Tipsfor New Buyers of Management Rights Tips
In comparison to other businesses, management rights are expensive to purchase. Management rights businesses often command a high price because of factors that include: low risk, perceived guaranteed income and lifestyle.
Most buyers of management rights are putting their life savings in this investment. Any buyer should look to have a good understanding of the industry before signing their first purchase contract.
There are many practical considerations. We will give you a few of the core tips below:
1.Get Advice on Structuring 买家结构化建议
You should seek advice regarding the best way to structure your purchase. Your accountant or lawyer can discuss with you and help you decide the most appropriate structure taking into account any personal taxation and asset protection considerations. This should be done before you sign the contract, to avoid the possibility of paying double stamp duty.
2.Use the Industry Experts
Seek out and make contact with a recognised management rights lawyer. Management rights law is a very specialised area of law and there are only a few firms that specialise in it and do it well. The cheapest may not necessarily be the best. Quality of service, reputation and independence should be the qualities that you are looking for. An experienced lawyer will make your purchase easier.
3.Signing Documents 合同签署
Speak to a lawyer before you sign anything. This may include a letter of offer. Your lawyer can explain important parts to you and advise you on what might be changed or added.
4.Contract Terms 合同条款
In a typical management rights sale, two standard REIQ contracts will be used – one for the unit and one for the business. Your contract should contain the following terms:
a. Verification – subject to your accountant verifying the net operating profit of the business – usually within 14 days from the date of the contract.
b. Due Diligence –subject to you and your lawyer being satisfied with your due diligence enquiries. Your lawyer should conduct a thorough review of the caretaking and letting agreements, by-laws and body corporate records – usually within 21 days from the date of the contract.
c. Finance – subject to you obtaining finance approval for your purchase – usually within 28 days from the date of the contract.
d. Body Corporate Consent – subject to body corporate consenting to the assignment of caretaking and letting agreements to you – usually on or before the settlement date.
e. Contemporaneous Settlement – where there is a unit, subject to simultaneous completion of both the unit and business contract.
d. 法人团体（Body Corporate）同意：须经法人团体同意将管理及出租协议转让给买家（通常在交割日当日或之前）；
Use a reputable lender. Small savings in interest can easily be lost due to delays in settlement or higher legal costs incurred through inexperienced lenders.
6.Body Corporate Application 法人团体申请及面试
You should prepare thoroughly for your body corporate application. In order for the Body Corporate to consent to the assignment of caretaking and letting agreement, you must demonstrate to the Body Corporate that you are financially sound and reputable and capable of satisfactorily performing the caretaking and letting duties. You should prepare the following documents:
a. A thorough and detailed resume;
b. 2 personal references;
c. 2 business references;
d. Financial information to show that you have adequate financial standing;
e. Marketing or business plan (especially for holiday complexes);
f. A police check (one for each director and possibly 1 for each shareholder if buying in the name of a company).
The body corporate may interview you to satisfy itself that you are capable of performing the caretaking and letting duties. Your lawyer may be able to give you a list of types of questions which you are likely to be asked at the interview.
To run the letting component of a management rights business you need to obtain a real estate agent’s licence. This can be a restricted licence which allows you to let and sell lots in your scheme only or a full real estate agent’s licence which allows you to let and sell lots inside and outside your scheme. The restricted licence is quicker and easier to get, and involves taking a training course from a registered provider. You should look to complete your licensing course as early as possible so that you obtain your licence before settlement.