Where a new build development includes Public Open Space (POS), ensuring the effective ongoing management of the POS is crucial. A well-drafted, clear management agreement to be entered into between the developer and intended management company can prevent disputes arising in respect of the maintenance of the POS and can promote clarity among all parties involved.

In this blog, we will look at the best practices for creating clear, comprehensive and enforceable management agreements.

The purpose and objectives of the management agreement

The management agreement should clearly outline the purpose of the agreement i.e. setting out the intended responsibilities of the management company and the developer as well as payment obligations of the property owners and how these costs will be collected. The objectives of each party should be clearly understood at the outset so that these objectives can be established and met within the agreement.

Benefit: If the specific obligations of each party are clearly outlined and defined in the agreement, the risk of future disputes arising due to parties being unsure of the respective obligations is minimised.

Ensure obligations are clear and specific

The services to be provided by the management company should be clear and specific, including specific maintenance and repair obligations. Where possible, all terms should be defined to create clear obligations, for example if the agreement refers to ‘maintenance’ then it needs to be clear what this includes, e.g. cleaning, repairs, landscaping and the upkeep of communal areas.

Benefits: The clearer the obligations of each party the less room for any ambiguity when interpreting the agreement. This in turn should mean it is easy for each party to meet carry out their obligations with no ambiguity or confusion as to who might be responsible for various areas.

Use easy to understand language

The terms of the management agreement should be written in plain English which is easy to interpret and understand and unnecessary legal jargon should be avoided where possible.

Benefit: Complex and unclear contract terms can lead to misunderstanding and potential disputes if complex terms are interpreted in different ways by different parties.

Include a detailed fee structure

A clear breakdown of all fees payable including service charges and any administrative and additional fees should be communicated on and agreed upfront to avoid any surprises. They should then be detailed in the management agreement.

Benefit: If all fees are not agreed and clearly set out at the outset, disputed can arise if fees turn out to be higher than one party was perhaps expecting. Detailing the fees upfront also means developers can confidently pass the information onto purchasers so that there are no surprises or disagreements as to the future management costs payable.

Include an effective dispute resolution procedure

A clear dispute resolution process should be included within the agreement which outlines the steps for mediation, arbitration or legal action if necessary should a dispute arise.

Benefit: Having an effective dispute procedure outlined within the agreement creates a pre-agreed avenue for dispute resolution if necessary and can save each party time and money.

A well-drafted, clear and enforceable management agreement provides certainly for all parties involved and ensures that the management of the POS on developments runs smoothly and effectively.

Here at Switalskis our specialist Residential Development team can assist with all elements of a management agreement to ensure that your agreement is clear and achieves all of your objectives while minimising any risk for ambiguity and disputes. Call 0800 138 0458  or email residentialdevelopment@switalskis.com