In the first part of our series focusing on the key risks involved in rent roll transitions, we explore 3 essential (but often overlooked) steps that can affect the sale.
MCRRB supports both sellers and buyers through rent roll transitions, helping keep the sale process controlled, obligations clearly understood, and settlement free from avoidable surprises. We assist with preparing new agreements, conduct weekly check-ins with all parties, review returned signed agreements and property files, and help ensure accountability to the exchanged contracts throughout the transition.
Following on from my last broadcast and catch-up with Sonia Rahme of Askew Williams & Associates, we have seen a number of common errors that are easy to make when teams are busy preparing to buy or sell a rent roll. These issues can arise during due diligence, when deciding whether to proceed with an acquisition, or after exchange when the rent roll is being transitioned to the purchaser.
Below are some of MC’s most important tips for achieving a seamless transition. If these steps are overlooked, they can lead to unnecessary cost and complexity at the end of the retention period.
1. Documents and Data
Where are all property documents currently stored? Consider whether ingoing inspection reports, routine inspection reports, leases, tenant application forms, and compliance records are all located within your property management software or spread across multiple platforms. In many cases, only the main property management system is merged or transferred to the purchaser at settlement.
- Tip: Ensure all documents are synced into your primary property management software.
- Tip: Scan all required hard copy documents into the system.
- Tip: Confirm that inspection photos and reports have transferred correctly; it is common for these not to sync as expected.
- Tip: Clarify before settlement whether the buyer or seller is responsible for ensuring all records transfer across under the contract or term sheet.
2. Bond Audits
In many transactions, the seller’s rental bond board account holds more bonds than are transferred or paid for at settlement. MC reconciles all bonds held in the bond board account against the properties included in the settlement to identify discrepancies early.
However, post-settlement bond audits completed during the retention period can reveal additional issues, such as bonds linked to properties no longer under management, unclaimed bonds, or duplicate bonds recorded against the same property.
- Tip: Buyers and sellers should decide before exchange or settlement who will conduct the bond audit. In many cases, this responsibility sits with the seller. Leaving outstanding bond issues until the end of the retention period can become difficult and costly.
3. Ingoing Inspection Reports
An ingoing condition report is commonly a required settlement condition for each managed property. It is important to confirm where these reports are stored and whether the seller holds executed, signed, and dated copies. MC often sees ingoing condition reports uploaded into property management software without proper execution.
- Tip: If any ingoing condition reports are more than 6 to 8 years old, check whether they were originally completed on paper or exist only as PDF copies, and scan them into your property management software before settlement.
- Tip: If you use third-party inspection software, confirm that all inspections and attached photos have uploaded correctly to your primary property management software.
- Tip: If you are a seller, review inherited properties carefully to confirm whether ingoing condition reports are available.
- Tip: Where an ingoing condition report is missing for an older tenancy, consistently completed annual routine inspections may help support the file, depending on the contract requirements.
By addressing these issues in the contract and preparing well before settlement, both parties can support a smoother, more organised transition.
Most importantly, MC recommends weekly check-ins between the seller and purchaser. Transparency is one of the most effective ways to achieve a successful sale and transition without last-minute surprises.
For assistance with rent roll sales, acquisitions, and transition services, contact Matt Ciallella.
Mobile: 0414 668 972 | Email : matt@mcrrb.com.au