MA's Fees and Payment Terms

MA's Fees and Payment Terms | Bestar

Managing Agent (MA) Fees and Payment Terms in Singapore

The fees and payment terms for a Managing Agent (MA) in Singapore are governed by the private service agreement between the Management Corporation Strata Title (MCST) and the MA firm. This agreement is a crucial document that outlines all financial arrangements and is legally binding.

The Building Maintenance and Strata Management Act (BMSMA) stipulates that the appointment of an MA and their fees must be approved by the subsidiary proprietors (unit owners). This can be done through an ordinary resolution at a general meeting.

1. Types of Fees

An MA's compensation is typically structured in two main parts: a professional management fee and additional charges for specific services.

• Professional Management Fee: This is the core fee for the MA's primary services, typically a fixed monthly amount. It covers essential duties such as:

  
  

  • Administrative and secretarial support (e.g., preparing for meetings, issuing notices).

  • Financial management (e.g., collecting contributions, preparing reports, paying bills).

  • Basic oversight of routine maintenance and cleaning contractors.

  • Ensuring compliance with the BMSMA and other relevant regulations. The quantum of this fee is determined by factors like the size and age of the estate, the complexity of its facilities, and the scope of services requested.

    
    

• Additional Charges and Exclusions: The service agreement will clearly list services that are not covered by the professional fee and will be charged separately. These may include:

  
  

  • Project Management Fees: For major capital works, such as facade repainting or lift replacement, the MA may charge a separate fee, often a percentage of the project's total cost.

  • Disbursement Fees: Costs incurred by the MA on behalf of the MCST, such as postage, printing of documents for meetings, and statutory fees.

  • Professional Fees: Fees for external professionals like auditors, lawyers, or engineers, which are paid out of the MCST's funds, not the MA's fee.

  • On-site Staff: The salaries and statutory contributions for on-site employees like a condominium manager, security guards, or cleaners are paid by the MCST. While the MA may manage these staff, their wages are separate from the MA's professional fee.

2. Payment Terms

The payment terms are a critical part of the service agreement. They define when and how the MA will be paid.

• Invoicing: The MA typically submits an invoice to the MCST on a monthly basis for the agreed-upon professional fee and any pre-approved additional charges.

• Payment Due Date: The MCST is usually required to pay the invoice within a set period, commonly 30 days from the date of receipt.

• Late Payment Penalties: The agreement may include a clause for a late payment interest rate (e.g., a certain percentage per month) on overdue amounts.

• Goods and Services Tax (GST): All fees and charges for the MA's services are subject to the prevailing Goods and Services Tax, which must be clearly stated in the agreement and on all invoices.

3. Contract Duration and Termination

The appointment of an MA is for a fixed term, typically up to three years. The service agreement must include provisions for its termination. The MCST has the right to terminate the contract in accordance with the terms laid out in the agreement, which are typically subject to an ordinary resolution at a general meeting. The performance of the MA is reviewed at every Annual General Meeting (AGM), giving subsidiary proprietors an opportunity to discuss and provide feedback.

What Condo Fees Cover

The fees that a Managing Agent (MA) charges are part of the overall condo maintenance fees paid by unit owners. These fees are deposited into two main funds managed by the Management Corporation Strata Title (MCST):

• Management Fund: This is for the day-to-day operational expenses, including the MA's professional fees, cleaning, security, utilities for common areas, and routine maintenance.

  
  

• Sinking Fund: This is a long-term reserve for major, non-recurring expenses like a full-scale facade repaint, lift replacement, or other significant infrastructure upgrades.

  
  

How MA Fees Are Calculated and Determined

An MA's fee is typically a fixed monthly amount agreed upon in the service contract with the MCST. This fee is not a percentage of the total maintenance fund. The overall costs of managing the condo, including the MA's fee, are then divided among the unit owners based on their unit's "share value."

Share value is a number assigned to each unit that reflects its size and proportionate share of ownership in the common property. A larger unit generally has a higher share value and thus contributes a greater amount to the maintenance fund.

The MA's fee itself is influenced by several factors, including:

• Size of the Development: Larger developments with more units may have higher total MA fees, but the cost per unit is often lower due to economies of scale.

  
  

• Age and Complexity: Older buildings may require more maintenance, and developments with extensive facilities like multiple swimming pools or gyms will have a higher management workload.

  
  

• Scope of Services: The fee is directly related to what's included in the service agreement. A basic package will be cheaper than one that includes an on-site condominium manager, for instance.

Additional Charges and Exclusions

A good MA fee proposal will clearly state what is not included in the fixed monthly fee. Common exclusions that will be charged separately include:

• Project Management Fees: For major projects paid from the sinking fund, the MA may charge a separate fee, often a percentage of the project's total cost.

  
  

• Disbursement Fees: Costs for things like photocopying, postage, and other administrative expenses incurred by the MA on behalf of the MCST.

  
  

• On-site Staff Wages: The salaries and benefits for on-site staff, such as security guards and cleaners, are paid by the MCST from the maintenance fund and are separate from the MA's professional fee.

How Bestar would Structure our Fee Proposal

This framework is designed to be transparent, covering all aspects of the costs so that the Management Corporation Strata Title (MCST) can make a well-informed decision.

A Sample Bestar Fee Proposal

1. Fixed Professional Management Fee

This is the primary fee for the core, ongoing services provided by Bestar. It is a fixed amount invoiced monthly.

• Model: A fixed monthly fee, exclusive of GST.

  
  

• Pricing (for a mid-sized condominium with 200-300 units):

  
  

  • Low-Range: S$5,000 - S$8,000 per month

  • Mid-Range: S$8,000 - S$12,000 per month

  • High-Range: S$12,000 and above per month

The actual amount is highly dependent on factors such as:

• Size of Development: The number of units and total land area.

• Age of Building: Older developments may require more hands-on management.

• Number of Facilities: The presence of multiple swimming pools, tennis courts, and other amenities increases the workload.

• On-site Staff: Whether the fee includes a dedicated, full-time on-site condominium manager.

2. Services Included in the Professional Fee

The proposal will clearly itemize the duties covered by the fixed fee. This is crucial for avoiding future disputes.

• Financial & Accounting Management:

  
  

  • Collection of maintenance and sinking fund contributions.

  • Preparation of financial statements and monthly reports.

  • Management of the estate's bank accounts.

  • Facilitation of the annual audit.

    
    

• Administrative & Secretarial Support:

  
  

  • Handling all administrative matters for the MCST.

  • Preparing for and conducting Annual and Extraordinary General Meetings (AGMs/EGMs).

  • Maintaining the official strata roll and other statutory records.

  • Issuing circulars and official notices to residents.

    
    

• Maintenance & Operations Oversight:

  
  

  • Regular inspection of common areas and facilities.

  • Procurement of quotations from contractors for routine services (e.g., landscaping, cleaning, pest control, security).

  • Supervision of contractor work to ensure quality and compliance.

    
    

• Statutory Compliance:

  
  

  • Ensuring the MCST adheres to the Building Maintenance and Strata Management Act (BMSMA) and all relevant by-laws.

3. Additional Fees and Charges (Exclusions)

This section is vital for transparency. It outlines services and costs that are not covered by the fixed fee and will be charged separately.

• Project Management Fee: For major, large-scale works (e.g., facade repainting, lift upgrading). This fee is usually calculated as a percentage of the total project cost.

  
  

  • Rate: 3% to 5% of the total project value.

    
    

• Administrative Disbursements: Fees for printing, photocopying, and postage for official correspondence. These are often charged at a cost-recovery rate.

  
  

• On-Site Staff Salaries: The wages, CPF contributions, and other benefits for any on-site staff (e.g., condominium manager, security guards, cleaners). These costs are separate and are paid from the management fund.

  
  

• Professional Services: Fees for engaging third-party professionals such as auditors, lawyers, or specialist engineers.

  
  

• Specialized or Additional Services: Any services requested by the MCST outside the scope of the standard agreement, such as legal research or organizing special events.

4. Terms of Agreement

The proposal concludes with the proposed terms of the contract.

• Contract Duration: A typical contract is for a term of one to three years.

  
  

• Payment Terms: The MCST is usually given 30 days from the invoice date to make payment.

  
  

• Termination Clause: Details the conditions under which the contract can be terminated by either party, often requiring a notice period (e.g., three months).

  
  

• GST: All quoted fees are typically subject to the prevailing Goods and Services Tax (currently 9% in Singapore).

How Bestar can Help

Bestar provides a wide range of professional services that are essential for the effective and legal management of a strata-titled property, such as a condominium in Singapore.

While the Management Corporation Strata Title (MCST) and its elected council are the governing body, they are typically composed of volunteer residents who may not have the time, expertise, or resources for the demanding daily operations. Bestar acts as their professional partner, taking on the heavy lifting in four key areas:

1. Legal and Regulatory Compliance

• Expertise in BMSMA: Bestar is a specialist in the Building Maintenance and Strata Management Act (BMSMA) and other relevant laws. We ensure that all decisions made by the council and the general body of owners are legally compliant, helping the MCST avoid penalties, fines, and legal disputes.

  
  

• Guidance on Governance: Bestar provides guidance on proper governance procedures, such as correctly holding general meetings, passing resolutions, and maintaining accurate records, ensuring that the MCST's operations are transparent and above board.

  
  

• Statutory Filings: We handle the crucial task of preparing and filing annual returns and audited accounts with the Commissioner of Buildings (COB), ensuring the MCST meets all its statutory obligations.

  
  

2. Financial Management

• Fund Collection: Bestar is responsible for the timely collection of maintenance and sinking fund contributions from all unit owners.

  
  

• Budgeting and Financial Reporting: We prepare and manage the annual budget for the estate, ensuring funds are allocated efficiently. We also produce and present regular, detailed financial reports to the council and subsidiary proprietors (SPs), providing full transparency on how money is being spent.

  
  

• Arrears Management: Bestar has a system for monitoring and managing payment arrears, following up with owners to ensure the financial health of the estate is maintained.

  
  

3. Operations and Maintenance

• Day-to-Day Operations: Bestar oversees the daily operational functions of the estate, including security, cleaning, landscaping, and pest control. We are the first point of contact for residents with operational issues or maintenance requests.

  
  

• Contractor Management: Bestar possesses a network of pre-screened and trusted contractors. We manage the tender process, negotiate contracts, and supervise the work of these vendors to ensure it meets the required standards. This helps the MCST get the best value for money.

  
  

• Upkeep and Repair: Bestar conducts regular inspections of the common property to identify and address maintenance issues proactively, preventing minor problems from escalating into costly repairs.

4. Administrative and Communication

• Central Point of Contact: Bestar serves as the primary liaison between the MCST council, residents, and external parties like government agencies and contractors.

  
  

• Records Management: We are responsible for maintaining and updating all essential records, including the strata roll (a register of all unit owners), financial records, and meeting minutes.

  
  

• Dispute Resolution: While not a legal arbiter, Bestar can help mediate and resolve conflicts between residents, ensuring the estate's by-laws are enforced impartially and fairly.

  
  

By delegating these critical functions to Bestar, the volunteer-based MCST can function more effectively, protecting the collective interests of all property owners and maintaining the long-term value of the estate.

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