Looking to put your management rights business on the market?
This is rarely a straightforward process. So, in the interests of a smooth, incident-free transition, it’s important to ensure your business is in the right condition for sale.
Letting appointments with the unit owners are a particular area of preparation that I see being regularly overlooked by the business owner.
The importance of letting appointments
The letting appointments documents are extremely important to any management rights business as they are essentially the only vehicle by which a property manager can derive income from a unit owner.
These forms appoint the manager as an agent of the owner; they lay out a variety of services with the set fees that will apply.
Letting appointments can be entered into for a specific one-off period or on an ongoing basis.
Note that there are important differences between old legislation forms (PAMD 20a) and new legislation forms (Form 6).
The main six areas to focus on with letting appointments
I recommend to managers and clients who are looking to sell their businesses to conduct an ‘audit’ of their letting appointments.
The proposed purchaser of your business will ensure that their own specialist accountant reviews all letting appointment forms as part of the verification process. So why not get them right from the start?
Focus your audit on ensuring that the following is in order:
1. The property owners’ details are correct and current.
2. Your licence details are correct for all forms you have prepared.
3. The agreement is a continuing agreement or, if a single appointment, the term has not expired.
4. The agreement is assignable. In the case of the new forms, they are automatically assignable, whereas one of the old forms needs to contain a correctly executed assignment clause.
5. The agreement is signed and dated by the property owner and manager.
6. The fees and charges detailed in the agreement are consistent with what is currently being charged in your system.
Need assistance with your letting appointment audit?
The above details can all impact the income of your business – and therefore its sale value. Yet they are all-too-common oversights from managers looking to sell their management rights businesses.
If you need assistance with an audit of your letting appointments, we can help – please contact our office.