12 May 2014
Words Tim Admin

What to Look Out For When Buying Management Rights - Past Disputes

In this the fifth and final series of articles about what to look for when buying management rights, I look at what is fortunately not a common problem and that is complexes with a history of disputes with resident managers. Disputes with the Body Corporate or the individual/s that represent it can be stressful and debilitating for the resident manager. They can also be expensive to resolve. On the other hand, complexes with past disputes may represent an opportunity for a buyer to turn the situation to the buyer’s advantage. As a general rule, if there has been conflict in a complex with the previous manager, there is likely to be conflict with the new manager. So if a buyer is at all suspicious about conflict between management and the Body Corporate the buyer should make enquiries to ascertain the state of harmony in the complex. It is important for buyers to ascertain the most likely reason/s for past disputes. Sometimes they arise out of a personality conflict or poor performance by the manager, other times they arise out of unreasonable expectations on the part of some owners. There are various ways that a buyer can, before going to contract to purchase a business, investigate the state of harmony in a complex. Because of our extensive exposure to the industry over many years we are often aware of the existence of, and reasons for, past disputes. That experience and knowledge can greatly assist buyers in dealing with actual or perceived problems in a complex. In an earlier article in this series I wrote of the importance of potential new managers having the personality to successfully operate a management rights business. Conversely those with the wrong personality are likely to find themselves in conflict with owners and committee members. It is not surprising then that many of the disputes we see can be traced back to the performance or attitude of the manager. Where this is the case, these problematic complexes represent an opportunity for experienced mangers (and even some not so experienced ones) who are able to use their shills to turn a poor relationship into a good one. A hard working new manager will be able to turn the situation around to his or her advantage. If on the other hand a buyer’s investigations show that the manager’s performance/personality have not been the real cause of past disputes or current disharmony, then a buyer would need to be confident that he or she could deal with the disruptive owners in a way that will not damage the business. Whilst a capable manger with the right people skills is generally able to convince enough owners to oppose the election to the committee or position of chairperson of someone who is dictatorial or unreasonable, a complex with a poor history of disputes should be properly researched and considered before purchase.