On 21 July 2022, the Real Estate Institute of Queensland (REIQ) released new versions of the Contract for Commercial Land and Buildings (9th edition) and the Contract for Commercial Lots in a Community Titles Scheme (8th edition).

The latest editions contain many amendments that have been made to align with the recently-amended REIQ Residential contracts that came into effect earlier this year, as well as some further changes made specifically to these commercial contracts:

New Termination Rights

Buyers now have a termination right if there is:

1. an error in the boundaries or area of the property;
2. an encroachment by structures onto or from the property;
3. there are services that pass through the property which do not service the land and are not protected by an encumbrance disclosed to the Buyer in the contract; or
4. a mistake or omission in describing the property of the Seller’s title to it.

Equally, should there be any services to the property that pass through other land (e.g. a neighbouring property) that are not protected by a registered easement, building management statement or statutory authority and it has not been disclosed to by the Seller to the Buyer in writing before the Buyer has signed the contract, the Buyer may terminate the contract.

So what does this technical jargon actually mean? It means that it is vital that sellers complete searches such as a ‘Dial Before You Dig’ or similar prior to entering into the Contract, so that they are aware of the location of all services and any potential encroachments or errors in boundaries which may need to be disclosed to the Buyer. Failure to do this could give the buyer a convenient excuse to terminate the Contract later down the track.  

Warranty of Present Use

The standard REIQ Contracts now stipulate that the seller does not warrant that the Present Use that is noted in the Contract is lawful. For example, this means that even though the present use of the property might be a ‘gym’ or ‘fitness centre’, that does not mean that a gym of fitness centre is lawfully allowed to be carried on from the property. . Further, in clause 7.7(1), if the present use is not lawful under the relevant town planning scheme, and the Seller has not disclosed that to the Buyer, the Buyer may terminate the contract. 

Consequently, it is very important for buyers to consider whether the use of the property is lawful for a particular use and to ensure they undertake appropriate due diligence to verify this, instead of simply ‘taking the Seller’s word’ for it. Equally, as a Seller, it is important to disclose if you are unsure whether the current use of the property is lawful. We highly recommend disclosure to the Buyer even if you are unsure to avoid the buyer relying on potential termination rights in this regard. 

Lease Warranties

Clause 10.3 now provides a large list of matters the Seller warrants that are correct as at the contract date in relation to current leases over the property. If there is a change in any way to these warranties during the Contract period (eg. between when the Contract is signed and settlement), the Seller must notify the Buyer of the change. 

Settlement Extensions

This new concept allows either party to unilaterally extend Settlement by up to 5 Business Days after the Scheduled Settlement Date specified in the Contract. This mechanism only applies to Settlement and does not apply to other conditions like the Finance or Building and Pest Condition. 

Default Place for Settlement

The standard condition has been amended so that if a Seller does not advise the specific location for Settlement (e.g. the specific law firm) at least 2 Business Days before the Settlement Date, Settlement will be required to take place at the Titles Office closest to where the land is located. Given the erroneous results this condition could result in, we recommend including a Special Condition to amend it.

Summary

There have been some significant changes made in the latest REIQ Contract updates for commercial buildings and units and it is important that parties understand what these mean and include appropriate Special Conditions to amend the Standard Condition if required. 

If you are purchasing or selling a commercial building or unit and would like guidance from Toowoomba's finest, you can get the ball rolling by contacting EL's conveyancing team:

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Thinking of buying or selling a property at auction? Here are some crucial tips:

What’s the Process? 

The contract for a property sold at an auction is required to be signed ‘on the spot’. This is different from other transactions, whereby the parties have time to have their respective legal representatives review, advise and amend the draft contract prior to you signing it. 

Because of this, we highly recommend that you engage a conveyancer to review the contract prior to going to Auction.  This can be done by contacting the sale agent and asking them to provide you with a draft contract for us to review on your behalf. 

Whilst an Auction contract is typically not subject to any conditions, it is still important that we check over the details of the property to ensure that the correct information has been inserted.  It is significantly more difficult to change certain aspects of the contract once it has been signed, thus part of our service includes a free review of the draft contract. 

The Fall of the Gavel 

It’s important to do any research regarding the property and confirm your financial ‘buying power’ prior to attending the auction and making a bid. This includes meeting with your broker or lender to ensure you have finance preapproval to purchase the property. You may also want to consider whether you can arrange a building inspection or obtain information from the selling agent prior to the auction to investigate the property. 

As previously mentioned, an auction contract usually comes with no conditions (eg. they are not usually subject to you obtaining finance or being happy with the results of a building and pest inspection), so it is important to understand that as a buyer at an auction, you won’t have the standard termination options available and will be in hot water if you can’t complete the purchase for any reason. 

If you cannot attend auction, you may elect to authorise a buyer’s agent to sign the contract on your behalf.

The Auctioneer’s Authority

We have seen instances recently where the contract has been signed by the Auctioneer as authorised representative of the buyer or seller. There are two main scenarios where this occurs:

1. some Agents will specify in their Auction Terms and Conditions that by agreeing and signing them, you grant the Auctioneer an irrevocable authority to sign all documents and papers necessary to form the agreement for sale of the property with the Buyer. It is therefore extremely important that you provide clear instructions to your agent and auctioneer regarding the reserve price etc; and

2. an Auctioneer also has authority pursuant to common law to sign a contract on behalf of the buyer or seller if the hammer has fallen and a party refuse to sign the Contract. Changing your mind isn’t that easy! 

Final Auction Tips

Buyers - it is important that you don’t get carried away at auction and end up being required to purchase something that you may have ‘buyer’s regret’ in relation to. Make sure you do your due diligence prior to the Auction and that you don’t bid over your budget.

Sellers – make sure you are 100% comfortable that the agent and auctioneer have clear instructions regarding the price that you are happy to sell for and again, don’t get caught up compromising on the day. 

In either case, it’s best to seek advice from your lawyer before buying or selling at auction. Contact Enterprise Legal's experienced conveyancing team now for more expert advice:

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🌐 | Property Conveyancing Services

UPDATE: On the 30 September 2022 the Queensland Government shelved the proposed changes to Queensland and Interstate land tax obligation.

These changes that were set to come into effect next year, and will now be deferred in parliament, the previous Queensland Land Tax requirements will remain in place.

What is Land Tax?

Land Tax is a State tax that is calculated based on the value of ‘freehold land’ (including vacant land and land that is built on) that you own in Queensland, calculated at midnight on 30 June each year. The rate you pay is based on several factors including:

1. the type of owner that you are (eg. an individual, a company, a Trust etc.);
2. whether you own the land jointly with other people;
3. the value of the land; and
4. if you are eligible for any exemptions (eg. if the land includes your principle place of residence).

Put simply, if the total value of your land is:

• $350,000 or more – for absentees, companies, trustees of trusts and superannuation funds; or
• $600,000 or more – for individuals and trustees of special disability trusts;

then you will be paying land tax (unless you have an exemption)!

What’s Changing?

Currently, Land Tax is exclusively calculated on the value of the land that you own in Queensland, however from 30 June 2023, Land Tax will be calculated on the value of all land owned by you throughout Australia. The threshold amounts for land tax will remain the same, causing many individuals and companies to pay Land Tax, where previously they did not have to.

Of course, if you only own land in Queensland these changes will not affect you and you will still be able to claim any exemptions applicable to you.

Consequences if You Own Land Outside of Queensland

Your interstate land will be valued according to the valuation legislation in the State or Territory in which it is located. This is referred to as the ‘statutory value’ and this value will be totalled with your Queensland land values and it may push you over the limit causing you to incur Land Tax where previously you were exempt.

If this is you – you will need to set up a QRO (Queensland Revenue Office) Online account and complete the declaration for all of your Australian held land.

Summary

Of course, there are plenty of exemptions available in relation to the Land Tax, so check if you are eligible before parting with your money!

If you need assistance with determining your eligibility or if you want to appeal a Land Tax assessment from the Queensland Revenue Office, contact our experienced Property Law team today:

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One of the first questions we ask our clients that are purchasing a property is: “Will you be moving into the property after settlement?”

The answer is normally either “yes, I can’t wait to move in” or “no, I am not moving in as this is an investment property”.

But sometimes there is a third scenario- where our client has found their dream house that they want to move into as soon as possible but there is a tenant in the property.

Whilst this situation is less than ideal, there are still a couple of options available for you to consider. Part of our service includes reviewing the draft contract prior to signing. This is particularly important when a tenant is involved as we can check that the critical dates ‘line up’ in relation to both applicable notice periods, and the transfer (stamp) concession eligibility requirements – read on to find out more.

Getting the Tenant to Leave

It’s important to know what type of Tenancy Agreement is in place, as this determines the notice period that must be given to the tenant to require them to vacate.

For a periodic agreement the tenant has four weeks to vacate when a sale contract is in place for the property.

However, if there is a fixed term agreement in place the tenant has the later of 2 months from the day of notice, or the date on which the fixed term agreement ends to vacate the property.

Notice is not normally given until the contract goes unconditional (as understandably, the Seller won’t want to kick their tenant out unless they know that the property is definitely being sold), so it is important to allow sufficient time between the notice being given and settlement.

Of course, the tenant can agree to leave early at their own discretion but with no guarantee of this, it’s important to understand the relevant notice periods at the time of entering into a contract.

Transfer (Stamp) Duty Concession Requirements

Transfer Duty (often referred to as ‘stamp duty’) is a government tax charged on most property transactions, with the amount payable dependant on the purchase price and whether or not the purchaser can claim a concession or exemption.

As an owner/occupier intending to move into the property, you may be entitled to claim either the First Home Concession if you have never owned a property before or the Home Concession if you have previously owned property before. These concessions mean that you save a significant amount on the ‘full rate’ of transfer duty, which is otherwise payable (including if you are purchasing the property as an investment).

A key eligibility requirement to receive either concession, is that any tenants occupying the property under an existing tenancy agreement must move out when their lease expires or within 6 months of settlement at the latest, whichever is the earlier. This also applies to previous owners who may be living in the property for a period after settlement.

If you claim a concession and the tenancy doesn’t end within the required timeframe you will then need to notify the Commissioner of State Revenue by completing a Notice of Reassessment and pay the higher stamp duty amount. Therefore, it is very important to understand the eligibility requirements and ensure that you can comply with them.

Taking Possession

Once the tenant has vacated you will likely want to inspect the property to ensure no damage has been caused and that it has been appropriately cleaned and the tenant has otherwise complied with their end-of-lease obligations.

Any issues that come up at the inspection should be discussed with the selling agent and managing agent (if applicable) so that it can be dealt with by them and the tenant’s bond utilised if possible.

In the event that this is not possible, we can provide advice on any other options you may have before settlement.

Enterprise Legal’s Top Tips

1. Talk to the selling agent when putting in your offer to find out about the terms of the tenancy and if the tenant has any intentions of vacating earlier than required;
2. Have the contract reviewed by us prior to signing and discuss any concerns you have about the tenancy with us at the same time; and
3. Understand that if you claim a stamp duty concession and subsequently do not meet all of the requirements, you have an obligation to notify the Queensland Revenue Office and you can be subject to penalties for giving false and misleading declaration if you do not give that notice.

Are you in the process of purchasing a property? Contact Enterprise Legal's experienced conveyancing team now for more expert advice:

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🌐 | Property Conveyancing Services

In January this year we posted an article titled ‘Business Structures 101’. This is the follow-on to that article, and is aimed at existing business owners who are thinking about starting a second (and separate) business (Second Business). Although we will cover some different content here to Business Structures 101, we recommend reading these articles in sequential order), so if you haven’t already checked it out we encourage you to have a quick read: Business Structures 101 and then come right back for the follow-on.

The quickest and easiest option when setting up a Second Business is to use the entity you already have, and simply register a new business name and start operating the Second Business. In some circumstances that can work, but making this decision still requires taking some time to consider whether it is really the best option in your specific circumstances.

The following are some key issues you should consider:

Crossover

You should consider how your current business (First Business) will be impacted if anything goes wrong with the Second Business.

This is quite a big risk to consider, because you want to ensure that appropriate steps are taken to protect the First Business if something happens with the Second Business (and vice versa). For example, if a disenfranchised former employee of the Second Business decides to bring a claim, then the claim is brought against the controlling entity. If the Second Business was trading under a separate entity, then only the assets and money held by that entity would be at risk, and (all going to plan) the First Business could continue to operate totally unaffected by that claim.

In short, you might lose the Second Business, but you would still have the First Business to fall back on. Alternatively, if both business are operating under the same entity, then both businesses are impacted and you may be required to sell the First Business (or at least some assets in it) to meet the claim. 

Saleability

One business is a lot of hard work, let alone two. It’s highly likely that at some point you may want to sell one of the two businesses, or bring someone in at an ownership level to help run it. If both businesses are operating under the same entity, it is very difficult to ‘uncouple’ them for a sale. It can be done, but will cost significantly more than it would to set up a new entity at the outset. Whereas if the businesses are operating under separate entities, then it is a much easier task to sell the relevant business or bring someone in by way of a share sale.

Tax Planning

You should also seek accounting/tax advice, again based on your specific circumstances. There may be some added tax benefits that you can obtain by separating the Businesses into different entities.

Ultimately, it’s important to consider your own risk profile and how opening a Second Business will affect your First Business, and more importantly you as an individual.Knowing your business entity and structure is one of the most crucial parts of setting up your business and is very important to consider when adding to your business portfolio.

Enterprise Legal offers a free Business Health Check, in which we arrange a time to meet with you in-person or by phone/Zoom to assess your business needs.

We will work closely with you, your accountant and other financial advisors to give you all the relevant information and discuss the best way to move forward. We can even create your new entity, amend your existing structure, or draft supporting entity documents to support your structure (such as company constitutions, association rules, shareholder’s agreements etc).

Contact the Business Law Team today or book in for your Free Business Health Check:

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If you have recently been dismissed from your employment and you believe your dismissal was unfair, unjust, or there was a lack of consultation from your Employer, you might have a claim. However, there are a number of eligibility criteria which can prevent you from legally bringing an unfair dismissal claim. It can feel a bit like a marathon that starts with a 100m hurdle event – if you jump over all the hurdles and make it to the end, then you can start the marathon. This article briefly sets out the hurdles that you need to jump over in order to be eligible to bring an unfair dismissal claim.

Hurdle 1 - Timeframe

Much like not making it to the starting line on time for the race, if you don’t file an unfair dismissal claim on time then you have very little chance of even getting out of the blocks. Employees have 21 days from the date they are dismissed (or the event leading to them resigning, in the case of a constructive dismissal) to bring an Unfair Dismissal claim. If your claim isn’t filed with the Fair Work Commission by that date, then no matter how good your claim is it will be ruled ineligible and you’ll lose any rights you might have had. In exceptional circumstances, the Fair Work Commission can grant an exception to that rule, but that would be the equivalent of starting the race late and hoping everyone else fell over before the finish line, so unless you’re the modern-day Steven Bradbury, you wouldn’t rely on it.

Hurdle 2 – Have you been ‘dismissed’?

This might seem simple, but some things that may not be a dismissal are a resignation (unless it is ‘forced’), a redundancy (provided it is genuine), you’ve been demoted or your fixed term has expired. You’re in the wrong race altogether, and an unfair dismissal claim will not be applicable.

Hurdle 3 – Has the dismissal been effected?

In this case, you’ve timed your jump too early, hit your front leg on the bar and come crashing to the ground. Unless you have actually been dismissed from your employment, you cannot bring a claim for Unfair Dismissal. This will usually be specified in your termination letter, and in some cases a resignation can still be a dismissal if it is considered to be a ‘forced’ resignation. There are some technicalities around what constitutes a ‘dismissal’ and whether it has been effective, so if it is unclear then you should seek legal advice before bringing a claim.

Hurdle 4 – High Income Threshold

If you earn more than the high income threshold (which at the time of writing, is $162,000 per annum, and subject to review on 1 July each year) then you will be ineligible to bring an Unfair Dismissal claim. Bonuses and other payments can be included in this part of the criteria. You may still be eligible for other claims though (breach of contract, general protections) so you should still seek legal advice, but if you earn more than the threshold you will simply be ineligible for an unfair dismissal claim.

Summary

Sometimes, no matter how unfair or unjust the circumstances might be, an unfair dismissal claim simply won’t be available to you. This doesn’t mean you won’t still have an action against an Employer, as there are other claims you could potentially bring, including a claim for general protections, breach of contract and misrepresentation.

If you have been dismissed but you think one or more of the above hurdles will prevent you from bringing a claim, you should still seek legal advice as there may be other options available. Contact our Employment Law team today for a free consultation.

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