Management Rights and Advisory Service

agreements

Agreements - What do you buy?

Purchasing Management Rights

When purchasing Management Rights, you either buy from the original developer or the outgoing Resident Manager the right to conduct the Management Rights business. This right comes about in the form of an Agreement or Agreements between the Body Corporate and the Resident Manager.

These Agreements are known by several different descriptions, some of which are -

  • Management Agreement
  • Caretaking Agreement
  • Letting Agreement
  • Unit Letting Agreement
  • Building Management Agreement
  • A combination of two or more of the above

The two basic functions of caretaking and letting may be dealt with in two single or one combined Agreement. It is more common for there to be 2 separate Agreements.

Some typical features of these Agreements are -

  • They are for a fixed period, however under the current Act they are limited to 10 years for most complexes, but 25 years for complexes in what is called the Accommodation Module.
  • A salary for caretaking services is paid to the Resident Manager with provision for yearly increases, usually linked to the CPI (Inflation).
  • There are termination provisions for unremedied defaults of the Resident Manager or for the Resident Manager’s gross misconduct or neglect.

The Resident Manager’s caretaking functions will be set out in detail and typically include-

  • keeping the lawns, gardens and all areas of the common property clean and in good order and repair
  • monitoring compliance with the Body Corporate By-Laws
  • remaining aware of and reporting to the Body Corporate on the general condition of the complex
  • looking after the swimming pool, spa and any other recreational facilities
  • supervising Body Corporate employees (if any)

Depending upon the nature and size of the complex and the particular agreement, the Resident Manager will be required to either-

  • personally carry out (or be responsible for the payment of staff to carry out) various duties - a do agreement; or
  • simply supervise employees or contractors of the Body Corporate carrying out those duties - a supervisory agreement; or
  • carry out some duties personally and otherwise act in a supervisory role.

The Resident Manager will also be given the right or is sometimes obliged to provide letting services to owners who want to use those services. Typical features of the letting provisions are -

  • Treating owners fairly and not to discriminate in any way.
  • Attending the office/reception desk during nominated times.
  • Offering ancillary services such as televisions, video or bed linen hire.
  • Restrictions on the Body Corporate allowing anyone else to provide competing services from within the complex.

When you purchase Management Rights, the Agreements and the rights under those Agreements, are transferred or assigned to you but the consent of the Body Corporate is necessary. You also acquire -

  • the Resident Manager’s Unit;
  • the right to occupy the office/reception area if this is not part of the title to the Resident Manager’s Unit; and
  • any plant and equipment (eg computer) of the outgoing Resident Manager necessary to run the office and carry out the caretaking functions and the letting business.

About Mahoneys

Mahoneys has an enviable reputation for its service to clients and for the competence of its partners and staff who offer expert services in Management Rights Law, Business and Commercial Law, All aspects of Property Law. One of their major areas of expertise is in the field of management rights.