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A Critical Point in Selling a Rent Roll

August 2019

When preparing to sell your rent roll there’s a whole list of things that need to be done to make the transaction smooth, but I want to share one of the most important ones with you today. Having a legally binding management agreement/authority is critical for your business.

When you win a new property listing, be it for selling or leasing, we know it is important to have an authority document signed and completed properly in order for us to get paid at the end of the transaction, or during the renting process. And where possible, by obtaining a sole agency, you can secure your ownership of that transaction.

With rental properties, the management agreement is very important to have completed in detail, and have it properly signed, so you have security for the ongoing management of that property in the years to come.

This is also critical for when you want to sell and assign the existing managing agreement to another agency. Ideally your management agreement should have a clause authorising yourself the agent the opportunity to assign your rights to a new agent.

Some assignment clauses used in management agreements stipulate that the landlord needs to give notice to not be held to the assignment within a set time (ie 14 days) otherwise the assignment proceeds. So, the safest and most advantageous option is to ensure you have that assignment clause in your management agreements.

A secure management agreement is assignable under common law provided it does not have any non-assignment clause within it, however, if a landlord does not agree with the assignment they can withdraw from the agreement and find another agent.

Remember, you must have written instructions to manage a property, and if that instruction is in not in writing, or the written instruction is not completed properly, it become ineffective and you are not legally entitled to manage that property under that agreement, let alone assign that agreement to another agency.

If you’re in a state that allows sole agency, ensure that you sign them up accordingly and renew them each time that sole agency period expires. This way when it comes time to sell, you are assured of having something of value to offer the buyer.

We recommend that agents undertake a health check or an audit on their rent roll prior to going to market to sell it. If you would like to know more about this service please let us know. 

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