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Management Rights Made Easy.
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MANAGEMENT RIGHTS Management Rights is the business of caretaking and letting within a Community Title Scheme (strata titled). It is estimated that by 2050, 65% of Australians will live in Community Title Schemes, with many of these complexes being operated under Management Rights.
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THE BUSINESS OF MANAGEMENT RIGHTS GENERATES HUNDREDS OF MILLIONS OF DOLLARS IN REVENUE ANNUALLY, MAKING IT A MAJOR ECONOMIC CONTRIBUTOR TO AUSTRALIA’S DYNAMIC TOURISM
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This informative guide is designed to provide anyone considering an investment in Management Rights with a sound overview of the industry. We help you understand what Management Rights are, the investment and operational options available, and what they can offer you. You’ll also find helpful tips on what to look out for as you explore opportunities in this thriving industry.
WHAT ARE MANAGEMENT RIGHTS? The Management Rights industry grew hand-in-hand with the development of strata titled properties that began to flourish in the 1960s, particularly on the Gold Coast.
The entire complex is covered by a Community Title Scheme. Everything not contained within the strata titled lots is defined as ‘common property’. This includes areas and facilities such as stairwells, entry gates and driveways, visitor parking, grounds, utility areas, lifts and leisure amenities such as pools, gyms, tennis courts, etc. All owners contribute to the maintenance of ‘common property’ via a levy payment system.
To fully understand the Management Rights model, you first need to know the meaning of the term ‘strata title’. This is a system that allows the legal ownership of a portion (known as a ‘lot’) within a building or complex. These ‘lots’ may be units in a small block or high rise tower, or villas and townhouses in a complex.
For developers and property owners, it makes sense to provide for an onsite manager to ensure the long-term maintenance of ‘common property’ and to provide a letting service for investors / absentee owners.
They are generally purchased by people wanting to live in them permanently (‘owner-occupiers’), live in them occasionally (‘lockups’), or those wanting to let them to tenants or guests (‘investors’). Depending on the complex, the type of letting will generally be either predominantly ‘permanent’ (long-term residential) or ‘shortterm’ (holiday or corporate), but is often a mix of the two.
In a nutshell, Management Rights is the business of onsite caretaking (page 7) and letting (page 8) of strata titled units within Community Title Schemes.
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WHAT DO MANAGEMENT RIGHTS INCLUDE? A Management Rights business will generally consist of three elements:
THE MANAGER’S LOT
As Management Rights is the business of onsite caretaking and letting, the business owner (‘manager’) is typically required to own and reside in a lot within the building or complex. As a result, the manager is a member of the Body Corporate / Owners Corporation. The manager’s lot generally includes an office, or the right to use an office. Other areas necessary to operate the business, such as a reception desk, parking, storage and housekeeping spaces and additional commercial premises may also be included, either as freehold real estate on title, or under ‘exclusive use’ or ‘occupation authority’. Specific details of the manager’s lot will be stipulated in the caretaking and letting agreements and will differ from complex to complex. Sometimes the manager is required to live in a designated unit, sometimes the manager is free to nominate any lot they choose, sometimes there is no requirement to reside onsite. There are some Management Rights businesses that do not have any association to a manager’s unit. In words, the caretaking / letting agreements do not impose any requirement to either own a lot in the scheme or to live on site. These are generally referred to as ‘business only’ management rights. A ‘business only’ arrangement is more common with smaller properties where income is lower and less able to substantiate a real estate purchase. ‘Business only’ management rights are popular in the market as they are ideal as ‘addon’ businesses. The size and style of a manager’s accommodation varies significantly – from small one-bedroom units adjacent to reception through to large, family dwellings. So it is vital the Management Rights purchaser considers their lifestyle needs and priorities.
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These should be weighed against financial goals. If your priority is lifestyle, you may opt for a more luxurious accommodation. Others more focused on financial goals might compromise on living quarters to maximise the size of the business they can purchase.
THE CARETAKING AGREEMENT
The Management Rights owner enters into a contractual agreement with the Body Corporate / Owners Corporation to provide caretaking / building management services in return for an agreed salary. This guaranteed remuneration is usually paid monthly in arrears and is known in the industry as the ‘body corporate salary’. The caretaking duties will be specified in the caretaking agreement, in accordance with relevant state-based legislation. Some agreements may specify duties in general terms, while others will state them in precise detail. Either way, it is important to know exactly what is expected of you and that you understand the exact nature of the duties. This will help you to assess the workload expected in view of the salary offered, as well as your ability to fill the role. Again, both lifestyle and financial goals need to be considered. Know precisely the level of work required, your capabilities, and your reasons for buying the business. One useful measure when comparing available businesses is to divide the salary by the total number of units to arrive at a ‘per unit’ salary. Benchmarks will vary depending on the nature of the agreement and the building, but it is a useful guide nonetheless. Note, the body corporate remuneration is usually linked to the Consumer Price Index (CPI), so will rise annually in line with CPI. Some caretaking agreements also make provision for salary reviews at predetermined intervals to ensure they remain fair.
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THE LETTING AGREEMENT
The Management Rights owner enters into a contractual agreement with the Body Corporate / Owners Corporation authorising them to provide an onsite letting service for lot owners / unit investors who choose to use their services. The letting agreement usually requires the manager to promote the letting of units, supervise the standard of tenants, respond to issues raised by tenants, and maintain an office / reception area. While this agreement should provide the manager with the exclusive right to conduct an onsite letting service, lot owners are free to engage outside letting agents. However, the onsite manager has an obvious advantage as they are best placed to provide a superior service. Why? The onsite manager is focused solely on letting units within their own complex, while outside agents have their loyalty divided between multiple complexes and units elsewhere. An onsite manager can attend to urgent matters on the spot, while response times from outside agents can be delayed. And minor repairs and maintenance can often be performed without the need to call in a tradesperson. The manager strikes an agreement with each lot owner covering such things as commission, cleaning rates, advertising, and any other services to be provided. Generally, the manager will receive a percentage of the rent / tariff (circa 8% for permanent rentals, 12% for short-term letting) as a management fee, although there are other models used, particularly for short term letting. Onsite managers must hold a relevant Letting Agent Licence under the relevant state legislation as it applies at the time. (refer page 21) It should be noted, letting matters are not the concern of the Body Corporate / Owners Corporation. These arrangements will remain confidential between the manger and each individual lot owner. Office / caretaking equipment Equipment required to carry out the manager’s duties may either be provided by the Body Corporate / Owners Corporation or by the manager themselves. If it is provided by the manager, it is customary to include the equipment when the business is sold. Buyers can ask to see an inventory of such equipment. An experienced broker will be able to source and provide this information. – 7 –
ADDITIONAL INCOME On top of the Body Corporate salary and income derived from letting, there is potential for the Management Rights owner to earn income from other sources. Examples include: MAINTENANCE
Property is prone to wear and tear. So, from time to time, absentee owners of rented units may request the manager attend to repairs. While this can simply be a matter of calling in a tradesperson, some managers may opt to perform the work themselves and charge the owner for doing so. If you have relevant skills, taking on tasks previously passed on to outside contractors can be a great way to boost income. By the same token, if you are not the handy type, be mindful if buying Management Rights that show significant income derived from maintenance. If you’re unable to perform these tasks, you will be unable to sustain that income. CLEANING /LINEN
This is mainly relevant to holiday and short-term letting (covered in the next section). When guests check out, their rooms need cleaning and the linen needs changing, a service almost always managed by the operator. As operator, you employ cleaning staff to perform the work, either as contractors or as permanent / casual employees. You then on-charge this service to unit owners with a mark-up. In buildings with high guest turnover, the income can be substantial. INTERNET
An increasingly common means for management operators to earn additional income is through the provision of internet services, particularly in permanent residential buildings. There are various structures under which this can occur; sometime the operator outlays for infrastructure / installation and collects all profits, sometimes they can team-up with a provide who covers the set-up cost a gives them a share of the profit. If the manager controls the internet provision within a building, they are able to connect tenants and residents instantly, saving on installation cost and time.
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HOW LONG DO MANAGEMENT RIGHTS AGREEMENTS LAST FOR? When Management Rights are initially established by developers, and the caretaking / letting agreements are first drawn up, they will have a duration of term or ‘tenure’. This can be ‘topped up’ on an annual basis by application to the committee. In Queensland, there two types of agreements, one known as the ‘standard module’ the other as the ‘accommodation module’. The standard module is geared towards management rights properties where the majority of units are owned by ‘owner occupiers’. This will have an initial tenure of 10 years. The accommodation module is geared towards Management Rights properties where the make-up of the residents is predominately tenants (i.e. the owners are mostly investors). The accommodation module will have an initial term 25 years. The concept of ‘topping-up’ is fundamental, as it allows an owner to maintain the value of their management rights and to pass it on to a new owner. This is one of the reasons the industry works so well; a management rights owner must do their job to a high standard, in order to keep the owners happy, be successful in getting ‘top-ups’, and therefore in maintaining the value of their business. (NB) All unit owners are permitted to vote on a manager’s request for an extension. This can only happen at an AGM or an EGM. As such, an extension request needs to be planned well in advance, usually with the assistance of a lawyer. There is a considerable difference between states in the type and length of agreement that developers are permitted to establish. In New South Wales, where the body corporate committee is known as the owner’s corporation, the maximum length of a caretaking agreement is 10 years, regardless of the type of complex. However, it is permissible to establish longer letting agreements in NSW. It is not uncommon to see a 10 year caretaking agreement, with a 25 year letting agreement.
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In Victoria, there is no specific legislation regarding Management Rights, and they are covered under a more general ‘Owner’s Corporation Act’. Although this does not stipulate a maximum length of term for a management rights, it is generally understood that the developer must act in the best interests of the lot owners, which can restrict tenure is some instances. Victoria is perhaps the least legislated of the three states, meaning interpretations of what is permitted may vary considerably.
TYPES OF MANAGEMENT RIGHTS Broadly, there are two types of Management Rights, classified according to the type of letting conducted within the building or complex – permanent (residential) and short-term (often referred to as ‘holiday’). It is important to understand the differences, as each offers different opportunities and challenges. PERMANENT / RESIDENTIAL
Permanent or residential complexes are those where people occupy the units / lots as their primary residence. Some units will be owner-occupied, while other investor-owned units will be rented out to tenants (usually on a minimum six-month lease). For the manager, these businesses involve finding good tenants, collecting rent, maintaining the common areas of the property, managing tenant issues and leases, and sustaining good relationships with all unit owners. While the rate of return per unit may be lower in permanent than in shortterm complexes, the income stream can be steadier, as they’re not subject to seasonal fluctuations. And there is also little need for marketing skills, other than to advertise and source new tenants from time to time. ‘Front desk’ duties are generally minimal. The priorities for managers of permanent complexes are to keep owners happy by diligently attending to caretaking duties, attracting good tenants and limiting periods of vacancy. This will ensure you maximise the size of your letting pool by seeing off competition from outside agents.
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SKILLED MARKETERS CAN BUILD THE CAPITAL VALUE OF A SHORT TERM BUSINESS BY INCREASING OCCUPANCY RATES AND DRIVING UP TARIFFS.
SHORT-TERM LETTING
This covers both holiday complexes, located in city, coastal and regional tourism hubs, and corporate letting operations in CBDs and commercial centres. Operating Management Rights in these situations is similar in many respects to operating hotels and resorts. The complex must be effectively marketed to attract guests, and a high level of service is generally required. That said, in return for hard work, the returns are generally stronger (on an income per unit basis). ‘Rents’ (or rates) are higher and there is greater opportunity to make additional income from services such as tour desk / ticket sales, cleaning / linen and equipment / entertainment hire. Skilled marketers can build the capital value of the business by increasing occupancy rates and driving up tariffs, and there are obvious lifestyle advantages to being located in prime leisure destinations. Just remember to consider the demands of dealing with guests on a daily basis, high service requirements, the potential for seasonal and market fluctuations, and the need to be confident in your marketing and management skills.
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HOW MUCH DO THEY COST? There are three components to consider in assessing the cost of buying Management Rights – the business, the manager’s unit and costs associated with the purchase. THE BUSINESS
One word referred to constantly in regard to Management Rights is ‘multiplier’. The value of the business will be a combination of the net profit it generates and the appropriate ‘multiplier’. To arrive at the value, the ‘multiplier’ is applied to the annual net profit, generally based on recent comparable sales. (Note: the profit will be from the last 12 months’ trading and will need to be verified by a specialist industry accountant.) As an example, if a Management Rights business has generated a net profit of $150,000 during the last 12 months, and the multiplier is set at 4.5, the price of the business component will be $675,000 (ie. $150,000 x 4.5). There are no hard and fast rules on multiplier rates. They are subject to supply and demand pressures, and are therefore set by the market. However, factors that can also influence the multiplier include: • Income: the strongest influence on the multiplier is the level of income the higher the income the higher the multiplier •T erm of agreements: the more years remaining on the caretaking and letting agreements, the higher the multiplier will be • Location: different regional areas attract different multipliers - for example, comparable properties in SE QLD will demand higher multipliers than regional QLD properties and properties in VIC / NSW •G rowth potential: if there is significant scope to increase the income, the property may well achieve a higher multiplier •S tyle and quality: a newer, upscale property is likely to demand a higher multiplier than an older, mid-scale building
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THE MANAGER’S LOT
With all Management Rights purchases that involve finance (which is the vast majority), the manager’s residence (if applicable) will be valued by an independent valuer. The valuation will take into account recent comparable sales of other manager’s units, as well as recent sales of comparable units within the complex. If there are additional areas granted to the manager on an ‘exclusive use’ basis (ie. office), this is likely to add some value to the manager’s lot. If there is an office or any other associated real estate included ‘on title’ this will be valued according to current market rates and sold accordingly. COSTS
You will also need to allow for costs associated with the purchase of the Management Rights (ie. loan establishment fees, legals, income verification and stamp duty). As a general rule of thumb, budget for an amount equivalent to 5-6% of the total price (business + manager’s lot).
BANKS LOOK FAVOURABLY ON THE MANAGEMENT RIGHTS INDUSTRY BECAUSE OF THE INVESTMENT SECURITY IT PROVIDES
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HOW MUCH CAN I SPEND? The starting point for every prospective Management Rights buyer should be to work out exactly what you can afford to spend, and your borrowing capacity. The easiest way to do this is to speak with an industry expert – either a specialist broker (that’s us!) or preferably an experienced finance broker or banker. Consider the value of your assets. As well as cash reserves, they might include the family home, shares, superannuation and other investments. Depending on your financial position, you might consider selling some of these assets to finance your purchase or borrowing against them. As financial institutions look relatively favourably on the Management Rights industry due to the high level of security it provides, lending ratios are relatively generous. Banks will usually lend at least 60% of the total cost of the Management Rights purchase (ie. business + unit + costs). For example, if you were to purchase a Management Rights for $1,000,000, with costs of $50,000, you would need to provide $420,000 and the bank would provide $630,000. For the right property and the right operator, banks may offer higher lending ratios – up to 70% and beyond is not unusual. One of the most critical areas to look at is loan serviceability. Although the financier may be satisfied you have ample security, they will also want to ensure that you will have sufficient income to repay the loan and live comfortably. This is particularly relevant if you are intending to purchase a Management Rights that combines an expensive manager’s unit with a relatively small business. The higher the percentage of the total purchase price that is attributed to the managers unit, the more likely that debt serviceability will be an issue (particularly with MR businesses with low net profits).
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WHAT IS THE PROCESS FOR BUYING MANAGEMENT RIGHTS? The process involved when buying Management Rights is well established and ensures a maximum degree of security over your purchase. OFFER AND ACCEPTANCE
When you have inspected and found your perfect property, your broker will arrange for you to make an offer via an ‘offer and acceptance’ form. This is a non-legally-binding document that serves to formalise your offer. It will stipulate your purchasing entity/entities, the dollar amount offered for each of the manager’s unit and business components and, usually, a number of terms and conditions. The form is presented to the seller, who may accept, reject or counter-offer. The process is repeated until a price is agreed (or not, as the case may be). CONTRACTS
Once a price is agreed, the vendor’s solicitor will prepare and issue contracts. Both parties sign on the dotted line and the property is now ‘under contract’. It usually takes a few days for contacts to be prepared and executed. DUE DILIGENCE – INCOME VERIFICATION
This is the first step in the due diligence process. Your appointed accountant will review the property and conduct a thorough investigation of the income and expenses, reviewing a range of financial records in the process. This is essentially to ensure that the business is generating the profit it has stated. Your accountant will provide a report detailing their findings. If discrepancies are found, a price adjustment may be justified and further negotiation may take place. DUE DILIGENCE - LEGAL SCRUTINY
The next step is for your appointed solicitor to verify the business is legally sound. This includes examining the caretaking and letting agreements, reviewing the minutes of the Body Corporate meetings, and checking that the PAMD forms (letting agreements with owners) are in order.
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VALUATION
With all Management Rights purchases (unless it is ‘cash’, and not subject to finance), an independent specialist will be instructed to conduct a valuation. In all cases, there manager’s residence (and any associated freehold title) will be valued, just as with a normal real estate transaction. For larger management purchases, the business itself will also be valued. This is longer and more involved process and may easily take a week or two. Different banks have different rules as to what size of transaction constitutes a valuation – sometimes it is based on the NOP, sometimes the business value, sometimes the value of the business. FINANCE
The final step is for your chosen financier to provide a stamp of approval for your loan. Once this has been granted, the purchaser will waive the finance condition and contracts become unconditional, subject only to body corporate approval. ASSIGNMENT
Obtaining approval from the Body Corporate is a key part of being assigned the caretaking and letting agreement. You will probably need to produce a range of documents including resumes, police checks, personal and business references, asset and liability statements and even proof of industry knowledge through accredited courses. Once this is done, the Body Corporate will most likely want to interview you to make sure of your suitability and that you understand your responsibilities so that you have a strong working relationship. SETTLEMENT
Settlement of your purchase can happen within a few days of receiving assignment approval. Often the settlement date is pre-agreed between vendor and purchaser, usually on the first business day of a month.
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WHO CAN HELP ME WITH BUYING MANAGEMENT RIGHTS? Management Rights transactions are unique and potentially complex. We cannot stress enough how important it is to seek the professional advice of specialists who have direct knowledge and experience of the Management Rights industry. Aside from your broker, who will be your vital linchpin through every step, there are some key people whose help will ensure you buy the right Management Rights and that the process unfolds as smoothly as possible. They will generally not be your regular day to day advisors. It is vital they are professionals who understand the finer points of the industry. The security and reassurance gained by dealing with proven experts is invaluable.
FINANCE
If you are dealing directly with a bank, make sure the representative looking after your business is someone who specialises in Management Rights. Ask how many Management Rights transactions they have handled previously. And remember, it is wise to obtain a few finance quotes to compare. We highly recommend you consult a specialist finance broker. Using a broker won’t cost you extra. And, because lenders expect brokers to shop around for the best deal, they will usually make an effort to ‘sharpen their pencils’. A good broker will also know which lenders are most suited to the type of Management Rights you want to buy.
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ACCOUNTANT
Again, it is critical you engage a specialist accountant who has an intimate knowledge of the industry. This is a big investment for you. The value of the business is derived solely from the profit it makes. So you must be 100% confident it is making the money it claims, and that the income is sustainable. Your lender will require this security as well. A specialist accountant will have verified hundreds of Management Rights profit & loss statements during their career. They know what to look for, and what rings alarm bells. They can provide sound advice in the event of any discrepancies. Before going to contract, ask your accountant about establishing the appropriate entities to suit your needs. The structure you set up to buy the business and unit can have significant tax implications. An industry expert knows how to set up the most suitable structure in order to maximise benefits.
SOLICITOR
Management Rights fall under unique and specific legislation, which varies from state to state. Only a specialist lawyer will truly understand the complexities. You need an expert legal eye overseeing the process, watching your back, helping you to understand any, and all, issues that might arise. As mentioned earlier in this guide, it is your lawyer’s job to scrutinise and ensure the validity of agreements that provide the security to the business you are purchasing, and check meeting minutes for anything that might signal problems.
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BROKER
Your brfoker will play the most integral role in helping you find the right Management Rights. Make sure the broker you deal with is suitably experienced. Find out how long they have been in business, how many Management Rights sales they have successfully negotiated and, where possible, speak to previous clients. An experienced Management Rights broker will understand details a general real estate agent or business broker may not – the structure and implications of the agreements, terms, the duties and responsibilities of manager, standard industry practices and formulas, how to assess trading figures, and how these relate to market value.
THE SECURITY & REASSURANCE YOU WILL GAIN BY DEALING WITH PROVEN EXPERTS IS INVALUABLE
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YOUR STATE BY STATE GUIDE TO MANAGEMENT RIGHTS LEGISLATION QUEENSLAND
In Queensland, the Body Corporate Community Management (BCCM) Act of 1997 is an established and highly detailed piece of legislation which is designed to cover all aspects of the establishment and administration of community titles schemes, including Management Rights. Queensland is the only state with dedicated body corporate and community management legislation which basically features two modules – an accommodation module of 25 years and a standard module of 10 years. The purpose of this legislation is to provide protection for owners, body corporate committees and Management Rights operators. It provides all parties with certainty, and protection, as to their legal rights and obligations. Some of the major objectives of the BCCM Act include: • To balance the rights of individuals with the responsibility for selfmanagement as an inherent aspect of community titles schemes • To provide an appropriate level of consumer protection for owners and intending buyers of lots included in community titles schemes • To provide an efficient and effective dispute resolution process It also provides protections for Management Rights operators. The BCCM Act does not allow a body corporate to terminate management rights agreements because they want to get a better financial outcome, want to do something different with management or they just don’t like the agreements anymore. Management rights agreements are contracts. They are binding on the body corporate and the manager. They cannot be varied without the consent of the other party, outside very limited statutory circumstances. Termination of Management Rights agreements is only allowed for certain very specific causes and, as such, it is incredibly rare.
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NSW
The management rights industry in NSW is nowhere near as prevalent as it is in Queensland. In NSW there are around 50 properties that operate under the model compared to Queensland with more than 2,000. In NSW, legislation is covered under the Strata Schemes Management Act 2015 and it sets a maximum 10 year term on management rights agreements, similar to the standard module in Queensland. Overall, the NSW legislation hinders the process of establishing a management rights model, even if the developer is in favour of it. Even if a proposed management rights model is disclosed in contracts of sale, all owners have to vote at the first AGM to support the model being adopted in the building. The vote has to be a greater than a 50 percent majority of those who cast their vote. There is also a provision whereby if 30 percent or more of owners vote against it, then it’s dead in the water. In Queensland, the Management Rights structure can be put in place from initial contract of sale from day one. This is not the case in NSW and the developer cannot use proxy votes or a power of attorney from lot owners to get approval. Also in NSW, an operator needs to have a full real estate licence to run a management rights business.
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VICTORIA
There is no dedicated legislation for Management Rights in Victoria, however section 9 of the Owners Corporation Act 2006 stipulates that “an owners corporation may appoint or employ persons to assist the owners corporation in carrying out its functions.” Section 68 basically states the developer must act honestly and with due care and diligence in the interests of the owners corporation in exercising the assigning of Management Rights. With no specific Management Rights legislation in place, a developer can set an agreement for as long as they like and this can be up to 50 years. However, ResortBrokers believes a 15 to 25 year term is appropriate as this mirrors the Queensland accommodation module of 25 years. However, another good option is 15 year terms or 10 years plus 3 X 5 year top-ups. These can be successfully funded by major banks. (In both NSW and Victoria, it is possible for a body corporate or owners corporation to grant a three year facilities management contract. This is a standard employment contract and the contractor reports to the owners corporation, not the committee. The committee gives instruction to the owners corporation on what needs to be done.)
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BACKED BY ROBUST STATE LEGISLATION AND SUPPORTED HEAVILY BY BANKS THE MANAGEMENT RIGHTS INDUSTRY IS DEEMED TO BE ONE OF THE MOST SECURE IN AUSTRALIA
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WHERE TO NOW? If you’re considering a future in the Management Rights industry, you can be confident ResortBrokers is very well placed to point you in the right direction. We will be the vital linchpin you need, not only to help you find the right Management Rights for you, but to expertly guide you through the process, ensuring your move is achieved smoothly and successfully. Because ResortBrokers has been a specialist in the accommodation sector since 1985, you can be assured of our experience. In fact, we were the first commercial agency in Australia to focus exclusively in accommodation business and property sales. So, when it comes to Management Rights, and other accommodation properties including motels, hotels, serviced apartments and caravan parks, you can have absolute confidence we are your expert leaders in our field. And, because we are truly national, with an integrated network of specialist brokers active across all states and territories, you will have access to more properties across the broadest market. Finally, our long experience means we know all the best industry professionals you’ll need to manage and safeguard your purchase. Our experienced brokers will be happy to spend time with you in the early stages, getting an understanding for your requirements, in order to best assist you moving forward. Take the time to meet with a broker if you can ... if you choose to move into this industry it will be a valuable relationship. Also keep an eye out for our ‘Management Rights Made Easy’ seminars. RESORTBROKERS – RIGHT PROPERTY, RIGHT PEOPLE, RIGHT AWAY.
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GLOSSARY OF TERMS Accommodation Module: provides a maximum term of 25 years (at a time) for caretaking and letting agreements, and generally applicable in buildings and complexes that are predominantly tenanted. Caretaking agreement: this is a legal document that outlines, among other things, the caretaking duties required of a manager, the salary the manager will receive, and the length of term for which the manager is engaged. Common Property: describes all property contained within a unit building or complex that does not form park of the individual strata titled lots, eg. stairwells, paths, gardens, pool, gym, entertainment areas, etc. Due Diligence: Comprehensive investigations to appraise the Management Rights business, evaluate its commercial strength and potential, and verify the legal and financial aspects of the proposed transaction. Inventory: It is common practice that office and caretaking equipment needed to operate a Management Rights business is passed on from the outgoing to incoming manager when the business is sold. This will include items such as lawnmowers, garden tools, computers and printers. Investors: unit owners within a building or complex who rent out their units to tenants Letting agreement: usually in conjunction with the caretaking agreement, this permits a manager to provide an exclusive on-site letting service to owners who wish to let their properties to tenants. It outlines the length of the term for which this authority is given. Lock-ups: describes units occupied by their owner only occasionally, usually for holidays. When the owners are not there, the unit is locked up and remains unoccupied.
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Lot: the term given to an individual unit in a low rise or high rise apartment building or an individual villa or townhouse within a complex or community. Management Rights: the business of on-site caretaking and letting of strata titled lots within a Community Title Scheme. Manager’s Unit: the unit within the building or complex allocated for residential occupation by the Management Rights owner / manager. Owner-occupiers: unit owners who live permanently in their own unit. Permanent Management Rights: describes the business of managing a complex or building where units are predominantly occupied on a permanent residential basis. Short-term Management Rights: describes the business of managing a complex or building where units are predominantly let on a short-term basis to holiday or business guests. Standard Module: provides a maximum term of 10 years (at a time) for caretaking and letting agreements, and generally applicable in buildings and complexes that are predominantly owner-occupied. Strata Titled: describes a building complex in which units can be owned individually by separate and unrelated entities.
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QUEENSLAND PO Box 5004 West End, Qld 4101 (07) 3878 3999 NEW SOUTH WALES PO Box 567 Ulladulla NSW 2539 (02) 9904 8224 VICTORIA PO Box 1100 Carlton, VIC 3053 (03) 9347 3100 SOUTH AUSTRALIA PO Box 327 Fulham Gardens, SA 5024 (08) 8356 5057 WESTERN AUSTRALIA PO Box 103, South Perth, WA 6951
1300 665 966 RESORTBROKERS.COM.AU
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