Caretaking Management Rights: What the Caretaking Agreement Says
What a caretaking agreement says on duties, pay review, top-ups, termination and transfer, and how a lender reads each clause before funding.
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Caretaking Management Rights · Caretaking Agreement · Lender Read
Most buyers price the letting income and skim the caretaking agreement, yet it is the document a lender reads clause by clause. Here is what each part of it says, and what it does to the loan.
Quick Answer
A caretaking agreement sets out what the onsite manager must do, what the body corporate pays for it, how long it runs, how it can end and how it passes to a buyer. Lenders read each of those clauses before funding management rights finance, because the salary and the term underpin the whole going concern.
Also called: caretaking agreement, caretaking service contract, caretaking contract. All three describe the same document.
What are caretaking management rights?
Caretaking management rights are the part of a management rights business where the body corporate engages the onsite manager, as a caretaking service contractor, to look after common property for a salary paid by the scheme. The letting rights and the manager's unit make up the rest, and the three are bought together as one business. If you need the wider picture first, start with what management rights are or the short definition of management rights in our glossary.
Most caretaking agreements sit in Queensland, so the rules shown here are Queensland's. Victoria and New South Wales run under different strata law, with different names for the same roles: see management rights in Victoria and Melbourne and management rights in Sydney and New South Wales.
This insight stays on one document. Our management rights guide walks through the whole purchase, from finding a complex to settlement.
What does a caretaking agreement require the onsite manager to do?
A caretaking agreement requires the onsite manager to carry out the duties schedule: the cleaning, upkeep and supervision of common property that the body corporate would otherwise pay separate contractors to do. In Queensland the engagement must be in writing, state the term, state the duties and include the payment arrangements, and it cannot be made as a by-law.
The duties schedule usually covers:
- Common areas. Cleaning lobbies, stairwells, car parks, bin rooms and walkways.
- Grounds and pool. Gardens, lawns, pool and spa care, and keeping safety barriers in order.
- Minor repairs. Small fixes to common property, with larger jobs reported to the committee.
- Supervising trades. Letting contractors in, watching the work and reporting back.
- Hours and standards. When the manager must be available and the standard the work must meet.
What is usually excluded matters as much. Major repairs, capital works, anything inside a lot and specialist services such as lifts or fire systems are commonly contracted separately. Read the exclusions line by line, because a schedule that quietly folds in specialist work changes how many hours the salary really buys.
| Part of the agreement | What it usually says | What a lender checks (indicative, varies by lender) |
|---|---|---|
| Duties schedule | The common property work the manager must do, and what is excluded. | Whether the buyer can deliver it without extra paid staff eating the margin. |
| Hours and standards | Availability, response times and the standard the work must meet. | Whether the hours fit alongside the letting side of the business. |
| Remuneration and review clause | The salary, how it is paid and how it is reviewed over time. | The salary's share of net profit, and whether the review mechanism holds its value. |
| Term and extension options | The start date, the term and any options to extend. | Years remaining against the proposed loan term, and the top-up history. |
| Transfer clause | How the agreement passes to a buyer, with body corporate approval. | That approval can be obtained before settlement. |
| Termination and remedial notices | The grounds and process for ending the agreement. | Any notices issued to the current manager, and whether they were resolved. |
Sources: Queensland Government, Engaging a service contractor, last updated 1 April 2026; Amending an engagement, last updated 21 November 2018; Transferring an engagement, last updated 1 April 2026; Terminating an engagement. All read 13 October 2026. Lender checks are indicative and vary by lender.
How is caretaking remuneration set and reviewed?
Caretaking remuneration is set first by the developer, and the starting salary should relate to the work the duties schedule requires. From there, the review clause in the caretaking agreement decides how the salary moves. Some agreements tie reviews to an index, some use fixed steps and some allow a market review. Read which one you are buying, and how often it applies.
In Queensland, a motion to increase a service contractor's pay can only be considered once in a financial year, so an agreement with no workable review mechanism can sit on a flat salary for years while costs rise. That is a real risk for the buyer, and for the lender.
From the underwriter's seat, the caretaking salary is the steadiest line in a management rights business, because the scheme pays it whether or not the letting pool is full. That is why lenders look closely at the salary's share of net profit, and how they weigh it varies by lender. Whether GST applies to the salary, and how it is taxed, are questions for your accountant.
Can a caretaking agreement be topped up or extended?
A caretaking agreement can be topped up or extended, but only by a decision of the lot owners. In Queensland an amendment is made by ordinary resolution at a general meeting. Where the amendment includes an option to extend or renew, it must be decided by secret ballot, and proxies cannot be used. A motion to extend the contract can only be considered once in a financial year.
The maximum term depends on the scheme's regulation module: up to 10 years under the Standard Module and up to 25 years under the Accommodation and Commercial modules, at the time of writing, according to the Queensland Government's guide to engaging a service contractor. How long a Queensland agreement can run, and why the module matters to a lender, is covered in our Queensland lender view.
A top-up of the term is how a manager rebuilds years that have run down. Ask for the top-up history, because a body corporate that has topped up regularly is telling you something about the relationship, and so is one that has refused.
How can a body corporate end a caretaking agreement?
A body corporate can end a caretaking agreement for set reasons and only by following a set process. The grounds include misconduct, gross negligence, failing to carry out the duties, and breaching the code of conduct or disclosure requirements.
- A remedial action notice comes first. The committee can decide to issue a remedial action notice with at least 14 days to fix it, at the time of writing.
- The manager has the chance to fix the failure. If the problem is remedied within the notice period, the process stops there.
- If not, the owners vote. Termination is decided by ordinary resolution at a general meeting.
An agreement can also end by agreement, under its own terms, or after certain convictions. After termination the contractor cannot transfer the business, so the caretaking side loses its sale value. That is why a notice history matters when you buy. Whether a clause protects you, or whether the body corporate is acting within its powers, is a question for your solicitor.
How does a caretaking agreement transfer when management rights are sold?
A caretaking agreement transfers to a buyer only with committee approval of the transfer, given by resolution of the body corporate committee. Once it has the information it needs, the committee has 30 days to decide, at the time of writing, and it cannot unreasonably withhold approval.
In deciding, the committee may consider the buyer's character, financial standing, competence, qualifications, experience and training, and the terms of the transfer. It can recover its reasonable costs but cannot charge any other fee. Engagements cannot be transferred at all under the Small Schemes, Specified Two-lot Schemes or Commercial modules.
A transfer fee may also apply if the business is sold soon after the initial contract date: 3 per cent of fair market value within the first year, or 2 per cent within the second, at the time of writing, with a hardship waiver available. Lenders make committee approval a condition of settlement, so build the approval timeline into your contract dates.
How does a lender read the caretaking agreement before funding?
A lender reads the caretaking agreement as the foundation of the business it is funding, checking whether the income it creates is secure for longer than the loan. On a credit file, these are the points that move the decision:
- Term remaining. Years left on the agreement against the proposed loan term, typically with a buffer.
- Top-up history. Whether the owners have extended the term when asked.
- Salary share. How much of net profit the caretaking salary carries.
- Duties. A duties schedule the buyer can deliver without hiring help that was not in the figures.
- Review clause. Whether the salary keeps pace over the term.
- Transfer clause. That approval is realistic before settlement.
- Notice history. Any remedial notices, and how they ended.
Passes the lender read
- Long term remaining with a record of top-ups
- Clear duties schedule with sensible exclusions
- Review clause that moves the salary over time
- Clean notice history and a cooperative committee
Fails the lender read
- Term run down close to the loan term
- Duties that need paid staff not shown in the figures
- Flat salary with no workable review
- Open remedial notice or a refused top-up
Deposit, valuation and how much a lender will advance sit in our lender read on management rights finance. The manager's unit is often funded separately as a commercial property loan, covered in our insight on the manager's lot. If the agreement was set by a developer in a new building, read our guide to off the plan and established management rights first.
When you have an agreement in hand, check eligibility and we will read it with you before you commit. More accommodation lending sits on our accommodation finance hub.
The caretaking agreement is the document that holds a management rights business together. It sets the duties, the salary and how that salary is reviewed, the term and how it can be topped up, the process for ending it and the approval needed to sell it. A lender reads every one of those clauses, because the caretaking salary is the steadiest income in the business and the term caps how long the loan can run.
Key takeaway: read the caretaking agreement clause by clause before you price the letting income, and bring its term, review clause and notice history to your broker early.Frequently Asked Questions
Caretaking management rights are the part of a management rights business where the body corporate pays the onsite manager a salary to look after common property. The other parts are the letting rights and the manager's unit, and all three are normally bought together. The caretaking agreement sets the duties, the pay, the term and how the business can be sold.
Caretaking management rights can be bought, but almost always as one business with the letting rights and the manager's unit rather than on their own. The body corporate's committee has to approve the transfer of the caretaking agreement to the buyer. A lender funds the business as a whole, so the caretaking salary and the letting income are read together through management rights finance.
The onsite manager is usually the caretaker as well, because the same person holds the caretaking agreement and the letting authorisation in most schemes. The two roles sit under separate documents, and the body corporate pays only for the caretaking side. Our guide to what management rights are explains how the parts fit together.
The caretaker's salary in a body corporate is paid by the scheme itself, funded from the levies lot owners pay. The amount and how it is reviewed are set out in the caretaking agreement, and the developer usually sets the starting figure. Whether GST applies to the salary depends on the manager's registration, so confirm that with your accountant.
A body corporate can end an onsite manager's caretaking agreement, but in Queensland it has to follow a set process rather than act on a whim. For most performance grounds that means a remedial action notice first, then a vote at a general meeting if the problem is not fixed. Our Queensland lender view covers how that risk feeds into the loan.
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