Not necessarily. There is no standard Australia-wide exit fee. Whether anything is payable depends on the signed management agreement, how the appointment ends, the notice given and the law in your state — and an excessive charge for ending the agreement may be an unfair contract term.
Not necessarily. There is no standard Australia-wide exit fee that every owners corporation must pay when changing strata managers.
Whether a fee is payable depends mainly on the signed management agreement, the reason the appointment is ending, whether the fixed term has expired, the notice given and the law applying in your state or territory.
In NSW, the government specifically advises owners corporations to check proposed management agreements for potentially unfair terms, including terms requiring an excessive amount in charges for ending the agreement. NSW agency agreement rules also provide that an agent is not entitled to remuneration for the period after the agency agreement has been terminated.
You may have to pay some final costs, but an "exit fee" is not automatically payable. You may still owe normal management fees up to the effective termination date, approved disbursements, third-party costs, or a contractual handover or early-termination charge. A fee that is not authorised by the agreement, relates to a period after termination, or is excessive or potentially unfair may be challengeable. Check the contract before the termination motion is passed.
[[table:0]]
No. NSW strata legislation does not set a standard dollar exit fee for changing a strata managing agent.
The starting point is the management agreement. NSW Government guidance says the agreement will state when and how it can be ended, and owners should examine early termination conditions carefully.
The NSW Government also specifically warns owners corporations to check for potential unfair contract terms, including terms requiring the owners corporation to pay an excessive amount in charges for ending an agreement.
[[callout:0]]
A manager should not simply continue charging normal management remuneration as though the agency agreement were still operating after it has validly ended.
The current NSW Property and Stock Agents Regulation 2022 includes a required agency-agreement term that the agent is not entitled to remuneration in the form of commission or otherwise for the period after termination of the agency agreement.
That does not necessarily prevent a separately valid claim for an agreed exit cost, accrued debt or damages arising from an alleged wrongful early termination. Those are legally different from continuing management fees for future months.
Three costs that are often confused:
If the fixed term ends and the owners corporation gives any required non-renewal notice, there is usually a stronger basis for saying no early-break fee should apply because the scheme is not breaking the agreed term.
However, the agreement may still contain lawful handover, records, archive, software-export or final-account charges. Those should be checked before the meeting.
In NSW, specific extension rules can apply around expiry. Missing the required non-renewal timing can cause an unwanted extension, which may change the effective termination date and the fees payable up to that date.
Ending a fixed-term agreement for convenience is where a break fee or compensation issue is most likely to arise.
The contract may set a fixed amount, a formula, a notice-based amount or a requirement to pay certain costs. The owners corporation should calculate the worst-case exit cost before voting.
A clause demanding all remaining fees for the entire unexpired term may need careful legal review, particularly if it operates as a penalty or may be an unfair contract term. Do not assume that a clause is enforceable merely because it appears in a standard-form agreement.
If the manager has materially breached the agreement and the owners corporation follows a valid contractual or statutory termination pathway, the scheme may have stronger grounds to resist a break fee.
However, the manager may dispute whether the alleged cause existed, whether the breach was serious enough, or whether the required breach notice and remedy period were followed.
Where the cause is contested, do not deduct or refuse a substantial claimed exit fee without advice. The dispute can involve both the right to terminate and the amount payable.
NCAT has broad powers under section 72 of the Strata Schemes Management Act 2015 in relation to strata managing agent and building manager agreements.
The Tribunal can terminate the agreement, vary its term or conditions, declare conditions void, require or prevent action under the agreement, and order compensation to a party.
This means that where an early termination condition is disputed or appears unreasonable, the Tribunal process may be relevant. The outcome depends on the facts and the statutory grounds established in the application.
[[callout:1]]
Potentially. The Australian Consumer Law protects consumers and qualifying small businesses from unfair terms in standard-form contracts.
The ACCC explains that a term may be unfair where it causes a significant imbalance in the parties' rights, is not reasonably necessary to protect the supplier's legitimate interests, and would cause detriment if relied on.
NSW Government guidance specifically flags an excessive amount in charges for ending a strata management agreement as a term to watch. Whether a particular clause is unfair depends on the contract, the circumstances and legal analysis.
The scheme should check whether the management agreement expressly authorises the fee and whether the amount or hourly rate was disclosed. Ask for an itemised explanation of what work the fee covers.
Compare written fee proposals from strata managers covering your building — free for owners corporations, no obligation.