Strata Manager Disclosure Obligations in NSW: What Owners Need to Know

Strata management involves a lot of moving parts, and it is not always clear to owners what their strata manager is required to do, or required to tell them. Over the last few years, this has become a major point of concern for many owners corporations, particularly when it comes to strata insurance commissions, supplier relationships, related-party arrangements, undisclosed financial benefits and financial transparency.

Much of this is not left to interpretation. Licensed strata managers in NSW operate under specific legal and regulatory obligations, including obligations under the Property and Stock Agents Act 2002 (NSW), the Property and Stock Agents Regulation 2022 (NSW), and the Strata Schemes Management Act 2015 (NSW).

This issue has also come under renewed attention following recent NSW Fair Trading action involving strata management disclosure practices, conflicts of interest, related-party service arrangements and alleged undisclosed financial benefits. While individual matters will be determined through the proper legal process, the broader issue is one every owners corporation should understand: your strata manager should be able to clearly show what they are being paid, who they are connected to, and whether any financial benefit sits behind the recommendations they make.

In this article, we break down the key obligations NSW law places on strata managers, including disclosure, conflicts of interest, commissions and the handling of owners corporation funds. We also look at what good transparency should look like in practice, and how we recognised concerns across the industry and made the shift to a commission-free agency agreement long before the rest of the strata sector.

What the law requires of strata managers

Strata managers are not just service providers. They are licensed professionals, regulated in NSW in much the same way as real estate agents.

Under the Property and Stock Agents Act 2002 (NSW), a strata managing agent is recognised as an agent who, for reward, exercises functions of an owners corporation or association. The Act also requires a person carrying on business as a strata managing agent to hold the appropriate strata managing agent’s licence.

That licence is the mechanism through which owners corporations delegate significant authority.

In practice, strata managers routinely hold and manage building funds, engage contractors, arrange insurance, issue levy notices, coordinate repairs, maintain records and carry out decisions on the owners corporation’s behalf.

Because of that level of trust and control, the law attaches specific obligations to the role. These obligations exist to protect owners, not just to formalise the relationship on paper.

Key obligations for strata managers in NSW include:

Fiduciary Duty: A strata manager is required to act in the best interests of the owners corporation, not their own and not a related company’s. Every decision, from choosing a contractor to renewing insurance, should be made with that duty front of mind.

Disclosure of Commissions and Financial Benefits: If a strata manager, or a related entity, receives a commission, rebate, training benefit or other financial benefit from a supplier, that benefit needs to be clearly disclosed to the owners corporation.

Conflicts of Interest: Personal, commercial or financial relationships between a strata manager and the suppliers they recommend or engage need to be declared, not left unclear.

Trust Account Integrity: Owners corporation funds must be handled properly. The Property and Stock Agents Act 2002 (NSW) includes requirements around trust money and trust accounts, including that money received on behalf of a client is paid into and retained in an approved trust account until properly paid or disbursed.

Rules of Conduct: The Property and Stock Agents Act 2002 (NSW) also allows rules of conduct to be prescribed for licensed agents, including strata managing agents. A licensee who breaches those rules without reasonable excuse may be committing an offence.

These are not best-practice suggestions. They are legal and regulatory requirements. NSW Fair Trading has also placed increased focus on strata manager disclosure obligations, with expanded enforcement powers and a public Name and Shame Register for regulatory action taken against agents.

Breaching these obligations can have serious consequences, including penalties, licence suspension or cancellation, and other enforcement action, with the potential for criminal proceedings.

Strata insurance commissions and financial benefits

One of the most important areas for disclosure is strata insurance. Insurance is often one of the largest recurring expenses paid by an owners corporation, so owners should be able to clearly understand whether their strata manager receives any commission, rebate, referral fee, training benefit or other financial advantage connected to the placement or renewal of that insurance.

The question is not just whether the building is insured. Owners should also be asking whether the recommendation is independent, whether any financial benefit has been disclosed, and whether the owners corporation can clearly see who is being paid, how much, and by whom.

Conflicts of interest and related-party suppliers

Disclosure is also important when a strata manager has a connection to a supplier, contractor, broker or service provider recommended to the owners corporation.

That connection may be financial, commercial, personal or organisational. It may involve a related company, a referral arrangement, a preferred supplier relationship or another benefit that is not immediately obvious to owners.

The issue is not simply whether the supplier is capable of doing the work. The issue is whether the owners corporation has been given enough information to make an informed decision, with a clear understanding of any relationship or financial benefit sitting behind the recommendation.

Good disclosure should be clear, specific and easy to understand. It should not be buried in vague wording or left for owners to uncover themselves.

Where we stand

In September 2024, we introduced a commission-free agency agreement. We recognised the growing concerns across the sector, and we took it upon ourselves to prioritise transparency. The result was a fee-for-service model, a pricing structure ahead of where the broader industry and subsequent regulatory reform have since landed.

This model means that we do not accept commissions or rebates from suppliers on the services we arrange for owners corporations, including insurance.

Even where our academy brings in professionals from relevant service providers to run educational sessions for our strata management team, for example when major fire safety reforms came into effect earlier this year, those sessions are disclosed in full in every one of our agency agreements.

It is a level of transparency that goes beyond what most owners corporations think to ask for.

For owners corporations, the practical question is simple:

Can your strata manager show you, in writing, exactly what they are being paid and by whom?

If the answer is vague, that is worth following up.