Real estate agents who sell strata developments off-the-plan are often asked to manage the strata schemes after the buildings have been developed. A member of the Real Estate Institute of New South Wales (REINSW) recently asked a solicitor if such arrangements were legal. According to the solicitor, strata agents cannot be involved in such circumstances.

Section 49 of the Strata Schemes Management Act 2015 (NSW) says that an owners corporation for a strata scheme may appoint a strata managing agent to oversee the scheme.

However, the developer of the scheme, or the person connected with the developer, cannot be appointed as the strata managing agent of the scheme until the expiry of 10 years from the date the strata plan was registered.

Definition of a “connected person”

Section 7 of the Strata Schemes Management Act 2015 (NSW) states that a person (i.e. the “principal person”) is connected with another person if:

  • they are relatives (within the definition of the Local Government Act 1993 (NSW)), or if the principal person is a corporation or is a relative of the holder of an executive position in the corporation
  • they are a business partner of the principal person, or are employed/engaged by the principal person
  • the principal person is a corporation or they hold an executive position in the corporation
  • they are the principal person’s employer
  • they are employed or engaged by, or hold an executive position in a corporation that also employs or engages the principal person; the same restrictions apply if the principal person holds an executive position
  • they have any other connection or association with the principal person of the kind outlined in the regulations
Can selling agents manage strata schemes?

“If, post-development, a real estate agent was still employed or engaged by the developer and their term of arrangement or appointment had not ended, then the agent would be connected with the developer and [is] not permitted to be the strata managing agent,” said Nicole Unger, REINSW’s legal counsel.

“Section 7 requires the relationship to currently be in existence in order to be a connected person. For example, it does not matter if the agent has previously been employed or engaged as the selling agent if that arrangement or appointment has terminated.

“The agent could then go ahead and be the strata managing agent under a completely new and current arrangement."

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