Why due diligence on rent roll compliance matters
When reviewing Management Agency Agreements, existing or newly signed agreements, there are always small compliance issues that can cause big headaches further down the track when you go to sell, or years after you’ve purchased a rent roll.
Regardless of whether you're a rent roll purchaser or seller you should be aware of what needs to be correct in an agreement. Two vital key areas purchasers and sellers should be aware of include;
Management Agency Agreement Compliance
Property File Compliance
1. Management Agency Agreement Compliance
Does the MAA have the correct corporation licence? I’ve seen offices that have put an individual’s licence on an MAA instead of the corporation licence.
Is the ABN correct for the Principal’s company?
Is the MAA signed by all concerned parties?
Have they also signed in the correct area of the MAA?
For multiple properties owned by the Principal, are they all listed on the MAA with actual rental amounts and correct management commission?
2. Property File Compliance
When was the last time a routine inspection was conducted? Has it been greater than 12 months?
Are all bonds been accounted for each tenant?
Is the smoke and all other compliance up to date?
Is the ingoing inspection signed by the tenants, if not has it been documented that they have not acknowledged?
Is the lease signed by all concerned parties?
These are just some important items or questions that need to be clarified when preparing to purchase a rent roll or even when you are planning to sell a rent roll. With a re-sign of MAAs, it is the vendors obligation to prepare the new MAAs for the purchaser, and they need to be correctly prepared. If these compliance issues and questions are not addressed, do you know what you are really buying, or are you confident the purchaser will accept your MAAs?
MC Rent Roll Broking not only represents vendors selling their rent roll, agency and business, but also assists and consults on buyer due diligence and appraisals. For more information please contact Matt Ciallella on 0414 668 972 or email matt@mcrrb.com.au.
