Depending on the size of your apartment complex, you may have a live-in building manager. If this is the case, your manager will have bought the “management rights” to your building, which they will run as a business on-site.
A building manager has myriad responsibilities, including managing the building’s general upkeep and security, coordinating tradespeople for common area maintenance and repair tasks; and they may even manage apartment rentals and tenancies.
Buying the management rights to a building or complex is not as straightforward as buying a franchise or other going concern. Whether the building manager is based on site or not, a much broader range of stakeholders have to play a part in the business’s successful operation. In addition to being a good business manager, the building manager has to work well with the body corporate Committee, the owners, and any tenants, along with external real estate agents and property managers.
It’s a complex web of relationships to balance, and any body corporate Committee will want to make sure they have the right person for the job – for everyone concerned – if and when the business is put up for sale.
Tower Body Corporate works with Hynes Legal, specialists in buying and selling management rights businesses. In their recent article “It’s time to revisit the management rights assignment process,” they highlighted a shift from a more laissez-faire approach to assigning management rights to a more rigorous approach—and rightly so.
The management rights industry is tricky, not just because of the relationship intricacies involved.
Suppose a Committee assigns management rights to an inexperienced, incompetent, or indifferent manager. In that case, the impacts are far-reaching for lot owners and tenants, maintenance, and costs, and they can damage the overall sense of peace within the community.
Finding the ideal management rights talent
Hynes Legal asserts that the transaction of a management rights business should be about much more than money. Each party needs to work closely with their own legal expert, the body corporate Committee, and each other as the business’s vendor and buyer. The expression “Caveat Emptor” or “Let the Buyer Beware” resonates more strongly than ever in navigating the processes of buying, selling, and assigning building management rights.
The management rights seller
Whatever your current manager’s reason for moving on and their relationship with your fellow residents and Committee, it’s vital to be a part of the process to make sure they hand over operations fully to a competent successor everyone feels confident with. The last thing you and your new manager will want to deal with is legacy issues that weren’t dealt with properly.
There are specialist brokers and legal advisors who can help sellers identify a buyer who will be a good fit and who will help them manage the transition and assignment process for the Committee. If your manager has indicated their intention to sell, ask who their professional advisors are and offer them an opportunity to talk to the Committee early so everyone can work together.
You may also want to engage your own specialist advisors, who will help you vet the potential buyers your current manager is negotiating with. What experience do they have managing a property of similar size and facilities? What are their references like? While the buyer will be taking over the business, in assigning management rights, the Committee needs to be sure they’ll fit your community and will uphold the standards you expect – just as if they were applying for a job with them.
Most importantly, remember the value of your time and effort. Unless you and your fellow Committee members are industry professionals, there will be aspects of this undertaking that you’ll definitely need help with. A professional advisor can help you navigate these intricacies more smoothly and make everything as clear as possible so everyone knows where they stand and what to expect.
The management rights buyer
The perks of having your building manager living on-site can be great. They’re on hand when you need them, have an exclusive understanding of your building and its facilities, and are a community member, so it’s in their best interests to deliver their best for the residents.
But there can be a downside. If your fellow residents and Committee don’t have a good relationship with your current manager, there may be challenges with whom they present to you as a potential replacement. You don’t want to experience the same difficulties and discomforts with a new manager. After all, you’re living in close quarters with them, and the previous person may have had a significant effect on the mood of your community.
In addition to calling on the help of your professional advisor, you may need to exercise a little more patience than usual—along with some assertive communication—to smooth the transition and ensure that your Committee and residents’ needs are met.
The ideal buyer ‘candidate’ should have good communication skills, great references, and a proven track record of managing property and people effectively. Make sure they have the appropriate licences and insurance and understand what will be involved in managing your building or complex.
If the buyer hasn’t owned a management rights business before, you may want to ask them why they are embarking on this venture now and what experience makes them think they’ll be a good fit for the role’s demands and the community they’ll be a part of.
The Committee’s role in assigning management rights
While a body corporate Committee can’t unreasonably withhold their assignment decision, you’re well within your rights to get a professional opinion to help you identify and deal with the finer aspects of the deal so you can make a more effective decision.
After all, the person or couple you choose will play a significant role in your community and impact the lives of every resident.
Change Body Corporate works with specialist legal firms like Hynes Legal to help Committees understand their rights and responsibilities regarding assigning management rights. If your building manager has expressed an intention to sell their management rights, you must have the information and advice you need to ensure a smooth transition.
Our company can help Committees with the process. Talk to our consultants here.
