Management rights is a common part of community title development in Queensland, and it is a highly effective form of property management.  While not as common in other states of Australia, it is also available as a service for bodies corporate in those states.

Management Rights provides for economic synergies by combining the various service providers which are required by bodies corporate in order to run effectively. Often management rights businesses are owner operated, and this can also provide economic and operational efficiencies.  A key part of the efficiencies revolves around an on-site presence, at least during normal office hours.  Additionally, often the provider of the services will be living on site with an office attached to the residence.  This facilitates in a cost-effective way services outside of standard business hours.

The entity that provides on-site management and caretaking services is known as the Caretaking Contractor.  This entity may also be referred to as the Resident Unit Manager (RUM), the on-site manager or the building manager.  Duties for a Caretaking Contractor will vary between schemes and they are provided for in the agreement with the body corporate.  The duties often comprise the following:

Supervision of the common property

Supervision of work to be carried out on the common property

Ensuring, or doing cleaning of certain common property

Ensuring, or doing maintenance on certain common property

Reporting to the body corporate Committee

Offering to owners a rental and property management service for their apartments

Caretaking Contracts are not contracts for concierge services, though duties of this nature may be included in high end developments.

As every development is different, and the requirements for good caretaking will differ based on the design of the building, and the services the developer aspires to provide for the owners and occupiers, it is important that the agreement with the Caretaking Contractor is crafted, and not merely printed off using a precedent from a prior development.  When agreements don’t fit the finished development, either in terms of the duties specified or the remuneration being paid, there is potential for inefficiency and angst between the body corporate and the Caretaking Contractor in the future.

A key point to clarify in the contract is the extent to which the caretaking duties are all encompassing and pass to the Caretaker an absolute obligation to do work for the fee paid, irrespective of the technical complexity involved.  Invariably services which have a technical component are carved out of the Caretaker’s duties – for instance lift maintenance.

A Caretaking Contractor may also possess an authority to conduct a letting agent business.  This allows the Caretaking Contractor to act as a rental agent for lots with the development from an office within the foyer of the building (this is often the on-site manager’s home).  Having an on-site letting agent is an effective mechanism for maximising rental and ensuring high occupancy rates.

If you wish to learn or discuss more about management rights in your next development, please don’t hesitate to contact make contact on the below.

Oliver McCall
Development Consultant
0411 352 409
omccall@sskb.com.au

Michael Lovell
Development Consultant
0438 318 565
mlovell@sskb.com.au

Bradley Jones
General Manager
0414655 284
bjones@sskb.com.au