Question:
What does the law state with regards to appointing new managing agents and terminating the contract with the existing agent?

Our contract ended with them in November 2009; where the confusion comes in is that I?m getting conflicting advice on this. I have been advised by another management company that once the contract expires it automatically goes onto a month-to-month basis? Is that correct? Others say that if the contract is not re-signed it automatically re-news itself for another year.

Answer:
Prescribed management rule ("PMR") 46 deals with the appointment, powers and duties of a managing agent. PMR 46 was amended on 28 November 2008 so its application to a contract of managing agency depends on whether the contract was entered into before 28 November 2008 or afterwards.

If the contract was entered into before 28 November 2008 then the situation is as follows:

A managing agent was appointed for an initial period of one year and once that one year period came to an end the contract could be terminated on one month?s written notice by either party. So this is most likely where your advice that the contract goes on a month-to-month basis after the expiration of the initial one year period comes from.

However, if the contract was entered into on or after 28 November 2008 the situation is as follows:

A managing agent is appointed for an initial period of one year and once that one year period comes to an end the managing agent?s appointment will automatically be renewed for another year unless the body corporate notifies the managing agent to the contrary. The amended PMR 46 also goes on to say that notice of termination of the managing agency contract may be given by the trustees if they take such a resolution at a trustee meeting or if the owners by ordinary resolution at a general meeting so decide. The amended PMR 46 also does not provide for a minimum notice of termination period to be given as the pre-amendment PMR 46 did (one month) so there is no longer a prescribed minimum notice period.

Article continues on page two...