• Wendy Thomson

What is Commercial Property Management?

Updated: Feb 8, 2021

Welcome to a series of posts focusing on the key ingredients of successful commercial property management through simple, practical tips that can help your agency deliver exceptional customer service. This post discusses that all-important mandatory piece of paperwork, which is the foundation of every commercial property manager–client relationship: the management authority.

Why a Bulletproof Management Authority is Vital

Commercial property management involves a range of services that may be offered by an agency to a commercial property client for a specified period. While many services are standard offerings, some clients may have particular needs that require the standard services to be customised, or that separate bespoke services be negotiated. Whatever the client’s requirements, it is vital that all services the agency commits to and all the fees and charges they attract, along with the specified period of management, are fully documented in the management authority.

In addition to property management services, an agency may also oversee the administration of each commercial premises lease through an exclusive management authority. Each lease will have critical events the landlord and tenant have committed to by signing the lease.

Why is it so important to get it right?

A management authority is required by law in each state and territory. When signed by all parties, it becomes an enforceable contract between the landlord and the agency. As a legally binding agreement, an authority can be relied on as evidence in any legal challenge that might arise should the provision of services or fees charged be later disputed. Many legal challenges are based on an agency either partially delivering or not delivering the services contained in an authority.

Tips to help you bulletproof your authority

Once the services to be offered have been agreed, the authority must record the following:

  • details of all services offered

  • fees and charges applicable to the provision of each service

  • period of management for which the services will be provided

Who can sign the authority as client?

Like any other legal contract, an authority can only be signed by a legally responsible person. If the client is acting under a power of attorney or an authority, originals of these documents must be sighted and copies made, or certified copies must be provided by the client. If the client entity is a company, all directors of the company must sign.

For a legally binding authority:

  • ·All parties must read the authority and understand and agree what services are provided, how they will be provided, and the period and the regularity of that provision.

  • All parties must sign the authority.

  • Copies of the fully signed authority must be provided to each party. Electronic copies are generally acceptable, but it is common practice for one signed original to be provided to client and one to be retained by the agency.

Once the authority is in place, the agency must ensure that its property management team delivers all services during the management period and in accordance with any scheduling. If an exclusive management authority has been signed, the agency has also effectively committed to ‘managing and enforcing the performance of the lease obligations of tenants and the landlord.’

Relying on a boilerplate authority?

A boilerplate authority contains standard or universal text and should always be checked thoroughly prior to use. Agencies relying on a boilerplate such as the REIV Exclusive Commercial Property Management Authority, should be aware that its wording includes attendance at mediation, VCAT and Victorian or Federal courts as one of the services provided.

If an agency is not prepared to undertake this type of service or does not have the expertise to call on, these sections should be struck through and initialled by all parties to the authority.

If an agency is prepared to offer this service, it should be noted that proper preparation of files for any dispute or legal case can take hours, and any attendance at mediation, tribunal or court may be required for several days and travel expenses incurred as a result. An hourly rate and a travel fee should be included in the authority to cover these costs.

Remember: Under the Estate Agents Act 1980 (Vic), fees can only be legally charged if they are included in an approved signed authority with a copy provided to the landlord.

It is critical that a real estate agency puts in place processes and practices along with training of their team to ensure they fulfil the requirements of their contract with the landlord.

For commercial property management and lease administration training for your agency team contact Wendy Thomson from WendyWho? Email: events@wendywho.com.au

© Wendy Thomson 2020