When a developer appoints the first owners corporation manager, it can create a difficult dynamic from the very beginning. On paper, the manager is there to serve the owners corporation. In practice, some owners are left wondering whether their interests are really coming first.
That concern came into sharper focus after ABC Four Corners aired “The Strata Trap” on 9 September 2024, raising allegations about Tideways and broader questions about how developer-appointed management arrangements can affect apartment owners. The story struck a nerve because it highlighted a risk that many Committees in new developments already worry about: what happens when the party responsible for the building also has influence over the party meant to help manage it?
This does not mean every developer-appointed owners corporation manager is acting improperly. But it does show why owners corporations need to look closely at how their buildings are managed, especially when defects, spending, and accountability become major issues.
Key takeaways:
- When developers appoint the first OC manager, owners may face a built-in conflict of interest.
- The Tideways allegations raised concerns about defect handling, transparency, and whether decisions were being made in owners’ best interests.
- Legal duties exist, but owners still need to ask questions, review contracts, and stay involved.
If a Committee feels the current arrangement is not working, it may be time to review the market and consider changing managers.
Why the Tideways story matters
The Tideways coverage was not just about one company. It put a spotlight on a wider issue in the strata sector.
In many new developments, the developer controls key decisions early on. That can include setting up the owners corporation, arranging budgets, and appointing the first owners corporation manager. While that may seem convenient at the outset, it can also create a loyalty problem. If issues later arise between the owners corporation and the developer, owners need confidence that their manager is willing to act for them without hesitation.
That confidence can quickly erode if owners believe the manager is too close to the developer, too slow to act on defects, or too comfortable with decisions that do not appear to benefit the owners corporation.
What were the allegations?
The allegations raised against Tideways included claims about:
- favouring the developer in negotiations
- reluctance to address building defects
- using owners’ funds for expenses connected to developer-related interests.
These are serious concerns because they go to the heart of what lot owners expect from an OC manager: independence, transparency, accountability, and a willingness to act in the owners corporation’s best interests.
It is important to frame these as allegations raised in public reporting, not as findings restated as fact. But even at that level, they reflect the exact kind of concern that many owners in new buildings have had for years.
A closer look at developer-appointed management
We wrote this article back in 2022, asking the question – Should Committees Consider Giving the Developer-appointed OC Management Company the Boot?
We highlighted that for new developments, owners corporations, and Committees should be reviewing even more closely their service contracts and operating expenses. For many years, one of the key areas of our work has been helping OC Committees to review their strata management and, if need be – to move away and appoint a manager of their choosing.
We also created a similar graphic showing the relationships between the Owners Corporations (the collective of owners who own the apartments), the property developer, and the appointed owners corporation manager (typically appointed by the developer):
We’re not saying all new developments and developer appointed owners corporation management companies are dodgy or bad. But the potential is certainly there when it’s one entity with sole authority to dictate terms in appointing another entity.
What we’re saying is that Committees and owners should be taking the time to review, look for anomalies, and ask questions.
Why owners should review the arrangement early
The early years of a building are often when the biggest problems emerge. Defects may come to light. Budget assumptions may prove unrealistic. Contract terms may not look as fair as they first seemed. Owners may also begin to notice that the manager is not responding to concerns with the urgency they expected.
That is why Committees should review the arrangement early rather than waiting until frustrations build.
A proper review can include:
- checking the term and termination rights in the management contract
- reviewing fees, disbursements, and extra charges
- asking whether any relationships or conflicts have been disclosed
- looking at how defect issues have been handled
- comparing service levels against other managers in the market
- assessing whether the Committee is receiving clear, timely advice.
These are not minor housekeeping steps. They are part of making sure the owners corporation is being properly represented.
Victorian legal context
In Victoria, the Owners Corporations Act 2006 provides the framework for how owners corporations and OC managers operate. The draft also points to duties requiring managers to act honestly, in good faith, and with due care and diligence. It further notes the importance of acting promptly where building defects may be involved.
That legal framework matters, but legal duties alone do not guarantee good outcomes. Owners still need transparency in practice. If a manager delays action, avoids hard conversations, or fails to properly communicate, the existence of legal obligations may offer little comfort unless the Committee is prepared to step in and act.
For that reason, Committees should treat the law as a baseline, not a substitute for oversight.
If your building feels stuck, do not ignore it
A lot of Committees sit with the same uneasy feeling for too long. They know something is off, but they are not sure whether the problem is poor communication, weak performance, conflict of interest, or simply a manager who is not the right fit for the building.
That uncertainty is exactly why an independent review can help.
Is your building tied to a manager who no longer works for the owners?
At Strata Consultants, we help owners corporations and Committees assess whether their current OC manager is really acting in the building’s best interests.
If your building is dealing with:
- poor communication
- weak defect follow-up
- unclear spending
- lack of transparency
- frustration with a developer-appointed arrangement
We can help you review the situation, understand your options, and move toward a manager chosen by the owners corporation, not one inherited without question.
If your Committee has concerns, speak with Strata Consultants about reviewing your current arrangement.
What owners corporations should do next
If your building has a developer-appointed manager, the answer is not to assume the arrangement is bad. It is to test whether it is still right for the building.
Owners corporations should:
- ask direct questions about performance and responsiveness
- request clarity around defects, costs, and decision-making
- review the contract in detail
- keep proper records of concerns
- seek independent advice where needed
- consider a competitive tender process when appropriate.
A good manager should welcome transparency and scrutiny. If the current arrangement cannot stand up to basic review, that tells you something important.
The bigger lesson from Tideways
The Tideways story resonated because it reflected a broader reality in strata: owners can feel powerless when the structure around them is not designed with their interests first.
When developers appoint the initial manager, owners should not just accept the arrangement and hope for the best. They should understand how it works, ask whether it still serves the building, and be prepared to act if it does not.
Because once defects, financial issues, or accountability problems are left to drift, the consequences can become much harder and more expensive to fix.
Conclusion
The Tideways allegations put a spotlight on a problem that many owners corporations have quietly worried about for years: whether a developer-appointed OC manager can truly act independently when the interests of owners and developers start to diverge.
Not every arrangement will be problematic. But every owners corporation should take the time to review whether its current manager is delivering the transparency, independence, and responsiveness the building needs.
We help Committees identify when an arrangement is no longer serving the owners corporation properly. If your building is dealing with poor communication, weak defect action, or concerns about conflict of interest, we can help you assess your options and move toward a manager that is accountable to the owners, not influenced by legacy arrangements.
Schedule a free consultation today by calling +613 9007 2618.
