Can owners terminate a managing agent contract before the end of the agreed period?
ELA
EstateIQ Legislative Assistant
Yes. Even if trustees have signed a three-year contract with a managing agent, the body corporate (through the owners) can still terminate that contract early.
Here is how the legislation regulates this:
Appointment and Termination
Management Rule 28, Annexure 1 makes it clear that a managing agent is appointed by the trustees subject to the control and direction of the body corporate. The body corporate (the owners in general meeting) retains the authority to terminate the appointment.
Special Resolution Requirement
The rules provide that owners may, by special resolution, direct the trustees to terminate a managing agent's contract, even before the end of the agreed period. This ensures that trustees cannot "lock in" the body corporate for years without the owners having an escape route.
Management Rule 28(7)(a) states that a management agreement may be cancelled on two months notice, if the cancellation is first approved by a special resolution passed at a general meeting.
Dispute Resolution
If there is disagreement about whether the contract can be terminated, the Community Schemes Ombud Service Act (CSOSA) empowers the Ombud to make an order declaring that the body corporate does or does not have the right to terminate a managing agent's appointment (CSOSA, section 39(5)(b)).
In Short
Yes, owners can terminate a managing agent's three-year contract early. It requires a special resolution of the body corporate, and if the managing agent disputes this, the Ombud can issue a binding order confirming the termination.
ELL
EstateIQ Legal Lookup
📘 Legislative References
Management Rule 28(6) (Annexure 1)
A management agreement for any managing agent must comply with the requirements as may be set out in the regulations.
Management Rule 28(7) (Annexure 1)
A management agreement may not endure for a period longer than three years and may be cancelled, without liability or penalty, despite any provision of the management agreement or other agreement to the contrary—
(a) by the body corporate on two months notice, if the cancellation is first approved by a special resolution passed at a general meeting; or
(b) by the managing agent on two months notice.
CSOSA Section 39(5)
In respect of management services—
39(5)(b): an order declaring that the association does or does not have the right to terminate the appointment of a managing agent, and that the appointment is or is not terminated.