When you get your development approval it’s critical that your whole team reads the conditions (all of them and not just those that relate to their area of expertise). They should then revert to you with any suggested changes or commentary. It’s not uncommon for local authorities to seek to insert conditions into a community management statement to uphold the intentions and desired outcomes of the development approval. In some cases, this can be unlawful and unenforceable. Your lawyer will likewise be able to tell you whether any of the conditions are likely to impact your sales process.
Risk = impact x probability. It’s common sense that if the risk of a catastrophic event is infinitesimally small then you won’t design your whole business around avoiding that risk. Likewise, when you’re buying management rights you’ll be told there are a lot of risks, but you may not be told that the probability of some of them occurring approaches being infinitesimally small. Good lawyers will arm you with knowledge of each risk, the probability of each risk (in their experience) and suggestions on how to manage the risk. Bad ones will leave you scared and ignorant.
The accepted standard in caretaking agreements these days is for a CPI review of the remuneration every year. Typically, the remuneration cannot go down on a CPI review. Every 5 years expect a market review; that is a review of the remuneration to a fair market value. A market review could, and indeed should, lead to either a rise or fall of the caretaker’s remuneration. To better ensure that the Caretakers remuneration does not diverge from a fair market remuneration, consider annual reviews to the wage index instead of CPI.
It’s human nature for a seller to try to optimise their sale price. It can be a wasted effort when it’s clear that some of the income being generated is unsustainable. While the buyer’s verifying accountant will only use 12 months’ worth of figures, most industry accountants will have conducted dozens, if not hundreds of verification reports. As such they will almost always spot unsustainable income and a price discussion will usually follow.
A layered community title scheme has distinct advantages but typically only where the uses within the layered arrangement are at least similar or complimentary. For example, long and short term residential accommodation. A development with markedly different uses such as commercial and long-term residential, can often benefit from being within a building management statement. A BMS is effectively a bundle of easements tied up in one document, that provides for access to shared facilities, the means of contributing to the maintenance and upkeep of those facilities and, in good BMS’s, dispute resolution mechanisms.