Management rights

[gavinc]

Can someone explain to me how these work? and is there any legal way to remove the management rights holder from management of the properties?
I ask this because I looked at a property in Mission Bay recently, a block of about 12 units. Body corp fees were about $350 per month (no argument with that) but on top of this the Manager was getting about $600 per month per unit for as far as I could see very little work.
Repair work, lift repairs and maintainance etc are all contracted out to the relevant trades anyway.
Do management rights expire after a certain time? can they be on sold?

[props4u]

that depends on actual contract signed by BC and said manager or management company, if such contract exists ... how long is it valid for, when does it expire, what does BC itself think of it, does BC think its getting a fair deal out of it or not

if no contract exists ... it is a decision to be made and voted for at either of annual general meeting or extraordinary meeting, in which case you need to counsel BC (all owners) to ensure voting goes your way

either way it is not something you can do unless you actually buy a unit and then raise issue having it tabled in agenda to look at, discuss and vote on ... and what's the likelihood you will be able to push this through without having first canvassed and cultivated BC (all other owners) sentiment on it to guarantee majority vote in favor of viable alternative you should have ready to propose, discuss, convince etc ... this needs time and much prep work, you can't just walk in and change things overnight

your best bet at this stage is to inquire requesting full disclosure by BC current chairperson (prior to buying) so you know what you're letting yourself in for regarding management contract

an important aspect you should be looking at or seeking clarification on prior to buying is this ... who owns what in that BC ... is there for example one owner who owns 6 of the 12 units? which would suggest that that particular owner rules the roost! ... how does the land lie voting wise? ... try see if you can get a listing of all owners and what exactly does each own in that BC ... you get this by asking for copy of owners registry from BC chairman (or management company if such work is delegated to management company)

FYI, BC means body corp, means "the owners"

[speights boy]

Apartment owners prevail

Judge declares that management agreement for tower was 'harsh and unconscionable'
Apartment owners in Takapuna's upmarket Sentinel have won a case against management of the 30-level tower.
.....
Owners argued the management system was undemocratic and that the manager held too much power, calling for the management agreement to be ruled invalid and unenforceable.

Justice Mark Woolford agreed and said the management agreement was "harsh and unconscionable" in terms of the Unit Titles Act 2010 which governs such agreements.

www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10845344

[props4u]

Apartment owners prevail
www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10845344

well thats good news ... though i cant see why this was not resolved through standard unit titles act procedure and had to be taken to high court ... expensive process even if one wins as this BC did

there are many such turbide management companies like that out there with unfair management agreements in place ... not good at all ... i reckon there should be punitive measures and clauses in force to discourage existence of such unfair one sided agreements which overide the interests of the BC itself

[Wayne]

often the management contract is set up by the developer for the developer initially and no one really noticed. Nice little earner for someone. These management contracts can have a real and significant value (due to steady income stream) and are fought for by the management company.

[Rosco]

often the management contract is set up by the developer for the developer initially and no one really noticed. Nice little earner for someone. These management contracts can have a real and significant value (due to steady income stream) and are fought for by the management company.

Yes most developers work on getting extra value from this.
ie if 20 houses, rented at $400 per week, then property management fees might be $28,000 per year + GST, and at a value of 1.5 times, these would be worth $42,000 to the developer to sell seperately! Nice little bonus for the developer!

Ross

[Ivan McIntosh]

Or they just keep the rights themselves and pick up the free cashflow.

There are a number of ways of getting rid of entrenched management contracts, or at least entrenched management rights, and Speights Boy highlighted one of the more recent cases.

[props4u]

There are a number of ways of getting rid of entrenched management contracts, or at least entrenched management rights, and Speights Boy highlighted one of the more recent cases.

could you please highlight any of 2 different ways without involving high court and lawyer fees

my understanding is that EVEN IF YOU WIN your case (the BC), you are still up for some costs of having involved high court and lawyers ... is this true or false?

[eri]

victopia apartments in auckland central are somehow wound up in a similar management arrangement

and it seems very hard to work with them...

[Ivan McIntosh]

could you please highlight any of 2 different ways without involving high court and lawyer fees

my understanding is that EVEN IF YOU WIN your case (the BC), you are still up for some costs of having involved high court and lawyers ... is this true or false?

They are legal methods I'm afraid. If the entrenched managers don't want to go, then you don't have much option. However, quoting the relevant cases at them and showing the managers how their behaviour or document is the same as those who lost in court can get a backdown. And if the owners are all agreed to pursue legal action, the costs divided amongst them all aren't so bad.

On the other hand, proposed changes to the Unit Titles Act (if they go through) should see the Tenancy Tribunal having a broad range of orders available for Unit Title disputes sufficient that High Court action might be avoidable. The Tenancy Tribunal approach doesn't require a lawyer...although you'd be well advised to consult one, because these matters tend to be complex.

To answer your query, even if you win you will still pay costs, same as with any civil action. Very unusual to get full costs recovery. Usually 30-60% at most.

[gavinc]

Thanks to everyone for your reply's and info.
I haven't brought and nor will I with this management contract in place, as I see it the Management Co is charging about $600.00 per month per unit for very little - body corp fees are on top of that and cover repairs etc.
Lovely place, 4 expat owners who probably are not concerned about the fees and the remainder I suspect would/could be difficult to get onside. Next time one is up for sale I will enquire and try to get a copy of the management contract, body corp info etc. I beleive that without the management contract the apartments would actually be more valuable or at least easier to sell

[props4u]

Thanks to everyone for your reply's and info.
I haven't brought and nor will I with this management contract in place, as I see it the Management Co is charging about $600.00 per month per unit for very little - body corp fees are on top of that and cover repairs etc.
Lovely place, 4 expat owners who probably are not concerned about the fees and the remainder I suspect would/could be difficult to get onside. Next time one is up for sale I will enquire and try to get a copy of the management contract, body corp info etc. I beleive that without the management contract the apartments would actually be more valuable or at least easier to sell

pleasure ... tho curious ... where in mission bay (address)? and name of mng co?

[gavinc]

43,45 & 47 Tamaki Drive - Bay Terraces

http://www.nz.open2view.com/properties/249475

No idea who the manager is, lives on site has his/her own apartment.

[props4u]

43,45 & 47 Tamaki Drive - Bay Terraces

http://www.nz.open2view.com/properties/249475

No idea who the manager is, lives on site has his/her own apartment.

interesting, thanks ... total of 17 units with cv's ranging from 0.8 to 1.2mil

350pm bc levy = 4200pa
600pm mngmnt = 7200pa
rates averaging = 3700pa
each owner's basic costs per unit = $15,100 pa

management co pockets 16 x 7200, a cool $115,200 pa
[edited to include this] ... yes, i know 16 not 17 x 7200

for doing what exactly? could it be some kind of super service i have never experienced?

how, may one ask, could this be beneficial to or serving the interests of 17 BC owners?

i stand corrected ... 16 BC owners (seeing he owns one)

i stand corrected again ... maybe he doesn't own one but BC does and he gets it rent free?
(hypothetical but more than likely)

[gavinc]

yep my thoughts exactly - maybe instead of complaining I should try to buy the management rights
Re super service - I also found this http://www.donalddesign.co.nz/bay_terraces.html
The medical practice on site is a bit of a beat up as the doctors own or rent the unit below the Management rights owner - its a unit out the back with no seaview - it's actually a doctors rooms and services the wider mission bay area