Bunk House FAQs, Included below is a short note and FAQ on the Minimum Guarantee Arrangement. The salient features of the Arrangement: 1. Minimum Guarantee Arrangement is being provided by Square Care – a property management service provider which is part of the Square Yards Group 2. Square Care is the fastest emerging PMS provider in Delhi NCR region 3. Square Care will enter into a 2-year contract with the property owner for managing his property 4. The responsibilities undertaken by Square Care are property management, tenancy management, third party negotiations and maintenance services with owner’s funds 5. The contract period starts from the date the possession is received by the buyer 6. Square Care will pay a minimum guarantee amount of Rs. 6,000 p.m. for 2 years of the contract irrespective of whether the property being put on rent 7. In addition, if the property generates a rent more than promised minimum guarantee, the excess amount generated will be shared in the proportion of 70:30 between the Owner and Square Care respectively 8. The property owner can terminate the contract only within first 6 months of contract 9. In case of termination of the contract, the owner will not be receiving any minimum guarantee amount post termination FAQs: 1. Does Square Care look after the maintenance of the property? Square Care takes care of the maintenance and repair services as per the Owner’s demand or the property’s requirement. However, payments for these services shall be borne by the owner. 2. What is the rationale for Square Care to provide such a lucrative deal? This is similar to a 0% interest scheme which retailers provide in collaboration with banks like Bajaj Finserv. The retailer benefits with higher sales and banks benefit with more number of businesses. Both the bank and retailer share the costs between them. The revenue generated by the bank is just the processing fee. This scheme of Rent Back would help attract sales and assures rent to the property owners who expect an immediate return post possession. Hence Square Care and the property owner have agreed to share the costs of this lucrative deal.
3. When is the rent payment to the owner processed? The rent amount of each month is paid to the owner not later than 10th of the following month.
4. What is the mode of payment? The mode of payment will be either by cheque or an online transfer as agreed between the Owner and Square Care.
5. What if Square Care generates more or less rent than the minimum guarantee amount?
Scenario
Amount received by the Owner
Amount received/borne by Square Care
Rent > Minimum Guarantee amount (Eg: INR 9,000)
Minimum guarantee + 70% of excess amount i.e., INR 6,000 + INR 2,100 = INR 8,100
30% of excess amount charged as management fee i.e., INR 900
Rent < Minimum Guarantee amount (Eg: INR 5,000)
Minimum guarantee i.e., INR 6,000
Rent received from tenant â&#x20AC;&#x201C; Minimum guarantee i.e., INR 5,000 â&#x20AC;&#x201C; INR 6,000 = (-) INR 1,000 (deficit borne by Square Care)
6. Why should the property owner be paying 30% of the excess rent amount? Square Care strives to rent out the property to a potential tenant as soon as possible after possession. The company shall bear certain marketing and sales related expenses involved to generate highest possible rent. Square Care also arranges various vendors for maintenance related charges and negotiates with them to carry out the work at minimum possible charges. The company takes a risk of paying the promised minimum guarantee amount in case the property does not generate the same for the whole duration of the contract. The company does not stand a chance of terminating the contract even within the first 6 months of the contract if the property is not able to generate the rent. To accumulate for all the possible costs that might be incurred by the company in these situations, the 30% management fee on the excess rent generated works out to be a fair commission.
7. What if the property owner does not want to put the property on rent? The property owner can terminate the contract within first 6 months of the duration of contract by providing a prior notice of 1 month.
8. What happens to the minimum guarantee amount paid in case of termination of contract? The property owner receives the minimum guarantee amount till the contract is active.
9. What happens if the owner does not want to continue services provided by Square Care but continue the lease with the tenant? The property owner can terminate the contract with Square Care only within first 6 months of the duration of contract by providing a prior notice of 1 month. The owner shall continue paying 30% of excess rent amount as management fee to Square Care for its efforts in finding a tenant and generating more than minimum guarantee amount.
10. Will there be TDS deduction on the minimum guarantee? TDS deduction will depend on the applicable regulations at the time of the payment of minimum guarantee. As per the provisions currently in force, TDS will be deducted for the minimum guarantee amount.