What a managing-agent contract must include

You've received a draft contract from a managing agent—or you're about to—and you're not sure what should actually be in it. This matters more than it might seem. A vague or one-sided contract is how schemes end up paying for services they didn't agree to, losing money to poor record-keeping, or discovering too late that disputes have no clear way to be resolved. Before you sign, knowing what a proper managing-agent contract must cover will protect your scheme and set realistic expectations on both sides.

The scope and services clause

This section should spell out exactly what the agent will do. Don't assume "full management" means the same thing to everyone. A good contract lists specific duties: collecting levies and rental income, maintaining bank accounts, preparing financial statements, arranging maintenance contractors, handling insurance, organising meetings, managing disputes between unit owners, and attending trustee meetings. It should also clarify what the agent will *not* do—for example, will they manage the reserve fund separately, or is that the scheme's treasurer's job? Will they handle legal disputes, or only refer them? If the scheme has a swimming pool or communal gardens, are those explicitly included? The more precise this section is, the fewer misunderstandings later.

Financial accountability and reporting

The contract must require the agent to provide regular financial statements—typically monthly or quarterly—showing all income collected, expenses paid, outstanding levies, and the reserve fund balance. Specify the format and due date. The contract should also state that the agent will reconcile bank statements monthly and that trustees will have access to all bank accounts and records. Many schemes suffer because they don't know what money is outstanding or where it has gone; a clear reporting clause prevents this. The contract should confirm that the agent will charge interest on arrear levies only if that is permitted by the scheme's rules, and it should specify what the agent's own fee is, how it is calculated, and when it is due. If the agent is permitted to keep a float for minor expenses, the contract should name an exact amount and require it to be reconciled quarterly.

Conditions and termination

State the contract term—usually one, two, or three years—and whether it renews automatically or requires a fresh decision by the trustees. Include a clause allowing either party to terminate if there is a material breach; define what counts as a material breach (for example, missing deadlines repeatedly, failing to provide financial statements, or misappropriating funds). The contract should specify how much notice is required—commonly 30 or 60 days—and what happens to records, funds, and ongoing matters when the agent leaves. Who pays for an audit transition? Will the agent hand over all records, bank statements, and correspondence within a set timeframe? This is crucial for continuity if you ever need to change agents.

Insurance, compliance and dispute resolution

The managing agent should hold professional indemnity insurance; the contract should name the minimum cover amount and require the agent to provide a certificate of currency. The contract must also state that the agent will comply with the scheme's governing documents, the Sectional Titles Act (if the scheme is sectional title), relevant by-laws, and applicable tax and employment law. It should confirm that the agent will advise trustees on compliance matters but that final decisions rest with the scheme. Finally, include a dispute resolution clause: if a disagreement arises, will it go to mediation before court or arbitration? Naming this upfront saves time and money if things go wrong. The contract should also state whether the agent's fees will continue during a dispute or if they are held until resolution.

Before you sign, ask the agent to walk you through any clause you don't understand. Check that the contract is on the agent's letterhead, dated, and signed by an authorised person on both sides. A clear, specific contract is not a sign of distrust; it is the foundation of a working relationship. Once you've agreed on the details, both you and the agent know where you stand. When you're ready to find an agent whose contract is transparent and whose terms suit your scheme, you can search verified managing agents on Strove and compare their offerings side by side.