Buying or selling a rent roll involves the transfer of substantial data as well as the transfer of funds.
Every rent roll includes sensitive information about property owners, renters and sometimes contractors. During an exchange, it can be confusing to understand who can access what data, exactly what should be exchanged and how to handle the transfer of information legally and professionally.
The clearer you are on what’s required ahead of the exchange, the better, as it will reduce the risk of confusion and non-compliance.
Data ownership vs access: understanding the distinction
In most cases, the selling agency retains legal ownership of rent roll data, including client lists and property records, right up until the deal is finalised.
This data includes details about properties, their owners, tenants, bonds and open maintenance requests.
During the due diligence phase of a rent roll sale, the buyer may be granted conditional access to some information in order to verify the integrity of the rent roll and assess the strength of the management agreements on offer. This access doesn’t mean ownership. It’s more like a temporary licence to view and evaluate information, usually under strict confidentiality agreements.
Not all information needs to be accessed by the buyer, and not all information will be exchanged. For example, historic documents for any archived managements, archived tenancies and closed maintenance request assigned documents aren’t usually exchanged in a rent roll sale.
During due diligence: access with caution/restrictions
Any data shared during due diligence must be handled securely and in line with privacy regulations.
For example, spreadsheets should not be attached to emails and ad hoc file transfers should be avoided. Best practice uses reputable property management software which enables read-only access, or grants access to temporary data rooms with time-limited permissions.
The software platforms designed for property management transactions usually have built-in compliance features like user access controls and encrypted environments. These give rent roll buyers and sellers visibility into what has been accessed and by who, and help to reduce the risk of data breaches or misuse while the deal is in the negotiation phase.
The retention period: access with purpose
After the sale is finalised and ownership of data is transferred to the new agency, the seller can retain limited access to historical information for a defined retention period if it is required to support auditing, accounting or legal obligations.
Again, this is access, not ownership. The new owner of the rent roll now controls the data for operational purposes, including ongoing communication with landlords and tenants.
As with every element of a rent roll sale, clear boundaries should be documented in the agreement. These should outline:
Which data the seller can retain access to during the retention period
How long they can access it for
The permitted use of the data
Having this clearly in writing protects both parties and will minimise the risk of disputes down the line.
After finalisation: transfer of control
In the majority of rent roll exchanges, the seller should not retain or use any data from the transaction once the retention period has concluded. Access to the database must be revoked by the new owner, and any copies (digital or physical) must be securely deleted.
Going forward, the new owner must handle data in a professional manner, in accordance with Australian privacy laws.
Data diligence is more than compliance
A rent roll transaction is a transfer of responsibility. Buyers need to respect the data they acquire, and sellers need to take care when releasing it, as a breach of data protection and privacy obligations can result in penalties.
Using secure platforms, defining access rules during the transition period, and documenting data protocols in your sale agreement is essential to avoid risk for all stakeholders, including the buyer, the seller and the individuals whose information is being transferred.