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A Guide to the New Strata Renewal Process

Posted by on Feb 6, 2017 in Articles, Conveyancing Articles, Strata Matters & Dispute Articles |

As from 30 November 2016 a new procedure has been introduced allowing for a strata renewal (i.e. either the collective sale of the whole strata scheme or the redevelopment of the whole strata scheme such that its termination and replacement by a further strata scheme is necessary) with the support of at least 75% of the lot owners. It is governed by Part 10 of the Strata Schemes Development Act 2015 (“SSD Act”) and the Strata Schemes Development Regulation 2016 (SSD Reg.”) and must be strictly adhered to avoid challenges by dissenting owners or rejection by the Court. Here are the important steps in the process: 1. Opting in to Process The process automatically applies only to strata schemes which commenced from 30 November 2016. For strata schemes already in existence before that date the owners have to agree to the new process applying by a vote in favour by more than 50% of the lot owners in a general meeting. 2. Consideration of Proposal To initiate the process a written strata renewal proposal (“proposal”), complying with Regulation 30 of the SSD Reg., must be submitted to the owners corporation for consideration by the strata committee. If the strata committee decides that the proposal warrants further consideration by the owners corporation it must convene a general meeting of the owners corporation to allow it to do so. 3. Appointment of Strata Renewal Committee If a majority of lot owners decide that the proposal warrants investigation by a strata renewal committee, the owners corporation must vote to establish a strata renewal committee to prepare a strata renewal plan and elect its members. 4. Functions of Strata Renewal Committee Once established, the strata renewal committee has up to one year to prepare a strata renewal plan, containing the information required by section 170 of the SSD Act and Regulation 33 of the SSD Reg. relating to the proposal for consideration by the owners corporation. Such information can be prepared with the assistance of valuers and lawyers and must include the market value of the strata complex and the proposed compensation payments to lot owners. 5. Consideration of Strata Renewal Plan Once the strata renewal plan has been prepared, a general meeting of the owners corporation must be convened to allow owners to consider the plan. Apart from provisions allowing for amendments of the plan, in order for the matter to progress at least 75% of lot owners at the general meeting must vote in favour of giving the plan to the owners for their consideration for at least 60 days during which they can get independent advice on the plan. 6. Approval of the Strata Renewal Plan Provided at least 75%...

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Resolving Home Building Disputes

Posted by on Feb 2, 2016 in Articles, Building Dispute Articles, Conveyancing Articles, Litigation Articles |

When you are building or renovating your home and a dispute arises between you and your builder then you should take the following steps: 1. Speak to the builder and try to come to a resolution through open and positive communication; 2. If that fails then check your building contract to see if there is a dispute resolution clause that requires certain procedures to be followed. For example, clause 27 of the NSW Fair Trading Home Building Contract for work over $20,000.00 requires one party to give the other prompt written notice of the dispute. However, it then provides that, if the dispute is not resolved informally, the parties “may” confer with a mediator or expert to assist; 3. If the dispute remains unresolved then, provided there are no other mandatory procedures to be followed under the building contract, you can contact NSW Fair Trading to assist with regard to major defects within the 6 year statutory warranty period and minor defects within the 2 year statutory warranty period; 4. NSW Fair Trading will attempt to negotiate a satisfactory outcome between the builder and yourself. If that fails then a Fair Trading Building Inspector will be sent on-site to inspect the work in dispute. If appropriate, he will issue a Rectification Order which will set a date by which work is to be rectified or completed; and 5. If you are not satisfied with the Rectification Order or if it is not complied with then you may lodge a claim with the NSW Civil and Administrative Tribunal (“NCAT”) which can hear matters up to the value of $500,000.00. For matters over this figure you would have to make a claim with a Court. February...

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Things To Know Before Leasing Business Premises

Posted by on Oct 6, 2015 in Articles, Business Sale & Purchase Articles, Commercial Agreement & Dispute Articles, Lease Articles |

A lease is an agreement between the owner of business premises (the landlord or lessor) and the operator of a business on the premises (the tenant or lessee). When you enter into a lease you are agreeing to pay monthly rent for the term of the lease, usually a number of years. If the rent is paid late the landlord can take possession of the premises without written notice and can lock you out. You will be liable for the rent until another tenant is found. A lease therefore involves a serious commitment on your part and you should get legal advice about all of its terms before signing it. Other things to be aware of are as follows: 1. You should check with the landlord or the local Council to see if there is development approval for the kind of business you wish to conduct on the premises. If not, you will need to apply for development approval from the Council; 2. Also, if you need to do a fit-out or building work check with the council if you need to lodge a development application; 3. You can negotiate a rent-free period with the landlord if it will take some time to set up your business. Also, you can make the lease subject to the local council granting development approval or simply wait for the approval before entering into the lease; 4. If the landlord is to provide fixtures and fittings with the premises you should check there is an inventory attached to the lease and that it is correct; 5. When negotiating the term of the lease you should always ask for an option for a new lease so that you get say a three year lease with an option for another three years. Without the option you may not be able to sell the business as the original term nears the expiry date or the landlord may grant you a new lease at a much higher rent; 6. You should agree on not only the rent but on how the rent will increase after each anniversary. Normal methods of increasing the rent are by way of a CPI adjustment, a fixed percentage or by agreeing on the market rent; 7. Normally, the landlord will ask you for security to ensure payment of the rent and outgoings. You should agree on this either being a cash bond (security deposit) for an amount equal to one to three months’ rent and outgoings or a bank guarantee for the same amount; and 8. Additional rules apply to retail shop leases which are leases of premises used wholly or predominantly for those retail purposes referred to in the Retail Leases...

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Business Legal Checklist

Posted by on Sep 8, 2015 in Articles, Business Sale & Purchase Articles, Commercial Agreement & Dispute Articles, Debt Recovery Articles, Lease Articles |

1. Does your Lease expire soon? Do you need to request a new Lease? A Lease over your business premises is an important part of your business. You should check when the Lease expires and, if soon, you must negotiate a new one with your landlord immediately. Otherwise, it will be highly disruptive to have to find and move to new premises. 2. If you are entitled to renew the Lease, when does the option period expire? Normally, you will have a three month window to exercise the option for a further term of years. You should check when this option period ends because if you miss out then it will be too late and you may be forced to vacate your business premises at the end of the Lease. 3. If you operate the business in partnership with others, do you have a written partnership agreement? If there are two or more owners of the business it is highly advisable to set out the rights and obligations between them in a written partnership agreement rather than just leaving it to chance. The agreement will cover many aspects including division of profits, salaries, roles of each partner, how disagreements will be handled and the rights of partners if one wants to leave or the business is sold. 4. If you operate the business through a company, do you have a written shareholders agreement? Where the business trades by way of a company it is highly advisable to have a shareholders agreement which will regulate the management of the company and will include clauses about various matters such as decision making, the rights of shareholders to appoint and remove directors, contributions by shareholders and resolution of disputes. 5. Do you know your obligations as a business to consumers under the Australian Consumer Law? The Australian Consumer Law imposes many obligations on retailers when selling their products or services to consumers who have corresponding rights and remedies available to them. For instance, retailers should be aware of the obligation not to engage in misleading or deceptive conduct, not to have unfair contractual terms and to comply with various consumer guarantees. 6. Do you know your rights under the Australian Consumer Law as a business consumer with respect to business suppliers? The Australian Consumer Law also offers businesses consumer rights against suppliers of goods and services if the upfront price payable under the contract is no more than $300,000.00 or $1 million if the contract is for more than 12 months. It is worthwhile to ascertain what those rights are if you have a dispute with a supplier. 7. Does your business need standard Terms and Conditions to give to consumers? Having...

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Things to Consider When Buying a Business

Posted by on Sep 4, 2015 in Articles, Business Sale & Purchase Articles, Commercial Agreement & Dispute Articles |

There are many advantages to buying an existing business. You won’t be starting from scratch and most often you will be acquiring a business with an existing customer or client base and regular cash flow. To ensure that this is the situation you should carry out due diligence whereby you investigate all aspects of the business before you buy. During the period before you actually sign a contract to purchase the business you should have regard to the following issues: 1. Why is the owner selling the business? – Is the reason believable? If a check of the financial records reveal no downturn in the profits of the business that is a good sign but you should also research if new competition is moving into the area or if the industry will be subject to a new form of regulation; 2. What is the financial position of the business? – This can be considered with the assistance of an accountant who will look at the financial records of the business. You should carefully examine the inventory i.e. a list of the goods and materials of the business and the assets and liabilities of the business; 3. What business structure will you use? – You can operate the business by various methods including as a sole trader, partnership or a company. Each has different legal and tax consequences; 4. What staff will you use? – You can continue to employ some or all of the existing staff which may help to maintain the smooth running of the business. You can observe the business during a trial period after you enter into a contract to purchase the business and this will help you decide which employees to retain; and 5. Transfer of lease or new lease? – If there is an existing lease over the business premises then you can obtain a transfer of that lease subject to the consent of the landlord. However, if you feel that you want the benefit and security of a new long term lease then you can negotiate that with the landlord and the contract to purchase the business can be made conditional upon that...

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Transferring a Lease to a New Business Owner

Posted by on Aug 30, 2015 in Articles, Business Sale & Purchase Articles, Lease Articles |

As part of the sale of a business the vendor and the purchaser have to decide if the purchaser wishes to have a transfer over the existing lease of the business premises or wishes to apply to the lessor for a new lease. If it is to be the transfer of an existing Lease then for commercial premises the lease itself will set out the requirements to be satisfied but in the case of retail shop premises it is the Retail Leases Act 1994 NSW which regulates the arrangements betweens the parties. Normally, for both types of leases, an application will have to be made to the lessor to approve the transfer of Lease and the lessor will have to be provided with satisfactory evidence as to the purchaser’s financial standing and business experience. Provided the lessor does give its consent in principle to the transfer then the lessor’s solicitors will prepare a Deed of Assignment of Lease between the lessor, the outgoing lessee and the incoming lessee formally consenting and assigning the rights and obligations under the lease to the incoming lessee. The Deed will also deal with other matters including payment of any moneys owing under the lease and whether or not the outgoing lessee is to be released from future liability under the lease. The Deed of Assignment of Lease normally becomes effective on the date of settlement of the sale of the business. In the case of retail premises the Retail Leases Act sets out a number of additional steps or matters including: 1. The lessee must request the lessor’s consent to the transfer in writing. However, before making such request the lessee must furnish the proposed lessee with a copy of any Lessor’s Disclosure   Statement in respect of the lease given to the lessee together with details of any changes that occurred since; 2. The lessor is then entitled to request information it may reasonably require concerning the financial standing and business experience of the proposed incoming lessee. According to the recent NSW Court of Appeal decision of Lockrey v Historical Houses Trust of NSW the lessor can only request specific documents such as financial statements and tax returns for a specific period; 3. If the outgoing lessee (or any guarantor) wishes to be protected from ongoing liability under the lease it must give a copy of a Assignor’s Disclosure Statement to the incoming lessee and the lessor at least 7 clear days before the assignment becomes effective i.e. usually from the date of settlement of the sale of the business; 4. If the lessor does not deal with the request for consent to the transfer expeditiously there will be deemed consent if the...

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