Same OC Manager, New Agreement saves over $91k

We helped a Tier 1 Owners Corporation negotiate a new agreement with their existing manager that offered a reduced term and cost-saving of $91,950 annually.

In February 2022, a committee member contacted us about what they believed to be an unfair and overpriced contractual agreement.


Background

  • The multi-Owners Corporation was being managed by a large Owners Corporation management company and was Developer appointed.
  • The existing Contracts of Appointment included periods of time that exceeded the recently legislated maximum term for Owners Corporation agreements.
  • The fee to prepare records for transfer was excessive and would be considered a poison pill* when wanting to end the agreement. 
  • A range of additional fees also appeared well above current market trends.

*(A poison pill is where the financial penalty for ending management is considered untenable). 

Outcome

  • The committee engaged The OCguide to review all management agreements for a multi-OC and prepare a report to clarify how the contractual terms compared to other agreements for similar sized Owners Corporations.
  • The OCguide’s report enabled the committee to confirm how their fees compared to the market average and how the terms agreed aligned with the legislation.
  • Using our industry expertise and market insights, The OCguide developed a contract amendment proposal and mediated with the existing manager to successfully negotiate amendments to the existing contracts. 
  • The Owners Corporation were offered new terms and reduced management fees with a cost saving of $91,750 annually, including a large range of additional services at no cost. They were also offered a substantial reduction in the number of years the contract was originally agreed to by the Developer.
  • The OCguide managed the process from start to finish, including preparing all paperwork, convening and chairing meetings and assisting and educating committee members regarding their rights and obligations.
It was the industry expertise and market insights provided by The OCguide that allowed this Owners Corporation to understand what a fair and lawful contract should and should not include.  This, combined with The OCguide’s ability to build a trusting relationship with both sides, allowed the development and agreement to contractual amendments offered by the manager.
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