A great number of management agreements do not reflect the real value of the services provided by the resident building manager to the body corporate.
The reason for this is simple. When a developer structures the agreement, emphasis is often placed on the potential rental commissions at the expense of the service contract remuneration. This helps to keep levies down and sell units. In the early years of the building’s life this may work well, with the rental commissions subsidising the on-site services. As the building ages however, the rental pool falls, and so does the rental commission. But the service contract in most cases remains unchanged except for CPI adjustments. The end result can be a financially unrewarding arrangement.
If you would like to know more about the opportunities for reviewing the income for your service agreement, call David Leary today.