Threat to Security - Management and Letting Rights (MLR) Agreements

The recent decision of Vie Management Pty Ltd (Receivers and Managers Appointed) (In Liquidation) v Body Corporate for Gallery Vie [2015] QCAT 164 (published on 29 May 2015) casts serious doubt over the value of security taken by financiers with respect to management and letting rights ("MLR") agreements in Queensland.

MLR agreements are entered into by the body corporate of a community title scheme and an onsite manager. The onsite manager is paid a fee for performing services for the body corporate and is also entitled to conduct the onsite letting arrangements.

The MLR industry has flourished in Queensland over the last 20 years with significant value being placed on MLRs. Financiers have commonly lent against the value of MLR agreements and assumed that they will have recourse to the MLR agreements following a default.