What to Know Before Buying or Selling Strata Management or Body Corporate Contracts

Strata business owners know that there’s more than one way to skin a cat – and that
applies when it comes to selling.  

Whether business owners want to sell the entire business or just a portion, such as a portfolio, they first need to understand that there are considerations to factor in. 

In Australia, the State you operate in plays a big part in strata management business sales, as legislation varies between States and impacts how a strata sale takes place.

For example, in Victoria, the legislative framework (namely the Owners Corporations Act 2006) and the commonly used management contracts make it conducive to the assignment of management contracts. 

However, in New South Wales (under the Strata Schemes Management Act 2001) and Queensland (under the Body Corporate and Community Management Act 1997), it’s the opposite in a way that the assignment is not as straightforward. 

Another point to keep in mind is that the form of the sale, as dictated by legislation and management contracts, is a different topic from your personal tax outcome. 

Our advice is for strata business owners to get the best tax advice they can from a trusted tax accountant. This will help determine what is best for them from a taxation point of view. 

In summary:  

Whether you choose to sell either your business or the management contracts depends on: 

• the State that your strata management business operates in 

• the management contracts that your strata management business utilises with its clients, such as: 

• • what the wording in the clauses within your management contracts mandate 

• • whether both you and the purchaser are members of a professional industry association 

• professional advice that you receive that dictates and determines the form of the sale – per the advice of your tax accountant.

Other considerations in selling strata management business 

Recently, we had a strata business owner who wanted to retire, and they were effectively selling the purchaser all that they need to get started in strata management. 

The business owner asked us a question that’s worth adding to the list of things you should consider. 

They ultimately wanted clear answers on what is and whether there is value in their: 

• website and URL 

• brand, logo, and trademark 

• employees’ professional experience 

• potential referrals and referral partners 

• company-owned laptops and phones 

• other company-owned fixed assets 

Tip: If you are planning on selling strata management contracts, we recommend undertaking an audit or spot check on your latest signed contracts. 

Through our strata business brokering experience, we’ve found that some clients may not always be aware of their own fine print or what the strata manager agreed to on the night of the AGM. 

Here’s an example of a strata management contract that was amended without the business owner’s knowledge: 

Thinking of buying or selling a strata management business in Victoria, NSW, or Queensland? Start the conversation – send us an email at [email protected]