By and large Caretaker Manages in a Strata Scheme are a good thing to have but like all things in life there are good and bad operators and agreements that go with them. Matthew and Sonia were looking to buy into an apartment building and decided to seek some advice from the team at Strata Check before signing the contract of sale.
The development they were looking at comprised, 75 apartments a pool and BBQ area, a small gym and landscaped gardens and grounds as part of the contract disclosure documents there was a Caretakers/Management Rights agreement. Nothing unusual about that given the number of lots, but what was of concern was the annual renumeration being paid to the manager in year one compared to the duties required to be performed. You see the proposed agreement was a Supervisory or Supervise only agreement which means the Caretaker was paid to oversee other contractors engaged and paid for by the Body Corporate for example the pool cleaner and the Gardener and cleaning contractor. Again in itself there is nothing wrong with the concept however the renumeration under the agreement was way too much money.
The Caretaker Manager was being paid $1125 per lot per annum plus GST or $23.79per week Inc GST and a 4% fixed annual increase, the initial term of the agreement was 15 years plus a 10 year option and over the first term of the agreement the annual renumeration would grow to $2812.5 per lot plus GST or $59 dollars per week inc GST that each owner would be paying in levies just for the Caretaker Managers supervisory salary.
Outcome,
Needless to say that Matt and Sonia did not proceed to buy into this scheme and found themselves another Strata Investment property that received the Strata Check tick of approval and saved them selves a significant amount of money, time and anguish in the process.