included. A clearer contract would have prevented these unexpected costs. - Restrictive exit clauses causing friction
A small block in Newcastle tried to exit their agreement due to poor service, only to find the contract required six months’ notice and a hefty termination fee. The owners felt trapped and had to negotiate their way out. Fair exit terms would have made the transition smoother. - Legal oversight resulting in Tribunal action
A strata committee failed to notice that their manager’s contract didn’t comply with the Strata Schemes Management Act 2015. When a dispute arose over financial reporting, they had no legal recourse and had to escalate the matter to NCAT – costing time and money.
The Bettr Strata Difference
At Bettr Strata, we don’t just manage buildings – we build trust.
Here’s what sets us apart:
- No commissions, ever
We don’t take insurance commissions or broker fees. Our income comes solely from transparent service fees. We won’t be the cheapest quote you receive, but our management fee is reflective of our expertise and premium service. - Upfront pricing
You’ll know exactly what you’re paying for, with no hidden charges or vague inclusions. - Clear service agreements
Our contracts are written in plain English, with detailed breakdowns of what’s included—and what’s not. - Fair exit terms
We believe in earning your business, not locking you in. Our agreements include reasonable notice periods and no exit penalties. If you’re unhappy, I am unhappy, and if I cannot find a solution for you, we will assist in moving you to a strata managing agent that better suits your needs. - People-first approach
We’re here to serve owners, not just manage assets. That means responsive communication, proactive support, and a genuine commitment to your community.
Ready to experience the Bettr Strata difference?
📞 Contact our team today to review your current contract or discuss your strata needs.
📧 Email us at hello@bettrstrata.com.au or visit http://www.bettrstrata.com.au to learn more.
Let’s make strata simpler, fairer, and bettr—together.
Regards,
JM
A disclaimer as my lawyer said I should add it here: This article is intended to provide general information only and does not constitute legal advice. You should seek independent legal advice tailored to your specific circumstances before acting on any of the information provided.