We are seeing plenty of transactions at the moment. But now, more than ever, you need to think about who you are selling to as bodies corporate take a greater interest in who is buying the management rights business.
It is important to remember that the body corporate consent process requires that buyers be prepared and suitably qualified. As you will likely already be aware, the body corporate is only required to provide consent to an assignment of the management rights agreements within 30 days of being provided with all of the relevant material needed to make a decision.
If the buyer is not prepared, or has not done their homework, then this time frame may not even start and consent will be delayed. This will result in settlement of your transaction also being delayed.
When acting for a seller, it is becoming more common to receive requests from the body corporate’s lawyers that a potential buyer undergo some form of formal training or assessment – especially for first time buyers. We have seen transactions fall over where buyers were not keen to embrace such a request.
This is difficult to understand as there are very few industries which do not require some form of training for first time entrants. So while we do not think training should be an automatic requirement for managers with experience, it should not be met with resistance by first time managers.
In fact, if a buyer has already completed appropriate training and demonstrates an eagerness to learn, it is an opportunity to shine when meeting with the committee.
Accordingly, we recommend that our seller clients think about their buyer (and how they will present to the body corporate), even before signing a contract, and work with them to achieve the common goal of consent and settlement.
The more time a seller spends with their buyer training them onsite and preparing them (before presenting them to the committee) the easier it is for the buyer to actually show some knowledge and understanding of the tasks at hand and generally easier for a seller to obtain the required consent needed to sell.
So what should your buyer have ready? They will at least need:
- credit checks;
- police checks;
- qualifications which demonstrate they can carry out caretaking and letting duties;
- details of their financial position;
- evidence of any training (including onsite training with the seller); and
- anything else the agreements provide for.
The best way to smooth the process, as a general rule, is to have the buyer prepare all of this material (as opposed to providing minimum information in the hope that the body corporate does not ask for more). Even better, meet with your buyer and help them. You will be best placed to know your committee and have some ideas as to what will present well to gain a favourable/suitable outcome.