The contract you sign will contain two clauses which set out Body Corporate remuneration and the stated net profit of the business.  When you are borrowing to finance the business it will be a requirement of your lending institution that the profit verification for the designated twelve month period be conducted by an industry recognised accountant.

It is important that you understand how the net profit is calculated, what is included or excluded in regard to income and expense items. These matters can be discussed with your Accountant at the same time as you discuss the business structure you are going to choose. It would also be appropriate at that time to discuss the other items the profit verification covers.

The verification process provides security and, if for some reason the represented net profit is not yet verified, you have the right to terminate your Contract or alternatively enter into further negotiation of purchase price.

Crosbie Warren Sinclair conduct this type of work every week and our data base of verified Management Rights complexes dates back to 1992.

No two Management and Letting Rights businesses are the same and an exhaustive due diligence should be undertaken by a specialist Management Rights Solicitor.

The due diligence process includes an assessment of:

• The location of the office to determine whether it is on title or the Manager has exclusive use
• All storage areas and other areas used by the Manager
• A complete search of the Body Corporate records to ascertain whether there is any conflict in the complex and what matters are really important to the Body Corporate so far as the Manager is concerned
• A complete search of the By-Laws of the Body Corporate to confirm the Manager has exclusivity within the Scheme to carry on a letting business
• A review of the Caretaking and Letting Agreements so the Manager is fully aware of the obligations to the Body Corporate.

The Body Corporate is allowed 30 days (from the time the current manager requests the transfer of Management Rights and provides all relevant information) to make a decision.  While it is possible that the decision can be made earlier, it is preferable to allow this time frame.

In preparation for meeting with the Body Corporate Committee, an incoming Manager should obtain business and personal references and prepare a Resume.  It is recommended that these be provided to the Committee before the meeting.

It is illegal for the Body Corporate to ask discriminatory questions, but the Body Corporate is entitled to assess the incoming Manager as to their suitability to carry out the tasks necessary.  In deciding to approve the transfer, the Body Corporate may ask questions relating to:

• The character of the incoming Manager and related persons
• The financial standing of the incoming Manager and how much they are borrowing
• The terms of the sale
• The competence, qualifications and experience of the proposed Manager and related persons and the extent to which they have received an training
• Who will be doing the work
• Any other matters which the Management and Letting Agreements allow the Body Corporate to raise

During the due diligence process you will have completed your training and presented your Certificate of Completion to the Office of Fair Trading with the completed licence application form.  The Office of Fair Trading will complete all necessary checks and your application will be awaiting verification of the Body Corporate’s approval of the assignment of the Caretaking and Letting Agreements.

For further information about obtaining your licence please visit the Office of Fair Trading web site.

Your sales contract will confirm the requirement for the outgoing Manager to provide training.  Typically this will be undertaken one week prior to settlement and one week after settlement.  During this time, you will have direct access to the existing office systems and also have the opportunity to attend to all necessary business transfers and establishment of accounts, meet staff and contractors and begin to establish relationships with the key contacts essential to the smoothe operation of your new business.