If you’re part of an Owners Corporation Committee in Victoria, you know how much it takes to appoint a strata manager. But what happens when that trust breaks down and when communication falters, levies go unissued, or your manager stops delivering on their promises?
The truth is, termination of a strata management agreement (formally called a Contract of Appointment or COA) is possible provided it’s done correctly and in line with the Owners Corporations Act 2006 (Vic) and your contract terms.
We’ve guided hundreds of Owners Corporations through this process of helping Committees make confident, compliant decisions when changing their strata manager. Here’s what every Committee needs to know.
Key takeaways:
- Terminating a strata management agreement is possible, but it must follow your COA and the OC Act 2006 (Vic).
- You can terminate on two main grounds: fundamental breach or commercial exit.
- A clear plan and proper notice help your Committee make a confident, compliant change of manager.
Your legal position under the Owners Corporations Act 2006 (Vic)
The OC Act 2006 (Vic) gives every Owners Corporation the power to revoke or terminate a manager’s appointment. However, it doesn’t prescribe how to do it.
That’s where your Contract of Appointment (COA) comes in. Think of it as the rulebook that governs your relationship with your strata manager. It sets out the grounds for termination, notice periods, and financial obligations.
Breaking that agreement without following its terms can expose your Committee to disputes or even claims for damages.
Who has the authority to terminate?
In most cases, your Committee can decide to terminate the strata manager.
However, some COAs require an ordinary resolution at a general meeting, especially when ending the contract after its initial term.
So while the Act gives you the right, the COA outlines the steps to do it properly.
When termination is justified: Fundamental Breach
When your strata manager fails to deliver on core duties, your Committee may have grounds for termination due to fundamental breach.
Clause 8.2.1 of the sample COA allows the Owners Corporation to terminate if the manager commits a serious breach and doesn’t fix it after written notice.
Examples of fundamental breach
Your Committee may have grounds to terminate immediately if the manager:
- fails to issue levies or maintain proper financial records
- mismanages Owners Corporation funds or acts dishonestly
- breaches statutory obligations under the Owners Corporations Act 2006 (Vic)
- ignores clear written directions from the Committee
To make the termination valid:
- send a formal written notice describing the breach
- allow a reasonable period to rectify it
- keep dated copies of all correspondence
Tip: Always consult your lawyer or a strata management consultant before serving a termination notice periods or vague breach descriptions can make the termination invalid.
Ending on good terms: Commercial Exit
Not all terminations stem from misconduct. Sometimes, Committees simply want to change managers due to better pricing, improved service, or a more experienced management firm.
This is a commercial termination (or mutual exit), which is the cleaner, non-disputational path.
Typically, under Clause 8.1 of the sample COA , an OC may terminate after the initial contract term by giving at least 28 days’ written notice, often approved by ordinary resolution.
When ending on commercial terms, your Committee must:
- pay the manager pro-rata fees for work completed
- cover reasonable handover costs and any unpaid disbursements
In return, under both Clause 8.5 of the COA and Section 151 of the Owners Corporations Act, the manager must:
- return all records and funds within 28 days of termination
- not withhold any documents or funds, even if there’s a disagreement
This ensures a smooth handover and protects your Owners Corporation from disruption.
How Committees can protect themselves during termination
When navigating the termination of a strata management agreement, Committees should approach it strategically and carefully by keeping the following:
- review your contract thoroughly
Understand every clause related to termination, notice, and breach. Don’t assume all COAs are the same, small details matter. - keep detailed records
Document all issues, communications, and notices sent to your manager. This evidence is vital if a dispute arises. - clarify decision-making authority
Confirm whether the Committee can terminate or requires a resolution at a general meeting. - seek professional guidance
Legal or strata experts can help interpret your COA, ensure compliance with the Act, and manage communications with your current manager. - prepare for the transition
Plan a smooth handover by coordinating with your incoming manager early. Ensure all records, keys, and financial statements are transferred properly within the legal timeframe.
Common scenarios owners corporations face
Making the transition smooth with Owners Corporation Victoria
The termination of a strata management agreement doesn’t have to be stressful or confrontational. With the right preparation and understanding of your legal rights, your Committee can make a confident, compliant decision that benefits every lot owner.
Whether you’re ending a contract for a fundamental breach or pursuing a commercial exit, the key is to follow the correct process, protecting your Owners Corporation’s financial and legal position.
We help Committees navigate these complex decisions and connecting you with trusted, professional strata managers across Melbourne.
Get in touch today to discuss your situation and find out how we can help your Committee make a smooth, confident transition.
