It is rare that a week goes by that we are not asked to check an agreement, or review an appointment, comment on a duty or check a by-law. These documents are the cornerstone of your business and are the key documents that will be looked at by a buyer when you go to sell (who will be looking for holes). It never hurts to be prepared and have these fixed or at least identified!
It is well known that the income of your business is a determining factor on the sale price you will be able to achieve. This income is only achievable and sustainable with proper letting appointments in place. We continue to be surprised at issues we commonly see (which are all usually simple fixes) – including:
- not signed by the agent;
- wrong name of the letting agent;
- wrong licensee;
- wrong licence number;
- missing dates;
- missing pages;
- schedule of fees not attached; or
- an appointment for a term, that has expired.
Fortunately, as a result of a Court of Appeal decision, a POA form 6 letting appointment will not be invalid just because the wrong version of the form was used at the time it was entered into. Provided the version of the Form 6 actually used, is substantially in accordance with the current version, then that will be sufficient compliance.
It does not hurt to take the time to review your appointments and make sure they are all in order, long before you are thinking of selling.
All managers should also remember, that without a proper appointment, there is no entitlement to commission.
The same can be said for your agreements with the body corporate. Whilst we have written many times about knowing your dates, it is just as important to ensure that you have complete copies of your agreements, and understand what they say. You don’t want to try selling your business (without a manager’s lot) only to find out at due diligence that there is a hidden clause in the agreement requiring the lot to stay with the business.
Other issues we often see come up in relation to the agreements, include:
- signed by the wrong person;
- the wrong body corporate seal inadvertently used;
- no evidence of a returning officer for a top up variation; or
- no evidence of an option being exercised.
Sometimes these little things, with the pressure of time constraints and emotion of a sale, become insurmountable. This should not be the case.
Whilst not everyone will be on the market to sell anytime soon, everyone should take the time to review the documents that make up their business and ensure that they are in order. This may seem a mundane and unexciting task but do not underestimate its importance. We are always more than happy to help you conduct a broad review of your key management rights documents.