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  • Slide_1

    What are Management Rights?

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    Find out why this lucrative industry offers ‘lifestyle, security and high returns.'

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    Why use Management Rights Experts before buying or selling?

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    Want an honest and straight forward view of the positives and the negatives?

LOOKING FOR A CHANGE OF LIFESTYLE?

Find out why this lucrative industry, offering ‘lifestyle, security and high returns,’ is a unique business opportunity and how you and your family can secure your future, living a quality lifestyle.

Whilst a Management Rights business can offer attractive lifestyle alternatives, the purchase process can be littered with financial and legal pitfalls; this can be daunting for the first time buyer.

Our team of professionals pride themselves in delivering easy to understand layman term information on the industry. Our monthly seminars not only give you the tools to move forward confidently, they give you the professional team that know the pitfalls and how to save you from them.

Many potential owners are investing their life savings into a purchasing Management Rights businesses; the investment of three hours could be the best investment you will make in protecting and increasing your assets.

These events provide an excellent opportunity to personally approach our representatives and all speakers offer complimentary one-on-one interviews to seminar attendees.

UPCOMING EVENTS:

GOLD COAST SEMINAR

SATURDAY 11th AUGUST 2018

Management Rights Australia (MRA) holds regular information seminars throughout the year for people wishing to buy a management rights business.

Join one of our seminars today and let us help guide you through the Management Rights maze. Bookings are essential.

Eventbrite - Management Rights Australia Seminar: August 2018

The Deep End of Pooled Letting Pools

We regularly review a variety of letting appointments (the agreement between the building manager acting as letting agent and the owners of the investment units used in a letting pool) and we often find that there is a noticeable gap between what the appointments state versus how they are interpreted.

For the most part the gap can be attributed to overly simplified clauses that do not adequately state the practices that the majority of the industry operates under. In general, these inadequacies are rarely the subject of a legal dispute (when business is good) and so fixing them is often left on the “do it tomorrow” pile.


When we look at letting appointments where the income is pooled between owners, the gap between what the appointments state versus how they are interpreted by the manager and the owners is often far more significant. This is often due to the fact that the line between the income and expenses that are pooled and the income and expenses that are tracked individually can vary from building to building. This uncertainty can easily lead to disputes with the manager where owners contest the distribution of the pooled income or the allocation of expenses.

If you are operating a pooled letting pool, the common issues you could face include:

  • How to fairly determine the income ratio. Do you allocate based on number of beds, unit entitlements, quality of the unit, sea views or some other unique quality? Or do you divide everything equally regardless?
  • How to share expenses. Do you share any or all expenses across the pool? Do you share expenses only up to certain cost? Do you use the same ratio for sharing income to also share expenses?
  • How to determine who authorises significant expenditure. Do you ask the owner or should you be asking all owners as all owners are sharing the costs?
  • How to operate a maintenance fund. Do you collect a levy or withdraw expenses as and when incurred? What happens when an owner leaves the pool or has only just joined the pool? What happens to the owner who has just left the pool after getting a new water system paid by the pool?
  • How to adjust income when the owner uses their unit. Do you make no adjustment, or do you pro rata adjust for the days used?
  • How to change the terms of the letting appointment. What do you do if not all owners agree to your proposed change?

In the vast majority of letting appointments we see for pooled letting pools, the vast majority of the questions raised above are not sufficiently answered, or if answered they create arguably unfair scenarios where owners of a certain class are effectively subsidising the owners of other classes. For example, if two bedroom units are used far more often than three bedroom units, the owners of the two bedroom units are supplementing the income of the owners of three bedroom units and to add insult to injury the three bedroom units also have a higher sale value.

When you look at the examples above you can see there are many situations where a disgruntled owner could easily start to ask difficult questions when the terms of your letting appointment are either vague or silent on the issue. If you operate a pooled income letting pool and your letting appointment doesn’t have the answers for these kinds of questions it’s definitely recommended that you prioritise a revision of your agreements as it only takes an issue with one owner to be an issue with all owners.

Liability limited by a scheme approved under Professional Standards Legislation

Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.

 

Management Rights Articles

  • THE PROBLEM WITH DEEDS OF CONSENT IN NEW SOUTH WALES

    The Problem with Deeds of Consent in New South Wales

    Financiers of management rights purchases commonly require the owners corporation to enter into a deed of consent to security (“consent deeds”). The problem is that there is nothing in the NSW strata legislation that requires an owners corporation to agree to enter into such a deed – even on the most reasonable of terms.

    Consent deeds, also commonly called “right of entry deeds”, act as security over the management rights in the event of a default by the caretaker.

    The deed allows the financier to ensure its security is not jeopardised if the caretaker is in default of its loan agreement. 

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