{"id":1421,"date":"2019-09-24T19:25:01","date_gmt":"2019-09-24T09:25:01","guid":{"rendered":"https:\/\/theonsitemanager.com.au\/news\/?p=1421"},"modified":"2019-09-24T19:25:03","modified_gmt":"2019-09-24T09:25:03","slug":"management-rights-the-developers-role-2","status":"publish","type":"post","link":"https:\/\/theonsitemanager.com.au\/news\/management-rights-the-developers-role-2\/","title":{"rendered":"Management Rights &#8211; The Developer&#8217;s Role"},"content":{"rendered":"\n<p>Lawyers acting for buyers of Management\nRights are often faced with the task of trying to explain to their clients\nproblems which they may face as a result of badly worded Caretaking and Letting\nAgreements.&nbsp; Much of this could be\navoided if developers and their advisers took more care in preparing these\nagreements.<\/p>\n\n\n\n<p>Developers have a golden opportunity to set\nup Management Rights in a way that will not create difficulties for building\nmanagers. The developer is in complete control of the Body Corporate at the\ntime the original Caretaking and Letting Agreements are put in place.&nbsp; Unfortunately where the developer\u2019s lawyers\nare not management rights specialists, important aspects of the agreements will\ncommonly be overlooked.<\/p>\n\n\n\n<p>I have acted for many people buying units\nfrom developers and I have never found the content of these agreements to be an\nimportant factor in deciding whether or not to buy in a particular development.\n<\/p>\n\n\n\n<p>Of course the agreements must be fair and\nreasonable to the Body Corporate; in fact the&nbsp;\nBody Corporate and Community Management Act requires this.&nbsp; However too often a potential buyer of the\nManagement Rights will find that the content of the agreements makes the\ndecision of whether or not to buy a difficult one. In many cases the content\ncreates potential problems for the buyer because of ignorance of the law\nrelating to Management Rights on the part of the developers and their lawyers\nor a lack of consideration for the potential building managers commercial\ninterests.<\/p>\n\n\n\n<p>It is important for the future smooth\noperation of the new complex that the management rights agreements strike an\nappropriate balance between the body corporate and the manager.&nbsp; Achieving such a balance makes it more likely\nthat a complex will attract a quality manager, and thereby serves the interest\nof the body corporate also.<\/p>\n\n\n\n<p>In some cases the content of the Caretaking\nand Letting Agreements indicates a failure on the part of those preparing them\nto appreciate that a Body Corporate\u2019s powers are limited by the Body Corporate\nand Community Management Legislation. Some agreements:-<\/p>\n\n\n\n<ul><li>contain duties which require\nthe building manager to carry out work which the Body Corporate has no power to\npay for, for example duties relating to individual lots or even outside of the\ncomplex;<\/li><\/ul>\n\n\n\n<ul><li>include the delegation of Body\nCorporate powers to the building manager which the Body Corporate has no power\nto delegate.<\/li><\/ul>\n\n\n\n<p>In such cases prospective buyers of\nManagement Rights are faced with the possibility that some time in the future\ntheir agreements could be unenforceable against the Body Corporate.<\/p>\n\n\n\n<p>The following are some examples drawn from\nactual agreements which illustrate a failure on the part of those preparing the\nCaretaking and Letting Agreements to properly consider the commercial interests\nof the building manager:- <\/p>\n\n\n\n<ul><li>duties that are so broadly\nworded they are bound to cause confusion between the Body Corporate and the\nbuilding manager as to the extent of the work the building manager has to carry\nout to perform the duties;<\/li><\/ul>\n\n\n\n<ul><li>a Body Corporate being given\nthe power to set the hours during which the building managers office must be staffed;<\/li><\/ul>\n\n\n\n<ul><li>a Body Corporate being given\nthe power to force a building manager to transfer the managers unit and the\nManagement Rights Business to someone else when the Caretaking and Letting\nAgreements come to an end. This seriously compromises the building managers\nnegotiating position when seeking extensions of agreements;<\/li><\/ul>\n\n\n\n<ul><li>complicated duties in the\nLetting Agreement when all that is required is an authorisation to allow the\nmanager to operate an onsite letting agency;<\/li><\/ul>\n\n\n\n<ul><li>failure to give the building\nmanager control over areas required for the proper conduct of the Management\nRights Business by freehold title;<\/li><\/ul>\n\n\n\n<ul><li>allowing the Body Corporate to\nterminate the Agreements if the building manager goes bankrupt, or if a\ncompany, is liquidated or put into administration.&nbsp; Because of the Gallery Vie decision, such\nprovisions may make it difficult or even impossible to obtain financing for\nmanagement rights purchase.&nbsp; <br>\nAlso, such a provision is not contained in the legislative provisions allowing\nfor termination.<\/li><\/ul>\n\n\n\n<p>Developers and their legal and body corporate\nadvisers must make sure the content of Caretaking and Letting Agreements is\nright before the selling of lots in the development starts. Developers are\nobliged to provide to buyers of lots copies of the proposed Caretaking and\nLetting Agreements. Any subsequent changes to the proposed agreements must be\nnotified to contracted buyers each of whom may have the right to cancel a\npurchase if they will be materially affected by any of the changes.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Lawyers acting for buyers of Management Rights are often faced with the task of trying to explain to their clients problems which they may face as a result of badly worded Caretaking and Letting Agreements.&nbsp; Much of this could be avoided if developers and their advisers took more care in preparing these agreements. Developers have a golden opportunity to set up Management Rights in a way that will not create difficulties for building managers. The developer is in complete control of the Body Corporate at the time the original Caretaking and Letting Agreements are put in place.&nbsp; Unfortunately where the developer\u2019s lawyers are not management<a class=\"more-link\" href=\"https:\/\/theonsitemanager.com.au\/news\/management-rights-the-developers-role-2\/\">Read More &rarr;<\/a><\/p>\n","protected":false},"author":1094,"featured_media":222,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mbp_gutenberg_autopost":false},"categories":[8,2],"tags":[],"_links":{"self":[{"href":"https:\/\/theonsitemanager.com.au\/news\/wp-json\/wp\/v2\/posts\/1421"}],"collection":[{"href":"https:\/\/theonsitemanager.com.au\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/theonsitemanager.com.au\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/theonsitemanager.com.au\/news\/wp-json\/wp\/v2\/users\/1094"}],"replies":[{"embeddable":true,"href":"https:\/\/theonsitemanager.com.au\/news\/wp-json\/wp\/v2\/comments?post=1421"}],"version-history":[{"count":1,"href":"https:\/\/theonsitemanager.com.au\/news\/wp-json\/wp\/v2\/posts\/1421\/revisions"}],"predecessor-version":[{"id":1422,"href":"https:\/\/theonsitemanager.com.au\/news\/wp-json\/wp\/v2\/posts\/1421\/revisions\/1422"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/theonsitemanager.com.au\/news\/wp-json\/wp\/v2\/media\/222"}],"wp:attachment":[{"href":"https:\/\/theonsitemanager.com.au\/news\/wp-json\/wp\/v2\/media?parent=1421"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/theonsitemanager.com.au\/news\/wp-json\/wp\/v2\/categories?post=1421"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/theonsitemanager.com.au\/news\/wp-json\/wp\/v2\/tags?post=1421"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}