DONT IGNORE THE SILVER LINING

Published: 16 March 2007.

The QRAMA Special Conditions for the PAMD Form 20a (Holiday Letting version) provide for a notice period of 90 days in which the seller of a unit is to give notice to the Resident Unit Manager of an impending sale. Many times the author has been called upon to advise Resident Unit Managers as to what they can and should do when the requirements of this clause are not met, particularly when the unit is being sold to an owner occupier.

Each situation is different, particularly based on the other terms of the Form 20a, the number and type of bookings, the number of units in the letting pool and the time of year. Generally speaking however, Resident Unit Managers should remember that their Form 20a is a contract with their selling unit owner, albeit subject to stringent statutory requirements. Breaching the terms of the letting appointment can give rise to rights to claim damages, just like breaching the terms of any other contract. In some cases it is easy to calculate the loss and reach an agreement in respect of those damages. In other cases the calculation is difficult or the situation might dictate that it is simply more politic to let the matter lie (for example if the same owner has another couple of units in the letting pool!).

Irrespective of how the Resident Unit Manager treats the outgoing owner, the more critical issue is how the Resident Unit Manager treats the incoming owner. Assuming at the worst that the incoming owner will be a full-time resident who needs absolutely none of the Resident Unit Manager?s services then at the least the incoming owner is a potential ally on the Body Corporate Committee.

It is more often the case that even owner occupiers may require, or find useful, some of the services offered by a Resident Unit Manager. Examples include intermittent maintenance of the unit and even the odd cleaning service. Looking in on the unit while the owner is away on holidays is also a common ?value add?.

Resourceful and imaginative Resident Unit Managers can find a ?silver lining? in losing a unit from the letting pool and there is usually very little to be gained from adopting a combatative or uncooperative attitude during the sale process. Inexperienced managers can fall into the trap of focusing on the loss of the unit from the letting pool rather than making the best of a bad situation and, more importantly, planning to get the unit back into the letting pool in the future.

Consider for a moment a Resident Unit Manager who is told by one of his owners that the owner?s lot is being sold to a retiree, with minor physical disabilities, who will spend anywhere between a quarter to a half of the year overseas, during which time the unit will be a ?lock up?. For the remainder of the year the retiree will reside in the unit.

Consider further that this particular selling owner gives only 30 days notice to the Resident Unit Manager but contracts with the retiree buyer for the retiree buyer to honour bookings 60 days after settlement, for the benefit of the Resident Unit Manager. Finally the retiree buyer offers, of his own accord, to make the unit available for up to an additional 3 months beyond the 60 days due to the fact that he will be overseas during that time. The effect of this offer being that the Resident Unit Manager receives not only a full 90 days notice, but also an additional 3 months in which to continue to use the unit for letting purposes.

You would think in this situation that the Resident Unit Manager is off to a good start with the incoming owner. The retiree buyer has not only honoured the outgoing unit owner?s obligations in terms of notice and forward bookings but has delayed the removal of the unit from the letting pool by a further 3 months. Similarly the Resident Unit Manager should see the following possible opportunities:
(a) the incoming owner becoming a member of the committee;
(b) cleaning and maintenance; and
(c) security visits during the ?lockup? periods.

Sadly, and somewhat absurdly, the Resident Unit Manager in this particular instance lost all of these opportunities. During the process of execution of the Resident Unit Manager?s standard PAMD Form 20a (for the 5 months after settlement), the incoming buyer objected to paying the Resident Unit Manager?s marketing levy. Why? Because the incoming buyer?s attitude to making his lot available for ongoing use was a favour to the Resident Unit Manager; not for the purposes of deriving income. The Resident Unit Manager refused to accept the deletion of the marketing levy. Further, he even refused to discuss the matter.

Needless to say this Resident Unit Manager not only failed to take up opportunities that could have minimised the impact of the loss of the unit from the letting pool, but also now has a substantial amount of work to do to repair his relationship with a person that could have been a valuable ally.

So if you are a Resident Unit Manager do not make the same mistake; look for the silver lining and grab it.

Article provided by Michael Kleinschmidt of Munro Thompson Lawyers