Whether you are extending the term, changing caretaking duties or adjusting remuneration, the approval process matters — and it differs depending on the proposed change.

In the August edition of Resort News, Mahoneys partner Amy O’Donnell outlined what managers should know before putting any proposed change to owners.

Top-ups

A top-up is a particular type of variation that extends the term of an agreement by adding, exercising or replacing a right or option.

A top-up must be approved by ordinary resolution at a general meeting. The request must be decided by secret ballot and supported by a deed of variation and the approved explanatory note.

Other variations

Other variations can include changes to duties, reception hours, remuneration, the obligation to live onsite, and modernising notice and assignment clauses.

Other variations may be approved by ordinary resolution, but do not require an explanatory note or secret ballot.

What the body corporate can (and can’t) ask for

The body corporate cannot seek a benefit in exchange for extending or changing the term.

However, it may recover the reasonable costs it incurs in considering and approving the change.

The commercial reality

A request to change one obligation can quickly lead to a broader renegotiation. Be clear about what is essential, what is desirable and what can wait.

Amy also provided a practical six-step checklist to work through before putting a proposal to owners, beginning with identifying your key dates.

You can read the full article here.

Although a top-up or variation may be legally straightforward, approval ultimately rests with the owners. Managers are more likely to gain support when they have performed consistently, communicated openly and engaged with the committee early.

If you are considering varying your management rights agreement, speak with us early. The groundwork completed before the motion is drafted will often determine the outcome of the vote.

Mahoneys is one of Australia’s leading management rights law firms.

For almost 25 years, our team of industry-leading lawyers has supported the management rights industry.

The firm and its lawyers have been recognised:

– in Doyle’s Guide to the Australian Legal Market and Best Lawyers in Australia for Property Law; and

– as Service Provider of the Year at the most recent ARAMA awards.

Written by Amy ODonnell

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