BLOGS

Any information contained in a blog on this website is general in nature only. The content of any blog posted below reflects information which is known to us as at the date of the posting of the blog. Please be aware that the law regularly changes. Please do not rely on the general information contained in the below blogs, instead we recommend that you contact us to obtain legal advice tailored to your own specific situation.

 

Aug07

Changes to Retail Leases Act

Amanda Quin - Monday, August 07, 2017

 

On 1 July 2017 a number of changes to the Retail Leases Act (NSW) (“the Act”)commenced including:

Removal of 5 year term

Section 16 of the Act was removed. As a result there is no longer a minimum term for a Retail Lease and no requirement for a solicitor’s certificate to be executed for short term leases.

Lease registration

  • The Landlord must supply the Tenant with a copy of the fully signed lease within three (3) months of the tenant returning the signed lease to the Landlord.
  • In addition, where the term of a lease is three years or more then the lease must be registered within 3 months of the Tenant returning the signed lease to the Landlord. This period may however be extended where any mortgagee delays in consenting to the lease.
  • The Landlord cannot require the Tenant to pay any mortgagee consent fees.
  • The maximum fine that may be imposed is 50 penalty units (which is currently $5,500).

Disclosure Statements

  • If the estimated amount of an outgoing is not disclosed in a Lessor’s disclosure statement, then the Tenant does not need to pay the outgoing.
  • Where the estimate for any outgoings is less than the cost of the actual outgoing – then unless there was a reasonable basis for the estimate, then tenant does not need to pay more than what was estimated.
  • If a Landlord fails to provide a Tenant with a disclosure statement (which is to be supplied at least 7 days before the lease is entered into) or has served a defective disclosure statement (ie an incomplete or misleading disclosure statement), then the Tenant may terminate the lease during its first 6 months.
  • If the Tenant does exercise its right to terminate the lease then the Tenant will be entitled to claim compensation for costs such as their expenditure on fitout. (Although the Tenant cannot terminate the lease under this section in relation to a defective disclosure statement if the Landlord had acted honestly and reasonably when issuing the disclosure statement and if the Tenant is in substantially as a good a position as they otherwise would have been if the disclosure statement had been correct).
  • Lessor disclosure statements are now required for Agreements for Lease.

Bonds and Bank Guarantees

Bank Guarantees must be returned to the Tenant within two months after the Tenant has performed all of its obligations under the lease.

Whilst it has not yet started, there is now provision for the Retail Tenancy Unit to move to an on-line bond lodgment system.

Assignment Process

When a Tenant is seeking consent to assign its lease to an assignee, then the Tenant may ask the Landlord for an updated lessor’s disclosure statement.

If the Landlord fails to provide the Tenant with an updated lessor’s disclosure statement within 14 days of it being requested to do so, then the Tenant may prepare its own updated lessor’s disclosure statement for service on the assignee.

If the Tenant then serves an assignor’s disclosure statement and the updated lessor’s disclosure statement on the assignee and the Landlord AND if the Landlord consents to an assignment of the lease (or is deemed to have consented, where the Landlord fails to respond within 28 days) then the Tenant and its guarantors will be released from liability under the lease from the assignment date.

NCAT jurisdictional limit increase

NCAT can now hear retail lease dispute matters up to $750,000.


 

Feb03

Changes to Strata Laws

Amanda Quin - Friday, February 03, 2017

Strata legislative changes

On 30 November 2016 the Schemes Management Act (2015), Strata Schemes Management Regulations (2016) and the Strata Schemes Development Act 2015 commenced.

There are over 90 changes to the Strata Laws and not all of them are significant. For example, Executive Committees are now called Strata Committees. However, some of the main changes to Strata laws are:

Collective Sale/demolition of strata property

  • There is a new process which could allow the whole building to be sold or demolished or replaced, if 75% of the owners agree to this occurring.
  • This new power does give greater flexibility to replenish an old crumbling building, but could mean that some owners may be forced to relocate regardless of whether they want to or not.
 

By-laws

 

 

 

  • There are new standard by-laws for new schemes. As previously, the by-laws may be modified or amended.
  • All pre-existing schemes must review their by-laws by 30 November 2017, but the new by-laws will not apply to the pre-existing schemes unless the pre-existing schemes choose to use them and register them.
  • Changes to by-laws will not be effective until they are officially registered with the Registrar General.
  • An owners corporation may pass a by-law that limits the number of occupants of a unit (to stop overcrowding). However any such by-law must permit a minimum of 2 people for each bedroom in the unit.
 

Renovations or other works by Owners

 

 

 

 

 

  • Under the previous strata laws, all works required approval from the Owners Corporation.
  • The new laws now divide works into cosmetic, minor and major.
  • If a change is cosmetic, a lot owner only needs to notify the committee and the committee does not need to approve the cosmetic change. Cosmetic works include: installing or replacing hooks, nails or screws for hanging paintings or other things on walls, installing or replacing handrails within the lot, painting, filling minor holes and cracks in internal walls.
  • If the works are minor, then approval may be granted by a vote of the committee ( which does not need to be at a general meeting. Minor works might include renovating a kitchen (but only if no structural work is required), installing or replacing wood or other hard floors, installing environmental measures (such as a clothesline or reverse cycle air conditioner). Whether these types of work are minor will depend on whether or not there is any structural work and whether any changes to the lot will be externally visible.
  • Major works, such as structural alterations, will require approval by a special resolution at a general meeting.
 

Strata Managers

 

  • When a new scheme is created, the initial Strata managers can only be appointed for the first year – to allow the new owners to determine if they are happy with the manager.
 

Abandoned Goods

 

 

  • There is a new process to follow that permits the Owners Corporations to sell or dispose of goods which have been abandoned on common property.
  • A disposal notice may be required to be placed on the goods (although this is not required for perishable food).
  • The owner of the goods is entitled to apply to NCAT for payment of the net proceeds from the sale of such abandoned goods, otherwise, the proceeds go to the administrative fund.
 

Unpaid levies

 

  • The Owners Corporation may either enter into payment plan with a non-paying lot owner or the Owners corporation can take recovery action by applying to the Local Court.
 

Fines

 

 

  • Higher upper limits on fines for breaches of general by-laws and new fines for overcrowding offences may be levied by NCAT.
  • The Owner’s corporation is to receive the money from such fines. The Owner’s corporation may enforce the fines in the Local Court.
  • Strata schemes are encouraged to arrange medication prior to taking proceedings at NCAT.
 

Meetings

 

 

  • If registered tenants make up more than 50% of the occupants of a Scheme, they can nominate a tenant to be their representative on the strata committee. However, in practice, hardly any owners register their tenants with the scheme, so it is unlikely that this new law will be of any practical value.
  • New limits on the number of proxies that any one person may hold. If the scheme has 20 lots or less, then only one proxy vote may be held per person. For larger schemes, the maximum number of proxies that may be held by one person is 5% of the total number of lots in the scheme.

 

Dec20

Rental Bonds Online

From 30 January 2017, it will be mandatory for landlords and real estate agents to invite residential tenants to lodge their residential rental bonds in NSW using Rental Bonds Online (RBO).

When a new residential tenancy agreement is entered, then the landlord (or the landlord's real estate agent) must be registered with RBO and must invite the new tenant to provide their email address for the purpose of initiating the RBO bond lodgement process.

A landlord or agent who fails to invite a new tenant to lodge their bond using RBO, prior to accepting a bond, will be in breach of the Residential Tenancies Act.

Tenants who do not have internet access can continue to give their bond directly to the landlord or landlord's real estate agent. The landlord or agent is then required to lodge the bond with the Rental Bond Board using the current paper based method.

More information is available athttp://www.fairtrading.nsw.gov.au/rentalbondsonline

 


Dec12

SURCHARGE STAMP DUTY

Amanda Quin - Monday, December 12, 2016

SURCHARGE STAMP DUTY

Surcharge Stamp Duty is payable on residential property in NSW (at a rate of 4% of the value of the property) – where residential property in NSW is transferred or sold to foreign persons (including foreign trusts and companies). The surcharge duty is payable by the foreign person or entity.

Residential property includes vacant lots of land that are designated for residential purposes AND any land on which there are one or more dwellings (including buildings which are being constructed).

It is payable on all transfers of property, not just on purchases – unless an exemption applies.

There are some exemptions for break-up of marriages, corporate reconstructions, partitions, deceased estates etc.

Normally when a person buys property "off the plan" in NSW, they are granted 12 months to pay stamp duty. However, where a foreign person buys property "off the plan", then the stamp duty must be paid within 3 month of exchange of contracts.

Where a foreign person purchases land jointly with a non-foreign person, then the surcharge duty is only charged on the proportion of the value that relates to the interest which the foreign person bought.

WHO IS A FOREIGN PERSON

FOREIGN PERSONS ARE:

  • Any natural person who is not ordinarily resident in Australia or does not have a right to reside in Australia.
  • Any natural person with only a temporary right to reside in Australia (irrespective of how long that temporary right may be or how long they have lived here).
  • Any natural person holding a permanent visa, who has not been in Australia for at least 200 days during the 12 months prior to the relevant liability date. (NB there are special rules for off the plan though).
  • Any discretionary trust where any foreign person (including foreign companies or foreign trusts) are a potential beneficiary (irrespective of whether any distributions have ever been made to them).
  • Any company or unit trust in which a foreign person (whether natural or otherwise) and the associates of that foreign person (even where the associates are Australian citizens) has at least a 20% interest in the entity. (For example, if your spouse was a UK citizen and if he or she held 5% of the shares in a company and you held 18% of the shares in that company, then because you are an associate of your spouse, then that makes that company a foreign person. Likewise with units trusts).
  • Any company or unit trust in which multiple foreign persons (and the associates of those persons) hold at least a 40% interest.

PEOPLE WHO ARE NOT FOREIGN PERSONS:

  • Australian Citizens, no matter whether they currently reside in Australia or not.
  • Any natural person holding a permanent visa, who has been in Australia for at least 200 days during the 12 months prior to the relevant liability date.
  • Any citizen of New Zealand who entered Australia legally and has resided in Australia for at least 200 days during the 12 months prior to the relevant liability date.
  • Any discretionary trust where none of the potential beneficiaries are foreign persons.

HOW TO MEASURE INTERESTS IN A COMPANY OR UNIT TRUST

A person holds an interest in an entity if that person, either alone or with one or more of their associates:

  • Controls that percentage of the voting power; or
  • Holds interests in that percentage of the issues securities in the entities (ie shares or units); or
  • Holds options which would give them that percentage of interest if the options were exercised.

Associates are a person’s spouse, parents, lineal descendants (including adopted children), siblings, aunts, uncles, nephews, nieces and grandparents AND all those people for their spouse as well.

POSSIBLE REFUND CIRCUMSTANCES

If a person was a foreign person at the time of entering into the contract for sale, but is not a foreign person at the time of completion of the transfer/settlement, it may be possible to apply for a refund of the surcharge duty.

This might occur where a Permanent Resident had only lived in Australia for less than 200 days at the time of signing an off-the-plan contract, but by the time it settled, they had met the 200 days requirement.


Dec02

Mandatory Energy Efficiency ratings for Commercial Office Space

Amanda Quin - Friday, December 02, 2016

As at 1 July 2017, the threshold for reporting energy efficiency ratings pursuant to the Building Energy Efficiency Disclosure Act 2010  will be reduced from 2,000 square metres to 1,000 square metres.

Where the said legislation applies, then a Building Energy Efficiency Certificate (BEEC) needs to be obtained and registered. A BEEC incorporates both a National Australian Built Environment Rating System (NABERS) Energy star rating and a Tenancy Lighting Assessment (TLA) of the relevant area of the building.

Where the BEEC requirements apply, then the BEEC must be registered prior to approaching the market regarding a proposed sale or lease and the Energy star rating must be included in any advertising for the sale or lease or sublease. Therefore if you do need a BEEC for a building, then you need to obtain the BEEC and register it before you advertise the office space for sale or for lease.

This legislation does not apply if:

  • The proposed lease is for less than 12 months;
  • The building is a strata titled building;
  • The occupancy certificate for the building is less than 2 years old; or
  • The building is a mixed use building and the office space is less than 75% of the building’s net lettable area.

 

In addition the disclosure requirements only apply where either:

(a) the office space is owned by a corporation/company; or

(b) where the tenant is a corporation/company (and in this case, only where the tenant or purchaser asks for a BEEC).

That is, this law does not apply to office space that is owned by natural persons and leased or sold to natural persons.

You can also apply for an additional exemption, if you are approached by someone who is seeking to buy or lease the building (as opposed to you as the owner advertising it for sale or for lease).


 

 


 


 



Jul25

NEW WITHHOLDING TAX ON TRANSFERS OF PROPERTY

Amanda Quin - Monday, July 25, 2016

From 1 July 2016 every person or entity who acquires land in Australia which has a value of $2 million or more must withhold money on account of the transferor’s potential Capital Gains Tax liability. The person acquiring the property is then required to remit any such amount to the ATO.

In addition, entering into an option to purchase (regardless of the value of the underlying property) and acquiring interests in certain landholding companies and trusts will also be caught by this new tax requirement.

If the transferee (ie purchaser) fails to withhold the correct amount of tax, then the purchaser will be penalised. Significant penalties will apply.

Generally, the amount to be withheld will be 10% of the purchase price or the value of the property, but this may be varied if the vendor obtains a variation notice from the ATO and serves a copy of the notice on the purchaser prior to completion of the sale.

The transferee is also not required to withhold or remit any money if an exception applies.

Accordingly, unless an exception or variation notice applies, all persons selling land or interests in land for $2 million or more must be aware that the purchaser will withhold 10% of the purchase price from completion.

Any withheld amount will be credited to the Vendors when the Vendors next lodge their tax return with the ATO.

Exceptions to the new withholding regime

There is no requirement for a purchaser to withhold any money on account of the vendor’s potential CGT liability if:

1. The market value of the property is less than $2 million; or

2. A clearance certificate has been obtained from the ATO by the vendor (or all of the vendors when there is more than one vendor) and provided to the purchaser before settlement; or

3. In relation to an option or an interest in a landholding company, the vendor gives the purchaser a declaration that the vendor is or will be an Australian resident for a period which covers the transaction (and the purchaser is not on notice of the declaration being false), or

4. The vendor is under external administration or in bankruptcy.

Who is eligible for a Clearance certificate

Australian residents are eligible for clearance certificates.

Foreign residents are not eligible for clearance certificates, but they may be able to obtain a variation notice to reduce or eliminate the need formoney to be withheld from the sale, if they can show that a CGT exemption or other exemption will apply.


May24

Swimming Pool Certification

Amanda Quin - Tuesday, May 24, 2016

Swimming Pool Certification - Requirements for Selling or Leasing

If you are selling, purchasing or leasing a property in NSW that has a swimming pool, spa or any excavation, structure or vessel that is capable of being filled with water to a depth greater than 30cm designed for human aquatic activity (all of which for the purposes of this Article will be referred to as a “Pool”), then you need to be aware of new regulations that came into effect from 29 April 2016.

What do the new regulations mean for Pool Owners in NSW ?

All Pool Owners in NSW must:_

  • (a)register their Pool (including Strata Schemes and Community Schemes), if they have not already done so. To register your pool all you need to do is go to http://www.swimmingpoolregister.nsw.gov.au/ and enter your name, address, contact details, pool type, approximate age of the pool and complete a self-assessment checklist on your pool; and
  • (b)maintain a safe pool barrier; and
  • (c)comply with any Council orders regarding the safety of their Pool (nb Local Councils have the right to randomly inspect any Pool)

All Pool Owners should generally ensure that their Pool complies with all relevant safety regulations relating to their Pool.

Additional requirements for Landlords:

Before entering into a lease for a premises in NSW that includes a Pool, the Landlord must obtain and attach to the Residential Tenancy Agreement either:

  • (a)A compliance certificate (from either the relevant local Council or an independent registered certifier) in relation to the Pool at the property. The purpose of this certificate is to confirm that the Pool meets the relevant safety requirements. This certificate should be attached to the residential tenancy agreement for the property; or
  • (b)An occupation certificate for the Pool, which is less than 3 years old, together with evidence of registration of the Pool on the Swimming Pool register.

NB The above requirement to obtain and attach documents to the Residential Tenancy Agreement does not apply where the Pool is on common property and the premises are part of a Strata Scheme or Community Scheme that has more than 2 lots.

Additional requirements if you are selling a property in NSW with a Pool:

Before entering into a Contract for Sale for a Property in NSW that includes a Pool (n.b. there are limited exemptions for pools that are on “common property”) the Vendor must obtain and attach to the Contract for Sale either:

  • (a)An occupation certificate for the Pool, which is less than 3 years old, together with evidence of registration of the Pool on the Swimming Pool register; or
  • (b)A compliance certificate (from either the relevant local Council or an independent registered certifier) in relation to the Pool at the Property. The purpose of this certificate is to confirm that the Pool meets the relevant safety requirements; or
  • (c)A non-compliance certificate for the Pool which indicates that the issues that cause the Pool to be non-compliant are minor issues.

Where a non-compliance certificate has been issued and should it show that the Pool has significant safety problems, then the Pool Owner is obliged to rectify the safety problems and then seek a re-assessment of the Pool by a certifier, prior to selling the Property.

However, if the non-compliance certificate indicates that the problems are minor then a non-compliance certificate may be attached to the Contract for Sale and in such a case the Purchaser will instead be responsible for ensuring that the safety issues are rectified. (It may be the case that some Purchaser’s may seek to renegotiate the purchase price based on whom is required to rectify any minor compliance issues).

NB The above requirement to obtain and attach documents to the Contract for Sale does not apply where the Pool is on common property and the premises are part of a Strata Scheme or Community Scheme that has more than 2 lots.

If none of the above certificates are attached to the Contract of Sale, then the purchaser may be able to rescind the contract within 14 days of exchange (or in some circumstances they may be able to rescind the contract right up until the completion date if there is a breach of a Vendor warranty). Therefore it is very important to attach the correct certificates to the Contract for Sale.

What this means if you are buying a property in NSW with a Pool:

The purchaser of a property with a Pool (other than where the pool is on common property of a strata or community title scheme where there are more than two lots in the scheme) should checkthat the Contract of Sale includes at least one of the following;

  • -A certificate of compliance (no greater than 3 years old), or;
  • -An occupation certificate (no greater than 3 years old) and a certificate of registration, or;
  • -A certificate of non-compliance (no greater than 1 year old).

If the Contract for Sale includes a certificate of non-compliance and theproblems with the Pool do not pose a significant risk, then the Vendor can sell the property without being obliged to ensure that the Pool safety is up to standard and insteadthe purchaser will be required to rectify the “minor” non-compliant issues identified by the certifier.

If you are a purchaser faced with the decision of purchasing a property with a certificate of non-compliance you can ask to see a copy of the notice outlining the non-compliant issues. This will give you the opportunity to estimate the potential costs involved to undertake the rectification works and therefore negotiate on the purchase price. Please be aware however that price negotiations should be undertaken prior to exchange of contracts.

For further information visit the NSW Government Swimming Pool Register website at http://www.swimmingpoolregister.nsw.gov.au/ or contact our office on (02) 6882 3133.



Apr26

Loose-fill Asbestos

Amanda Quin - Tuesday, April 26, 2016

Certain council areas in NSW are considered to be at a higher risk for the presence of loose-fill asbestos insulation.

Loose-fill asbestos is considered to be a significantly more serious health risk as compared to asbestos sheeting.

The NSW government has a buy back/demolition compensation scheme operating, BUT only if the person applying for the buy back/demolition compensation was the owner of the property as at 29 June 2015.

Existing home owners (ie who owned an at risk property as at 29 June 2015) have until 1 August 2016 to register for the free testing program (nb free testing is available if the house is in one of the council areas listed below).

Or if you are a concerned home owner and you live outside of the free testing area, you may choose to privately test your house at your cost, but such cost will be refunded if the test is positive.

If you are purchasing a house built before 1980 (particularly if the property is in any of the following local council areas), then you should consider requiring a clear asbestos test before completing your purchase:

  • Albury City Council
  • Bankstown City Council
  • Bega Valley Shire Council
  • Berrigan Shire Council
  • Bombala Council
  • Boorowa Council
  • Cooma Monaro Shire Council
  • Eurobodalla Shire Council
  • Goulburn Mulwaree Council
  • Greater Hume Shire Council
  • Hornsby Shire Council
  • Ku-ring-gai Shire Council
  • Lithgow City Council
  • Manly Council
  • Narrandera Shire Council
  • North Sydney Council
  • Orange City Council
  • Palerang Council
  • Parramatta City Council
  • Queanbeyan City Council
  • Snowy River Shire Council
  • The Hills Shire Council
  • Tumbarumba Council
  • Upper Lachlan Shire Council
  • Wagga Wagga City Council
  • Warringah Council
  • Yass Valley Shire Council
  • Young Shire Council

 



Apr01

Abolition of Duties in NSW - Pitfalls

Amanda Quin - Friday, April 01, 2016

The NSW State Government has flagged that on 1 July 2016 it will be abolishing stamp duty on the following transactions:

  • Transfer of business assets
  • Transfer of marketable securities (eg shares in private companies and units in unit trusts)
  • Transfer of statutory licences and gaming machine entitlements
  • Mortgage Duty (to the extent it has not already been abolished)

You may recall that the NSW State Government has on a number of occasions flagged that these duties were being abolished and then delayed the abolition date. Hopefully, this time the abolition will proceed as planned.

LANDHOLDER DUTY – LAND RICH COMPANIES AND UNIT TRUSTS

However, there is a potential pitfall for companies and unit trusts which are landholders.

Despite the proposed abolition of stamp duty on the transfer of shares in a private company or units in a unit trust from 1 July 2016, it appears that landholder duty will still remain.

Landholder duty is payable on the acquisition of a significant interest in a private company or unit trust that owns land and meets certain other requirements.

As such, stamp duty may still be payable on the transfer of shares in a private company or units in a unit trust, where the transfer involves a significant interest and where the company or unit trust (or its linked entities) has land holdings in NSW with a value of $2 million or more.

There are some exemptions for companies which hold rural land. This can be a complex area of law and we recommend legal advice be obtained prior to any transfer occurring.

TRANSFER OF A LEASE IN CONJUNCTION WITH A SALE OF BUSINESS

Where a lease is transferred with the business (which often happens with business premises that are rented), then although the goodwill of the Business will be exempt from stamp duty, nevertheless the plant and equipment and any consideration for the transfer of lease is liable for duty.

If the transaction were instead structured with a new lease being granted to the new owner of the business, then the plant and equipment would not be liable for stamp duty.

Accordingly when buying a business that operates from leased premises, you should consider whether the costs of the stamp duty that would be payable in relation to the plant and equipment and the transfer of the lease is likely to outweigh the costs of negotiating and entering into a new lease instead.

TRANSFER OF LAND IN CONJUNCTION WITH A SALE OF BUSINESS

Where a sale of land and a sale of business takes place, then whilst the goodwill of the Business will not be liable to duty, nevertheless the land and the plant and equipment of the business will be liable to duty.

Aug27

Buying or Selling a Property in NSW - Law Society Guide

Chris Tongue - Tuesday, August 27, 2013

For Sellers:

YOUR GUIDE TO SELLING A HOME

For Buyers:

YOUR GUIDE TO BUYING A HOME

Buying or Selling a Home: Online guides now available

Please follow the above links to view online checklists for buying and selling a house or apartment in New South Wales.

These checklists will help answer some of the common questions about buying and selling and show how your solicitor will assist in the process.

For more information, please contact our office.