Not that long ago, managers who sold their business did not have to worry too much about their buyer and seeking body corporate consent. As long as the buyer was a reputable person and had some skills which were adaptable to the role of a caretaker, the assignment was almost a forgone conclusion. Fast forward to today, committees are scrutinising a buyer’s skills and experience more than ever. Committees are much more aware of what their rights are and are very careful about who they decide to approve to ensure that they secure a good quality manager.
If you are selling, it is vitally important to vet your buyer at the outset. Don’t just rely on what you might have been told about your buyer but make sure that you check their resume to see their skills and experience. If they are a first time buyer and have not had any past experience or completed any form of industry training, this should be seen as a red flag. It is no longer acceptable for sellers to hope that their committee will approve a first time buyer if they have not undertaken any training.
A committee will generally look favourably upon first time buyers who have completed an industry recognised course such as the ARAMA MRITP induction program and/or an ABMA accreditation. It is not acceptable for a buyer to assert that they have completed their real estate training for licencing or that they are skilled in work similar to that of a caretaker. In most cases, that will not be enough for a committee to be satisfied that the buyer possesses the requisite skills and experience.
If your buyer is inexperienced and has not completed any industry training, as a seller you can expect any number of things to happen. A solicitor acting for the body corporate will almost always require the buyer to undertake training as a condition of the committee’s approval and it will often provoke the need for a professional assessment of the buyer to test their knowledge on the obligations of a caretaking and letting agent. You would be surprised how thorough some assessments can be and what a consultant will expect the buyer to know.
Other times, a committee will insist that the buyer engage professional assistance to ensure that correct management practices are adopted from the outset so that the buyer is aware of what their duties involve. More often than not, any training which the buyer is required to undertake will usually cost several thousands of dollars. This can be avoided if the buyer completes their training before the assignment process takes place.
If your buyer is underprepared, you can expect to encounter difficulties during the assignment. Delays are likely to occur which will push out contract timeframes and cause frustration for all parties involved. It will inevitably lead to unanticipated costs – in some cases several or tens of thousands of dollars. This is not to mention the time and cost for the buyer as well. Frustrated buyers will often look to pull out of the contract if they see things are becoming too difficult.
There can be very serious consequences if your buyer is underqualified. Not only can it cause a financial detriment to you when selling, it can also affect the relationship with your committee and the body corporate manager. If the committee do not approve your buyer, or your contract ends up terminating, it could also deter other interested buyers and impact the value of your business. These risks can be avoided – make sure you buyer stacks up from the start.
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