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Changes to Retail Leases Act

Posted by on Jul 3, 2017 in Business Sale & Purchase News, Commercial Agreements & Disputes News, Conveyancing News, Leases News, Litigation News, News |

The Retail Leases Act 1994 applies to most retail shop leases in NSW. Amending legislation, which commenced on 1 July 2017, introduces significant reforms including the following changes: * The requirement that a retail lease must be for a minimum of 5 years has been removed so that there is now no minimum term. * A lessee will now have a right to compensation where the the lessee terminates the lease inside the first 6 months for a failure by the lessor to give the lessee a Lessor’s Disclosure Statement or if the lessor gives one that is incomplete, false or misleading. * A lessor must return a bank guarantee to a lessee within 2 months of the lessee complying with its obligations under the lease. * A retail lease must be registered within 3 months of the executed lease being returned to lessor by the lessee. * A lessee will not be liable to pay a particular outgoing under the lease unless that outgoing was disclosed in the Lessor’s Disclosure Statement. Also, if the lessor had no reasonable basis for a particular outgoing estimate the lessee is only obliged to pay the amount of the estimate and nothing more. * A Lessor’s Disclosure Statement, which has to be provided by the lessor to the lessee 7 days before the lease is entered into, can now be amended if the parties agree in writing rather than the lessor having to issue a new document and the parties having to wait another 7 days. * The monetary jurisdiction of the NSW Civil and Administrative Tribunal with regard to retail lease disputes is increased from $400,000.00 to $750,000.00. * Penalty notices for failure to comply with the Act can now be issued. The main message is that greater care must now be taken to ensure that a Lessor’s Disclosure Statement is accurate otherwise: (a) a lessee may not only be entitled to terminate the lease in the first 6 months but also substantial compensation including the cost of a fit-out and legal fees; and (b) a lessor may not be able to recover all outgoings in full if those referred to in the lease are not disclosed or the estimates are not reasonably based. Compliance with the Retail Leases Act will also be important to avoid receiving a penalty...

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Change to Foreign Resident Capital Gains Tax Withholding

Posted by on Jun 7, 2017 in Conveyancing News, News |

For those of you considering buying or selling real estate in the near future you may be aware that there is a Foreign Resident Capital Gains Withholding (“FRCGW”) which, in the case of real property being sold for a price of $2m or more, requires the purchaser to withhold 10% of the purchase price from the vendor (whether he or she is a foreign resident or not) and to submit this sum to the Australian Tax Office on account of possible capital gains tax liability UNLESS a clearance certificate  from the ATO is provided to the purchaser by the vendor before settlement. The big news is that as from 1 July 2017 (subject to Commonwealth legislation passing beforehand) the FRCGW will apply to the sale of real estate where the price is $750,000 or more (basically everything in Sydney!) and the withholding amount will be at the rate of...

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Do You Need More Than A Will? – Other Things To Consider

Posted by on Jun 1, 2017 in Articles, Conveyancing Articles, Wills & Deceased Estates Articles |

Most people understand the importance of a Will i.e. it is a document by which a person disposes of their assets after their death. But the crucial thing to remember is that a Will only operates from the date of one’s death. What will happen to your assets in a situation where you are still alive but due to an accident or some other reason you are not of sufficient mental capacity to manage your own affairs? And in such a case who will make necessary decisions about your medical treatment or where you are to live? That is why it is well worth considering two other valuable documents that more and more people these days are entering into at the same time as their Will being an Enduring Power of Attorney and an Appointment of Enduring Guardian. Put simply, the presence of all three documents means that all your affairs will be taken care of both before and after your death. Let us take a closer look at the other two documents: Enduring Power of Attorney Some of the features of this document are: (a) It appoints someone (an attorney) to have authority to make decisions about your property and financial affairs; (b) It does not authorise anyone to make decisions concerning your lifestyle, health or personal affairs; (c) It will still be valid even if you lose mental capacity provided a prescribed person, such as a lawyer, explains the document to you and signs a certificate to that effect; (d) It will operate until you cancel it, the attorney no longer wishes to act or you die; (e) Before an attorney can use the document he or she has to accept it meaning they must sign it; and (f) In order to allow the attorney to deal with land owned by you the Enduring Power of Attorney has to be registered at Land & Property Information which involves a registration fee. Appointment of Enduring Guardian Some of the features of this document are: (a) It appoints someone (an enduring guardian) to make personal, lifestyle or health decisions on your behalf when you are not capable of doing so yourself; (b) The enduring guardian can make decisions such as where you live, what services are provided to you and what medical treatment you receive; (c) It only comes into effect when you lose mental capacity and is effective only during the period of such incapacity. Therefore, although it may never become operational it makes sense to plan for unforeseen events; (d) It must be witnessed by a prescribed person such as a lawyer who must explain the document to you and sign a certificate to that effect; (e)...

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Surrender of Retail and Commercial Leases

Posted by on May 31, 2017 in Articles, Business Sale & Purchase Articles, Commercial Agreement & Dispute Articles, Conveyancing Articles, Lease Articles |

When a landlord and a tenant both agree to terminate a lease before its expiry date this is called a surrender of Lease. A lease creates an interest in land in favour of the tenant and constitutes a contract between the landlord and the tenant. A surrender terminates both the tenant’s interest in the land and the contract. The process of the surrender should be regulated by a Deed of Surrender so that the rights and obligations of both the landlord and the tenant are clearly set out to ensure no disputes can arise at a later time. Also, if the Lease is registered, section 54 of the Real Property Act requires a Surrender of Lease form to be executed by the parties and upon registration the land will revest in the landlord. As a preliminary point, the parties should determine who will meet the legal costs relating to and arising out the surrender of the lease. The process for a typical surrender of lease will be as follows: 1. A Deed of Surrender of Lease has to be prepared covering numerous issues including: (a) The date of surrender i.e. the date the tenant will vacate the premises; (b) Payment of rent and outgoings up to the date of surrender; (c) Making good the premises by the surrender date .i.e. the tenant having to return the premises to the same condition they were in at the start of the lease; (d) Release of the landlord, tenant and any guarantors from liability from the date of surrender; (e) The return of any bank guarantee or security deposit to the tenant; (f) The liability of either the landlord or tenant or both for the legal costs and stamp duty relating to or arising out of the surrender of lease; (g) The preparation of the Surrender of Lease form to be registered at Land & Property Information (“LPI”); and (h) Any payment by one party to the other in return for the surrender. 2. The solicitor for the tenant will have to review the Deed and may wish to make amendments to which will have to be negotiated; 3. Once the Deed is finalised, the parties will have to sign it and exchange it so it can come into effect; 4. The tenant will have to make good the premises before the surrender date to the satisfaction of the landlord; 5. The parties will have to execute the Surrender of Lease form; 6. A letter will need to be sent to any mortgagee requesting it to produce the Certificate of Title at the LPI; 7. Once the Certificate of Title has been produced at the LPI, the Surrender form can be lodged...

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Bank Guarantees for Retail and Commercial Leases

Posted by on May 16, 2017 in Articles, Commercial Agreement & Dispute Articles, Lease Articles, Litigation Articles |

A landlord of a retail or commercial property often requires a tenant to provide a bank guarantee as security in case the tenant defaults under the Lease. Many bank guarantees that are offered to landlords are inadequately prepared by the bank and do not offer effective protection. To avoid a bank guarantee being rejected by a landlord or to ensure that it is one capable of being called on by a landlord the following should be considered: 1. Australian Bank The bank guarantee should be issued by an Australian bank with an Australian trading licence. This aids in the landlord’s ability to quickly and efficiently make a claim and to receive funds. 2. Unconditional It should provide and unconditional undertaking by the bank to pay a certain amount if a demand is made by the landlord. 3. Favouree It should correctly describe the landlord as “the favouree” i.e. the one to receive the benefit of the bank’s undertaking. 4. Customer It should state precisely the party for whom it is being issued (“the customer”) as the tenant. If the bank guarantee is sought by a third party connected to the tenant then it should mention the customer’s name followed by “at the request of [name of the tenant]”. 5. Description of Leased Premises The leased premises should be correctly described in full. 6. Purpose It must set out that the purpose of the bank guarantee is to secure the tenant’s obligations under the Lease with descriptions of the address of the leased premises and the parties including their names. 7. Amount It should correctly state the amount of the bank guarantee as required by the Lease which would normally comprise a certain number of months’ rent and proportionate share of any outgoings plus GST. 8. Expiry Date The expiry date of the bank guarantee should be at least 3 months after the expiry date of the Lease to give the landlord enough time to determine, upon the tenant vacating the premises, whether there have been any breaches of the Lease such as failure to make good the premises, to obtain any quotes for repairs, for the work to be carried out, for final invoices to be received and for a written claim to be made on the bank. May...

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