On 28 October, the Federal Government announced it would provide a $1 billion concession loan to the ACT Government for its Loose Fill Asbestos Insulation Eradication Scheme. The 10 year loan is subject to the Commonwealth interest rate (with a 0.6 percentage point discount).
A loan is not what Territorians were hoping for.
The scheme is described as a voluntary buyback, under which the ACT Government intends to purchase and demolish all 1021 Mr Fluffy houses. The aim of the scheme is that within 5 years none of these 1021 housing will be left standing. This is in line with the advice of the Asbestos Response Taskforce that ‘there is no effective, practical and affordable method to render homes containing loose fill asbestos insulation safe to occupy in the long term’.
Mr Fluffy owners have until 30 June 2015 to decide whether or not to opt into the buyback program (the Scheme).
The Scheme
Homeowners who opt into the Scheme will surrender their Crown Lease to the ACT Government.
In exchange, the homeowner will receive:
-Market Value-
The government will pay the market value of the affected block (house and land) as at 28 October 2014
This valuation date will be the same for all of the 1021 properties – regardless of the timing of their buyback and demolition.
Importantly this valuation will ignore the presence of loose fill asbestos
-Stamp Duty Waiver-
A once only right to a waiver of stamp duty (up to the value of that payable on a transfer of the affected home) for the purchase a residential property in the ACT
-Legals-
$1000 to obtain independent legal advice on the deed of surrender of the crown lease.
-Emergency Financial Assistance-
Homeowners can also access emergency financial assistance when they move out of their home – being $10,000 plus $2,000 per dependant child. This assistance is only available while the Scheme remains open, and is available whether or not you opt into the Scheme.
-First Option on your Land-
Each homeowner will also get a right of first refusal to re-purchase their affected block at market value, on which they must build a residential premises and live in it. There is mention that large blocks will be subdivided, and that homeowners may only be able to re-purchase part of their block if it is subdivided.
What’s the downside to all this?
-Waiver of all rights to sue the Government-
Homeowners will sign a deed of surrender, waiving any right to pursue legal action against the ACT and/or the Commonwealth in relation to the property. This waiver does not include any action you have for personal injury i.e. asbestos related diseases.
-Surrender value of your land as at 28 October 2014-
If you opt into the Scheme, it is not clear what the timing of settlement of your surrender will be. This is the date that you handover your land and receive your money. If this occurs up to 5 years down the track – market value then may be well above what it was on 28 October 2014.
-First Option on your land is market value at that time-
The date when your block becomes available for re-purchase could be up to 5 years down the track – well after you have received your surrender payment. If the market increases, homeowners who are paid 2014 values for their house and land may be priced out of the market for their land buyback.
And where will you live in the meantime? The financial assistance on offer will not cover residential rental for the years that may pass before your block is remediated and ready for purchase.
-Block may be halved-
Big blocks may be subdivided by the ACT Government, to increase the return, better for repayment of the Commonwealth loan. So a homeowner’s first option to buy back their land is not guaranteed to be the whole block.
-Compensation is limited-
Homeowners will have to bear the costs of engaging a licensed asbestos removalist to recover any goods that may be affected by asbestos (i.e. those in the ceiling or subfloor). You will not be provided with compensation for contaminated contents.
The compensation offered for rental and relocation assistance may not be adequate.
ACT Government will not compensate for mortgage early repayment fees – although they will advocate for the banks to waive these fees. Homeowners also will not be compensated for future financing costs for the purchase of their replacement home.
What if you don’t agree with your valuation?
The ACT Government will arrange two independent valuations, and will not select the valuers in each instance. If a homeowner doesn’t agree with the valuation amount, the homeowner must pay for further valuations to be carried out.
What Happens If You Don’t Opt In
There are two key consequences of deciding not to participate in the buy-back.
1. Likely Compulsory Acquisition
Given the ACT Government’s expressed desire to demolish all Mr Fluffy houses within 5 years, it is possible (if not likely) that it will utilise its compulsory acquisition powers under the Land Acquisition Act 1994 (ACT). Indeed, this has been alluded to in the various Taskforce Reports and Chief Minister Gallagher’s speeches.
2. Mandatory Home Safety Requirements
The Government has indicated that in 2015, mandatory legislative obligations will be in place regarding Mr Fluffy houses. These requirements, under an amended Dangerous Substances Act 2004 are designed to minimise the risk of entry of asbestos fibres into the living areas. Homeowners choosing to remain in their homes will have to, at their own expense:
– Seal, remediate and clean their home. This will include restricting and sealing access to ceiling cavity and subfloor, and all entry paths from wall cavities to living areas e.g. door frames, light switches, window frames, external or internal vents and grills.
– Obtain regular asbestos assessments to ensure ongoing efficacy of the remediation.
– Obtain building approval for any kind of maintenance or renovation works. It is noted that maintenance or renovation works are unlikely to be approved unless associated with the minimisation of asbestos risks.
– Inform every person who enters the home of its status and condition.
These requirements will not only impose considerable costs on homeowners but will likely:
– limit air flow, contributing to condensation, mould, damp and potentially termite activity
– render downlights inoperable
– render underground storage areas (including garages) unusable
– affect privacy
– render exhaust fans, air conditioning and heating systems inoperable
Will compulsory acquisition be better than the buy back scheme?
Everyone knows the mantra of “The Castle” – a compulsory acquisition of a home must be “on just terms”. This is not just a “vibe” but a constitutional right.
Homeowners who hold out for compulsory acquisition under the Land Acquisition Act 1994 (ACT) are entitled to a range of compensation, including:
– market value of the property
– any loss, injury or damage suffered as a consequence of the acquisition (section 45(2)(c)
– legal costs associated with getting advice regarding the acquisition (section45(2)(e))(with no cap of $1000)
– lump sum payment of $15,000 (section 51) if you were residing in the premises prior to the acquisition
And thanks to the constitution, a court could be asked to consider in each individual case whether the above compensation represents “just terms”.
BUT:
– the compensation would be payable of the ‘market value’ of the land taking into account the presence of asbestos. Market value is defined by the Act to mean the market value of an interest in land at a particular time – being the amount that would have been paid for the interest if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer. The stigma attached to Mr Fluffy houses means market value could be substantially lower than the valuation under the Scheme
– access to any compensation is likely to be more time consuming and costly than under the Scheme
– the Government may be able to change the legislation regarding compulsory acquisition to limit the amount of compensation available
– the Government may opt not to compulsory acquire properties, leaving home owners to bear the costs of mandatory safety requirements mentioned above.
The Take Home Message
The ACT Government is consistently describing the buyback scheme as “voluntary”. Given the risks associated with failing to opt in to the Scheme it is unclear however, whether there are in fact other viable options available to these 1021 home owners other than signing up before 30 June 2015.
Written by Cassandra Emmett – Practice Leader Property and Commercial – and Sarah Harris
Chamberlains Law Firm
P 02 6215 9100
E Cassandra.emmett@chamberlains.com.au
In a lease for commercial or retail premises, rent is only one part of the tenant’s ongoing financial obligation. Additional costs called “outgoings” are usually passed on to the tenant by the landowner.
What are outgoings?
Outgoings are the landowner’s reasonable expenses associated with the premises, and they can pass these on to the tenant if properly documented in the lease.
Commonly, outgoings in commercial leases include:
What outgoings can a landowner recoup?
Most retail and commercial leases in the ACT are governed by the Leases (Commercial and Retail) Act 2001 (ACT) (“the Leases Act”). Section 71 of the Leases Act only allows outgoings to be recouped by a landowner if the following three points are satisfied:
What are recoverable outgoings?
Section 70 of the Leases Act says that a landowner can only recover:
What other provisions must be included in the lease if the tenant is liable for outgoings in commercial lease?
A lease that provides for the tenant to pay outgoings must include provisions requiring the landowner to:
What happens if there are multiple leases within one premises (i.e. a retail premises in a shopping complex)?
If there is more than one lease within a particular property, the outgoings are generally apportioned on the basis of the lettable area that premises bears to the total area of the property.
However, this is not required by law, and the Lease itself must establish how outgoings will be calculated and apportioned.
What should you do before entering a Lease?
Landowner
As a Landowner you must ensure:
Failure to do either of these things can result in time-consuming and costly disputes between yourself and the tenant and may prevent you from recovering your expenses relating to the premises.
Tenant
As a tenant, make sure you:
Two recent cases in NSW illustrates how the failure to comply with legislative requirements when issuing a statutory demand means that you, as a creditor, are highly unlikely to be able to get a winding up order against a debtor company.
In both cases of Kisimul Holdings Pty Ltd v Clear Position Pty Ltd [2014] NSWCA 262 (11 August 2014) (Kisimul) and In the matter of Ege Foods Australia Pty Ltd [2014] NSWSC 983 (24 July 2014) (Ege Foods) the creditor’s failure to comply with these requirements meant:
Background & Issues
In Kisimul, the creditor had sent two statutory demands to the debtor company. The central issue in the case was that the affidavit accompanying these demands did not include a statement to the effect:
I believe that there is no genuine dispute about the existence or amount of the debt.
The debtor company applied, on three alternative grounds, for the statutory demands to be set aside pursuant to section 459G of the Corporations Act 2001 (Cth):
In Ege Foods, the creditor had sent one document titled ‘Creditor’s Statutory Demand for Non Payment of Settlement Cheque for Sale of Business’. The affidavit accompanying this demand did not:
The debtor company did not make an application under section 459G for the demand to be set aside. As such the Court was required to use its discretion under section 467A to dismiss the winding up application.
Court’s Findings
In both cases, the statutory demand was set aside and, in the absence of a valid statutory demand or other proof of insolvency, the creditors were prevented from proceeding with winding up the debtor companies.
In Kisimul the Court held the failure to include a statement to the effect that there was no genuine dispute about the debt constituted ‘some other reason why the demand should be set aside’.
In Ege Foods, the Court held that a statutory demand that did not comply with section 459E(3) could not take effect for the purposes of section 459F. The Court further observed, in line with Kisimul, that the debtor may have been able to rely upon the creditor’s failure to comply with section 459E(3) to set aside the demand under section 459G.
Various iterations of the Building and Construction Security of Payment Act (“the Act”) operate in numerous states and territories providing a fast-paced and streamlined payment process for builders and other industry participants.
Adjudication is a cost efficient and effective mechanism used under the Act to settle disputes about payments. Adjudicators, as the title implies, hear the assertions of each party and ‘adjudicate’ or make a judgment on their assertions regarding a dispute.
Problems can however arise when an adjudicator does not actually ‘adjudicate’ but make a decision based on reasoning that none of the parties were arguing about. Can such adjudication under the Act be binding? As illustrated in the recent Queensland case of Caltex Refineries (Qld) Pty Ltd & Anor v Allstate Access (Australia) Pty Ltd & Ors [2014] QSC 223 (‘Caltex v Allstate’), the decision may not be valid as it denies the parties natural justice.
What happened in Caltex v Allstate?
Caltex hired scaffolding equipment from Allstate in performing its refinery work. Caltex paid for scaffolding on a tonnage basis and used the material for long-term work at two different sites. It was understood by the parties that under the respective contract, Caltex was required to replace any damaged scaffolding at its own cost. After a few years, Allstate found that more than half of the scaffolding was damaged. Allstate issued payment claims that were primarily for the cost of replacing the scaffolding.
The payment claims that Allstate issued were in excess of $3 million for one site and $4 million for the other. Caltex disputed the payments, saying there was a material difference between Caltex having to replace the goods and paying Allstate for the replacement costs. Caltex argued it had to replace the damaged equipment, not pay Allstate for the costs of replacing them.
Allstate was not satisfied with Caltex’s response and Allstate proceeded to adjudication under the Act. At adjudication, Allstate argued that Caltex was responsible for any damaged equipment and Caltex had on a number of other occasions paid off and settled such payment claims. They argued that there was no express term in the contract, but the payment was for a breach of an ‘implied’ term of the contract.
Caltex argued that this was not the case. They argued that there was no term in the contract for Caltex to pay Allstate for damaged equipment. They also argued that Allstate had not pin-pointed to any specific term in the contract.
Adjudicator’s decision
Quite oddly, the adjudicator settled the dispute on the basis that there was an express term in the contract that stated Caltex had to pay for replacement of the damaged scaffolding at its own cost. Neither Allstate nor Caltex argued for this conclusion –which appeared to be based on the adjudicator’s own reading of the contract.
Court’s findings – denial of natural justice
Caltex resorted to Court proceedings to dispute the adjudicator’s decision. Caltex argued a number of points, but two of their arguments were that the adjudicator erred with the contract interpretation and that they were denied natural justice.
The Court essentially agreed with Caltex. Not only was the adjudicator’s reasoning flawed, but Caltex was denied natural justice because it was not provided with an opportunity to argue about the point that adjudicator decided upon. On the same note, the adjudicator’s decision was different from Allstate’s arguments and submissions and it was also wholly inconsistent with any of the parties’ arguments.
In coming to the above conclusion, it was unnecessary for Caltex to prove that it could have persuaded the adjudicator had they been given the opportunity. The relevant fact was that they were deprived of their opportunity to argue on the adjudicator’s reasoning of the decision. As a result, the adjudicator’s decision was deemed to be ineffective.
Conclusion
Caltex v Allstate is a good example that demonstrates the importance of natural justice in adjudication. Each party should be able to argue their case based on documents they provide under the Act and the adjudication should be based on what the parties are disputing about. If the adjudicator wholly decides the case on reasoning that no party raises – then you may question whether you were provided with natural justice in the adjudication process.
In the recent case of Commonwealth Bank of Australia v Barker [2014] HCA 32 the High Court overturned the earlier Federal Court decision that a term of mutual trust and confidence was implied into employment contracts.
Background
The employment contract in question provided for compensation upon termination if the employee was made redundant and could not be given another position with the employer. Mr Barker asserted that an implied term of mutual trust and confidence also existed. He claimed the Bank breached this implied term because it failed to find him another position within the Bank.
Federal Court Accepted Implied Term
The Federal Court, following Malik v Bank of Credit and Commerce International SA (In Compulsory Liquidation) [1998] AC 20, decided that the term of mutual trust and confidence was implied by law into the employment agreement. On appeal the High Court examined whether it was appropriate to imply the term into employment contracts.
The High Court Rejected Implied Term
The High Court refused to imply the term. The Court said that to do so would be to “trespass into the province of legislative action” and therefore the Court could not endorse it.
The joint judgment stated that the complex policy considerations of Australian employment law made it a matter for the legislature. Justice Gageler said that “common law obligations in contract…ought not to be developed by courts other than in a manner that is sensitive to their interaction with legislation”. He was concerned that the consequences of the term would not be appreciated by the parties until a dispute arose.
Only Necessary Clauses to be Implied
The High Court emphasised that only necessary terms can be implied into contracts. The implied term of mutual trust and confidence was not necessary for the “effective performance of the class of contract”.
In Mr Barker’s case, the term was not necessary because the contract was effective without it. Justice Kiefel explained that the “only difference is that the compensation…is more limited than the damages sought, but that is not a matter to which the requirement of necessity is addressed”.
Possible Obligation of Good Faith Performance
The Court declined to examine the question of whether there is a duty of good faith in the performance of contracts. This implied duty would be an extension of the existing duty on contractual parties to co-operate.
In Secured Income Real Estate (Australia) Ltd v St Martins Investments P/L (1979) 144 CLR 596 the High Court affirmed Butt v McDonald (1896) 7 QLJ 68 where the Court said that “[The duty to cooperate] is a general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary on his part to enable the other party to have the benefit of the contract.”
How is this different from the term in question in CBA v Barker?
In CBA v Barker the Court found that the duty of mutual trust and confidence varied from the duty to cooperate for several reasons. First, it imposed obligations wider that what was necessary for the contract. Second, the duty to cooperate relates to contractual performance, but the implied term of mutual trust and confidence relates to the maintenance of the relationship between the parties.
How is this duty to cooperate different from a duty of good faith?
In Australis Media Holdings P/L v Telstra Corp (1998) 43 NSWLR 104 the Court said that “there cannot be a duty to cooperate in bringing about something which the contract does not require to happen. An ‘implication, arising as it does from necessity, must be limited by the extent of the need’: Board of Fire Commissioners (NSW) v Ardouin (1961) 109 CLR 105 at 118”. In Secured the Court found that the duty only requires reasonable acts of cooperation.
The implied duty to cooperate comes close to the duty of good faith (Alcatel v Scarcella (1998) 44 NSWLR 349) and will overlap to an extent. However it is narrower that the duty of good faith. The duty to cooperate requires parties to act reasonably regarding enforceable obligations. Good faith is a broader concept that includes honesty and fairness (Renard Constructions (1992) 26 NSWLR 234), seeks to exclude acts of bad faith, and targets parties exercising their rights or powers under the contract for extraneous purposes (Alcatel).
Conclusion
Employers can defend a claim that relies on this implied term of trust and confidence. However, employers should be careful when including redeployment clauses because breach can lead to a damages claim. Mr Barker ultimately recovered under the express term despite losing the implied term argument.
A prevalent phenomenon in the building and construction industry, the phoenix, is often a tool used by the “dodgy” end of town in order to avoid paying subcontractors and suppliers. Though not all phoenix activity is illegal or for that matter misguided, it is unfortunately more often than not conducted with a view to defeat creditor claims.
The classic scenario: The head contractor on a project is a company called “Dodgy Builder” who owes you $20,000.00. The company’s director has millions in assets, either in his own name or his spouse’s, however he says the company is in financial trouble and can’t repay the debt. One day the company is placed into voluntary liquidation and along with all the other unsecured creditors you have little hope to ever recover anything.
The next day however the director sets up another company called “Dodgy Builder 2” right next door and operates business as usual. You demand your debt from him or from the new company however he says it is a different company and has nothing to do with “Dodgy Builder”, and consequently owes you nothing. This is the classic phoenix predicament and is all too common in the building and construction industry.
What is a Phoenix company?
A “Phoenix” is a term used to refer to a company, as described above, where a new company is formed from the ashes of an insolvent company, transferring all assets from the insolvent entity to a solvent entity without transferring liabilities.
This process is a device used by many to abuse the protections afforded by limited liability corporations – directors of phoenix companies often wind up companies to avoid paying debts while retaining their business and assets. This often results in avoidance of creditors, employees and tax liabilities.
This can be a legitimate exercise for companies that go into liquidation whereby the sale transaction results in a repayment of creditors or otherwise the new company takes on the debts of the old company. Unfortunately this is all too often NOT the case.
How do phoenix companies get away with not paying creditors?
There is no express legislation defining phoenix behaviour. Currently law enforcement agencies need to prove that such directors engaged in phoenix activities intended to defeat creditors or that they intentionally defrauded in their legal documents. This can be a difficult task as most phoenix companies do not maintain complete or accurate financial records, which is an offence in itself.
ASIC and the ATO are looking into the problem closely which is estimated to cost the economy up to $3 billion. They have identified around 1,400 companies and 2,500 individuals who are suspected of phoenix behaviours, and they are seeking to press charges against them.
Protecting yourself from phoenix companies.
It is difficult to detect phoenix behaviour and it is accordingly best that industry participants keep themselves informed with information on the ASIC website and keep themselves up to date as to the activities of their peers.
There are strategies that can be put in place to secure debts and debt recovery processes which can be implemented to minimise exposure risk to Phoenix activity. It is important you seek legal advice from experienced lawyers with respect to such activity.
When you sell a business that’s run from leased premises, you need to be aware that your landlord has a say in whether the sale goes through or not.
Once you have a buyer for your business, and you’ve agreed on a price and nutted out the relevant terms, the assignment of your lease to the buyer is almost always a necessary part of the sale.
In most business leases, your landlord must agree to the assignment before it can take effect.
Your typical business lease will almost always contain a clause stating that you must not assign the lease without the consent of the landlord. Your landlord must therefore agree to your sale by approving your buyer, because your buyer will be their new tenant. Your landlord will want to know who is their new tenant, and what is their business experience and financial standing, this is part of the approval process.
Your lease will usually say that the landlord must not unreasonably withhold their consent to an assignment. In practice, it is difficult to measure whether a landlord is being reasonable or not when they do not agree to new tenant. So this gives the landlord a lot of power in the transaction.
In the ACT the Leases (Commercial and Retail) Act 2001 (the Act) governs the assignment of retail and commercial leases. All other jurisdictions in Australia have similar legislation. The Act will apply to most commercial and retail leases if there is any inconsistency between your lease and the Act.
The very first step under the Act is to give the prospective buyer a copy of the disclosure statement for the premises – this is a document the landlord would have given you at the start of the lease (section 93). You may then request the landlord to agree to the assignment of your lease to the prospective buyer (section 95).
At this point you should give the landlord information about the prospective buyer, or usually you will direct the prospective buyer to deal direct with the landlord to give them information about themselves. The landlord is empowered to request additional information about the prospective buyer.
Once you have made your request (make sure you do this in writing) and the landlord has received any information requested about the prospective buyer, one of three things can happen:
You can sell your business! You, the landlord and the prospective buyer should then sign documents to assign the lease, which include releases between you and the landlord.
There are time limits under the Act for the landlord’s response to your request, these are to protect you from delay. If the landlord fails to answer in time, they are automatically deemed to have consented;
The Act says a landlord can only withhold consent ‘if it is reasonable in all the circumstances to do so’.
There are a range of circumstances in which a landlord can reasonably withhold consent, including:
Their financial position may be considerably worse than yours, or they may be new to business with no financial history or references, and a landlord will not want to take the risk;
If your potential buyer is a public company, its directors will typically refuse to provide personal guarantees so you’ll need to negotiate on this;
Where they are new to business, they won’t have the experience to prove that they can make it work;
This is unlikely to be a problem where the potential buyer is purchasing and continuing your business; or
This gives the landlord a right to terminate.
If your landlord refuses consent on what appears to be reasonable grounds, there is really nothing you can do to force their hand. You could consider looking for alternative premises, however: You probably have time to run in your existing lease that will cost you money; and you will need advice on the GST going concern status of your sale if you change premises.
If you think your landlord is unreasonably withholding consent, your only option is to commence legal proceedings. If the Act applies to your lease, it allows you to apply to the Magistrates Court to have a landlord’s refusal overturned only on the grounds that it is unreasonable.
These court actions are difficult to win as they come down to the reasonableness of the landlord’s actions, which is subjective and hard to gauge. These court actions are also time consuming and expensive, and your potential buyer may move on while you are running the action.
The most serious ramification of your landlord withholding its consent is that the proposed sale of your business will not proceed. In this way your landlord can force you to hold on to a business you no longer want.
Despite its ubiquity over the past 15 years the Building and Construction Industry Security of Payments Act 1999 (NSW) (“the Act”) has recently been amended by the New South Wales government in response to the Collins Inquiry. The amendments came into force on 21 April 2014 and are aimed at:
1. Streamlining cash flow in the building industry and relieving financial pressure on subcontractors where some subcontractors had to wait 90 + days for payments.
2. Ensuring head contractors pay their subcontractors before claiming money from principals themselves.
Despite these somewhat simple objectives the Amendments have resulted in many changes to the operation of the Act and it is important for all stakeholders in the construction industry to obtain proper legal advice about their project management and payment functions in light of such changes.
Major changes to the Act include but aren’t limited to:
1. The Act now differentiates between head contractors and sub-contractors (and imposes slight varied obligations on them) and construction contracts in connection to exempt residential construction contracts.
2. The Act does not apply to construction contracts directly with owners who will live in or intend to live in the dwelling being constructed.
3. The Amendments to the Act have removed the requirement to state: “This payment claim is made under the…. Act” in certain circumstances, effectively broadening what could be deemed a payment claim under the Act.
4. Due dates for payment of payment claims have been amended:
• For principals to pay head contractors: 15 business days (maximum, can be contracted to lesser period).
• For head contractors to pay sub-contractors: 30 business days (maximum, can be contracted to lesser period).
• For construction contracts in connection to exempt residential construction contracts: date specified in the contract or if no express provision, 10 business days.
5. Head contractors must also now provide a “Supporting Statement” to the principal when providing a payment claim that requires them to declare they have paid their sub-contractors the amounts that are due. If such a Supporting Statement is not provided to or is false, a fine of up to $22,000 may apply.
The Amendments have also affected the way documentation should be prepared and examined by industry participants:
– Payment claims must still however specify the work they relate to, and the claimed amount.
– Head contractors must now provide a “Supporting Statement” with their payment claims.
Though the Amendments have only resulted in minor changes to documentation requirements and procedure it is important for all industry participants to ‘get across’ the changes quickly and to have their documentation reviewed properly by a qualified solicitor.
This is admittedly a complex Act which despite its 15 year history is often poorly understood and implemented by many industry participants. It has serious implications for cash flow and solvency of any business in the construction industry and proper advice should be sought in order to ensure industry participants are properly protected and more importantly properly taking advantage of their rights under the Act.
Following on from our previous article about buying a house in the ACT, this article provides some tips to help you ensure the sale of your house runs as smoothly as possible.
Selling your house is one of life’s major financial transactions so it is important that you engage the right person. They will be marketing your house as well as negotiating with the Buyer on your behalf. You must be confident that they have your best interests at heart and will efficiently perform their responsibilities.
This is important because they have likely seen it all before and know the best way to handle all kinds of situations involved in the process. An experienced solicitor/conveyancer will have a high level of knowledge of the process and the law, and will have close relationships with other important people in the industry.
Any defects identified in reports will compromise your ability to sell the property and most likely will need to be fixed for a sale to occur (or you will need to cut your price to account for the defect). Depending on how serious the defect, it may delay an exchange of contracts by several weeks.
We have listed some of the problems we come across from time to time. Remember that a solution can generally be found, especially with some patience and flexibility.
It has been known to happen that your lender will lose or misplace the original Certificate of Title. If this does happen, it is the Lender’s responsibility to replace the title but unfortunately this can cause delays due to government procedures
Your lender has not been given sufficient time to prepare the discharge of mortgage, however an experienced conveyance will be familiar with the timeframes your bank will require to ensure a smooth, hassle free settlement.
The main reasons why a buyer would be unable to settle would be due to delays with their finance. We will work hard on your behalf to keep the pressure on the buyer to finalise the sale as soon as they can.
The other main reason would be that they are unhappy with the state of the property in the lead up to settlement. We can advise you on your rights and obligations in this situation.
These are all issues that an experienced conveyancer can assist with and resolve, so that your sale will go through with minimal stress and fuss.
Relationships between businesses are often based on two documents: the credit application and the terms of trade agreement. The information set out in these documents will affect how you will be able to deal with debts owed to your business. Therefore it is important to have terms that can assist you in recovering those debts efficiently and cost-effectively. In this article we outline the most commonly absent terms and conditions that you should consider adding to your current documents.
This term will fully indemnify you so that you can recoup costs associated with recovering debts such as solicitors debt collections fees.
Your documents should provide a rate of interest that you are entitled to charge on unpaid debts. The term should be designed so that interest begins to accrue as soon as payment is due and payable (ie the due date of the invoice).
By updating from a simple Retention of Title term to a PPSI Registration term, you gain a secured interest in the goods in question.
This term means that the directors would become liable for the debt if the debtor company has no assets. This term should be drafted to allow you to lodge a caveat over any property owed by the directors.
You will need to include a variation clause in order to update your agreement with your customers. This will make it simpler to change your business practices as circumstances require.
Your customers need to provide you with accurate information so that you are aware of the risks of extending credit to them. This term means that your customers warrant that the information they give to you is accurate.
If a debtor is a trustee, it may hold no assets of its own because all the assets are held on behalf of the trust. This means that you may not be able to access those assets to secure the debt. You should ensure that any trustee debtor is bound “in its capacity as a trustee”.
You should include a condition that your liability is limited to the extent that it is legally possible to do so (ie you cannot exclude the operation of certain legislation such as the Australian Consumer Law). For example you may want to limit your liability to the purchase price of the goods in question.
The Dispute Resolution & Restructuring Team at Chamberlains Law Firm – are experts in PPSA Registrations, Credit Documentation, Debt Recovery & Insolvency and are able to assist you in getting up to speed, staying informed or tackling that elephant in the room you have been avoiding.