A widow contesting a Will

All jurisdictions in Australia provide statutory rights for eligible persons to contest a Will on the basis that they have not been left adequate provision by the testator for their proper maintenance, education and advancement in life. 

In Western Australia, an eligible person includes:

  • a spouse or de facto partner;
  • a person receiving or entitled to receive maintenance from the deceased as a former spouse or de facto partner;
  • a child of the deceased;
  • a grandchild of the deceased, in specified circumstances;
  • a stepchild of the deceased, in specified circumstances;
  • a parent of the deceased.

If a family provision claim is successful, the Court can order an appropriate adjustment to the terms of the Will to satisfy the claim. A range of factors are considered including the relationship the applicant had with the deceased, the obligations or responsibilities the deceased had to the applicant, and the nature and size of the estate.

The expectation that spouses should provide for each other generally places a widow’s needs ahead of other interested parties in a family provision claim. However, all cases will be individually assessed and balanced with the needs of the applicant and the competing needs of other entitled recipients.

The moral duty to provide for a spouse

There is a general expectancy that testators have a moral duty to provide for the proper maintenance of their spouse or de facto partner. The Court has explained this as providing what is necessary for the spouse to enjoy accommodation to the standard to which he or she is accustomed and, to the extent possible and having regard to the size of the estate, a fund to meet unforeseen contingencies. This is particularly so where the marriage or relationship has been lengthy.

Competing claims

Family provision claims by widows usually involve a contest between the applicant and a child or children from the deceased’s former relationship. 

The applicant will generally apply for greater provision than what has already been provided in the Will based on his or her personal and financial circumstances, current financial position and future needs.

Generally, the widow and children of the current relationship (if any) will stand favourably against the children of a former relationship. This is because the testator’s primary duty is perceived as being owed to his current family and the likelihood that the children of the former relationship may have already been provided for through child support payments. This of course is not always the case and each matter will turn on its own circumstances in consideration of a range of factors.

Determining the sufficiency of proper maintenance

The Courts have explained the difficulties of determining the meaning of ‘proper maintenance’. In Re Harris [1936] SASR 497 it was considered to be ‘…more than a provision to keep the wolf from the door – it should at least be sufficient to keep the wolf from pattering round the house or lurking in some outhouse in the back yard – it should be sufficient to free the mind from any reasonable fear of any insufficiency as age increases and health and strength gradually fail’.

Sometimes, widows are left a ‘right of residency’ in the testator’s property. This allows the widow to occupy the family home or other property of the deceased for his or her lifetime with the intention that the property will pass to a residuary beneficiary, such as the testator’s child or children from a former marriage, after the widow’s death. 

A right of residency however is not always practical and may be considered insufficient to meet the moral duty expected of the testator. The widow may, due to age or health, need to vacate the residence, being left vulnerable and without security of a home.

The alternative approach of leaving the home to the widow may also be inappropriate – if the widow passes soon after the deceased, then the result may be a significant capital asset being inherited by the widow’s relatives, contrary to the wishes of the testator.

As can be seen there needs to be a balance between a tokenistic provision and the risk that a testator’s significant assets might inadvertently be inherited by an unintended beneficiary. 

In Luciano v Rosenblum (1985) 2NSWLR 65 the Court gave some guidance as to the expectation of a widow after the death of a spouse:

‘Where the marriage of a deceased and his widow has been long and harmonious, where the widow has loyally supported her husband and assisted him to build up and maintain his estate, the duty which a deceased owes to his widow can be no less than to the extent to which his assets permit him to achieve that result…’

Conclusion

A testator owes a moral duty to provide for his or her spouse and, as a general rule, a spouse will have priority over other entitled beneficiaries in a Will contest. Having said that, every case is different and will turn on its own unique circumstances.

There are a range of factors a Court must consider when assessing the merits of a family provision claim. Your family circumstances should be assessed in light of these factors when preparing your Will to minimise the potential of a Will contest when you die.

Strict time limits apply with respect to making a claim for family provision. If you feel you have not been given adequate provision from the Will of a family member or if you or someone you know wants more information or needs help or advice, please contact us on + 61 8 9921 6040 or email thayter@midwestlawyers.com.au.

Contractual obligations in the wake of COVID-19

The coronavirus (COVID-19) presents numerous challenges for individuals and businesses, amongst them, the legal rights and responsibilities under existing contracts during a pandemic such as this.

Parties to a contract that are facing difficulties in meeting their obligations may be anxious about their legal position in such circumstances.

Some contracts may provide specific rights for parties to delay performance of their obligations or terminate a contract due to certain conditions, however these must be carefully scrutinised before taking such action. 

The individual circumstances of each case and the law at the relevant time must be considered before an informed decision can be made.

Force majeure

Commercial agreements may include ‘force majeure’ clauses which operate to suspend a contract and / or eventually bring it to an end if a specified situation occurs, and continues to occur, that is out of the parties’ control. 

Specified events may include things such as natural disasters, war or public emergency. The words used in such a clause will determine whether a pandemic like the coronavirus will constitute a force majeure event enabling the contract to be suspended or terminated. 

Many standard contracts would not specifically include the word ‘pandemic’ as a force majeure event and each contract must be assessed in light of the provisions, the surrounding circumstances and with reference to case law.

Frustration

Failing the inclusion of specific clauses, general contract law (and legislation in some states) provides that a contract may be ‘frustrated’ by events beyond the parties’ control which make its performance impossible or makes the contractual obligations fundamentally different. Examples include changes in the law that make performance of the contract illegal or physical destruction of the subject matter. 

The doctrine of frustration operates when events occurring subsequent to the contract’s formation render the agreement ‘radically and fundamentally’ different to the parties’ expectations. The frustrating event must occur through no fault of the parties who, because of it, are now unable to perform their obligations.

Case law provides examples of frustration however traditionally, the doctrine operates in very limited circumstances and can be difficult to establish. The doctrine will not apply in circumstances where performance of the contract is merely more expensive or onerous than originally anticipated – performance of the contract must become literally impossible. Given these limitations and the uncertainty of establishing frustration, it is preferable to rely on express contractual rights to delay or terminate a contract, if possible.

What should you do?

If you are having difficulty performing your obligations under a contract, or are considering terminating a contract, you should obtain urgent advice regarding your legal rights and the ramifications of termination.

Threatening to terminate a contract without sufficient legal cause may be considered wrongful termination and constitute a repudiation of the contract. Repudiation occurs when a party to the contract shows an intention to no longer perform its obligations, the result being that the other party may be in a position to claim compensation for loss and damage.

Contracts should be reviewed to determine whether performance can be delayed, or termination rights are available, and advice provided regarding the correct process to follow in these circumstances. The contract will usually specify strict notice requirements or the use of prescribed forms and specific conditions for valid service of a notice.

The consequences of termination and the parties’ respective rights will generally be determined by the contract itself and whether some of the obligations under the contract have already been performed.

If you or someone you know wants more information or needs help or advice, please contact us on + 61 8 9921 6040 or email thayter@midwestlawyers.com.au.

COVID-19 – Important Updates For Financially Distressed Businesses

This material is general in nature and incorporates information regarding proposed or pending legislative changes to address the potential economic and other impacts of the Coronavirus (COVID-19) pandemic. 

On 22 March 2020, the Australian Federal Government delivered its second response to the economic threat posed by the Coronavirus. 

Part of this response includes measures to alleviate some of the financial hardship faced by many businesses and provide some safeguards to help them survive and be better placed to resume operations after the crisis.

Key to these objectives were proposed reforms to company and personal insolvency laws.

Statutory demands

Temporary changes to the requirements for issuing a statutory demand are aimed at offering protection to companies that might otherwise be pushed into insolvency and liquidation.

Statutory demands have long been used to recover money owed by a company which will be presumed insolvent if, after 21 days after service of a statutory demand, it either fails to pay the debt or have the demand set aside or extended. The presumption of insolvency triggers a right for a creditor to instigate proceedings to have the company wound up. Generally, a statutory demand may not be issued unless the debt is for $2,000 or more and the debtor is given 21 days from service of the demand to pay the debt or apply to have it set aside.

Temporary changes, anticipated to operate for 6 months as from 25 March 2020 include:

  • Increasing the minimum amount of debt for which a statutory demand may be served from $2,000 to $20,000;
  • Extending the timeframe for a debtor company to comply with a statutory demand from 21 days to 6 months.

Personal liability for company directors – insolvent trading

Companies are prohibited from trading whilst insolvent, and directors have a duty to prevent insolvent trading. Directors who allow a company to continue incurring debt where it is reasonably foreseeable that the company is, or likely to become insolvent, may be held personally liable for financial losses. 

New measures provide temporary relief from the duty to prevent insolvent trading to company directors who incur debts in the ordinary course of the company’s business, alleviating the director from personal liability that would otherwise be associated with insolvent trading. These measures will apply for 6 months.

Individuals and bankruptcy

Similar temporary measures, to apply for 6 months, are proposed for individuals facing insolvency issues through changes to personal insolvency laws, namely:

  • increasing the threshold for the minimum amount of debt owed from $5,000 to $20,000 before a creditor can initiate bankruptcy proceedings;
  • extending the timeframe for which a debtor must comply with a bankruptcy notice from 21 days to 6 months;
  • in circumstances where a debtor has declared an intention to enter voluntary bankruptcy, extending the timeframe for which a debtor is protected from an unsecured creditor taking further recovery action from 21 days to 6 months.

Taxation matters

Business owners or company directors who are struggling financially as a result of the Coronavirus may seek tailored solutions from the Australian Taxation Office such as temporary reductions, payment deferrals or the withholding of enforcement action.

How can we help?

The above material is based on an understanding of the available information at the time, which may be subject to change or further development. The individual circumstances of each case and the law at the relevant time must be considered before an informed opinion can be offered.

This is a concerning time for all Australians and we are here to help.

If you or someone you know wants more information or needs help or advice, please contact us on + 61 8 9921 6040 or email thayter@midwestlawyers.com.au.

Covid-19 – Temporary Relief from directors’ personal liability whilst trading insolvent

If a company trades while insolvent directors are personally liable. This can lead to boards of directors feeling under pressure to make quick decisions to enter into an insolvency process if there is any risk that the company will experience periods where it will be unable to be pay its debts when they fall due and are trading while insolvent.

In order to ensure that companies have confidence to continue to trade through the Covid-19 crisis with the aim of returning to viability when the crisis has passed, directors will be temporarily relieved of their duty to prevent insolvent trading of a company with respect to any debts incurred in the ordinary course of the company’s business. This will relieve the director of personal liability that would otherwise arise from insolvent trading. It will apply for six months.

Temporary relief from personal liability for insolvent trading will apply with respect to debts incurred in the ordinary course of the company’s business. Blatant cases of dishonesty and fraud will still be subject to criminal penalties. Any debts incurred by the company will still be payable by the company. The WA Premier and WA Treasurer announced $25 million has been allocated for a rent relief plan for small businesses and not-for-profits that lease from Government agencies and trading enterprises. 

The plan will benefit businesses such as convenience stores in train stations, cafés in government buildings, and restaurants in tourism precincts. It will also benefit eligible small businesses leasing land from the WA Government, such as caravan park and eco-tourism operators.

Legislation is in place that allows pastoral lease holders to request rent payments be reduced, waived or delayed where the pastoral lease has been adversely affected, or if the lease holder is suffering personal financial hardship due to poor economic conditions in the pastoral industry.

The rent relief is in addition to the recently announced moratorium on the termination of leases for non-payment of rent for six months for commercial tenancies suffering financial distress, to be rolled out by State and Territory Governments in response to the COVID-19 pandemic.  

Small businesses include those owned and operated by an individual, partnership or proprietary company with a relative small market share and are not a subsidiary of a larger business, as defined by the Small Business Development Corporation Act 1983.  Not-for-profits include all charities and associations defined by the Associations Incorporation Act 2015.

Visit https://www.business.gov.au/risk-management/emergency-management/coronavirus-information-and-support-for-business/temporary-relief-for-financially-distressed-businesses for more information.

Tim Hayter, Principal, Mid West Lawyers

This information is general in nature and should not be relied upon as legal advice. Formal legal advice should be sought for your particular circumstances. 

Covid-19 – Temporary Higher Thresholds for Credits Statutory Demands

A creditor issuing a statutory demand on a company is a common way for a creditor to recover unpaid monies and place the company into liquidation. The Government is temporarily increasing the current minimum threshold for creditors issuing a statutory demand on a company under the Corporations Act 2001 from $2,000 to $20,000. This will apply for 6 months.

Not responding to a statutory demand within the specified time creates a presumption that the company is insolvent. The statutory time frame for a company to respond to a statutory demand will be extended temporarily from 21 days to 6 months. This will apply for 6 months.

The Government will make a number of changes to the personal insolvency system regulated by the Bankruptcy Act 1966 to assist individuals. The threshold for the minimum amount of debt required for a creditor to commence bankruptcy proceedings against a debtor will temporarily increase from its current threshold of $5,000 to $20,000. This will apply for 6 months.

Failure to respond to a bankruptcy notice is the most common act of bankruptcy. The time a debtor has to respond to a bankruptcy notice will be temporarily increased from 21 days to 6 months. This extension of time will give a debtor more time to consider repayment arrangements before they could be forced into bankruptcy. This will apply for 6 months.

When a debtor declares an intention to enter voluntary bankruptcy by making a declaration of intention to present a debtor’s petition there is a period of protection when unsecured creditors cannot take further action to recover debts. This period will be temporarily extended from 21 days to 6 months. This will give debtors more time to consider the options that are best for them. This will apply for 6 months.

Creditors, many of whom are themselves small businesses, will still have the right to enforce debt against companies or individuals through the courts. The Small Business Development Corporation has created a COVID-19 assistance centre to provide dedicated guidance on available support options, including:

  • information on available stimulus packages and eligibility requirements;
  • advice on preparing businesses to manage impacts;
  • other resources.

To access the service, contact 133 140 (8.30am to 4.30pm weekdays) or email info@smallbusiness.wa.gov.au 

Visit https://www.business.gov.au/risk-management/emergency-management/coronavirus-information-and-support-for-business/temporary-relief-for-financially-distressed-businesses for more information.

Tim Hayter, Principal, Mid West Lawyers

This information is general in nature and should not be relied upon as legal advice. Formal legal advice should be sought for your particular circumstances. 

Covid-19 – Advice for Employers

Employers need to be mindful of issues relating to employees in relation to the Covid-19 pandemic.

Employers should not send staff to be tested at either COVID clinics or through GP referrals unless they have a fever and respiratory symptoms such as cough or sore throat AND:

  • have returned from overseas travel in the last 14 days; or
  • are a contact of a confirmed COVID-19 case; or 
  • believe they may have been in close contact with a person infected with COVID-19.

Health authorities advise that it is ineffective and unnecessary to test people who do not have these symptoms.

Unnecessary testing also uses more valuable resources such as personal protective equipment (PPE) and pathology supplies, which are in limited supply worldwide.

There is no point testing someone if they do not have symptoms and it uses valuable resources such as personal protective equipment (PPE) and pathology supplies, which are in limited supply worldwide and need to be used responsibly for patients who meet testing criteria.

Employers should not send their staff to COVID-19 Clinics or GPs for medical clearances or certificates.

Encourage and practice quality personal hygiene like you would in the winter flu season – the includes covering coughs and sneezes, washing hands often with soap or sanitiser and staying away from work if unwell.

Continue to follow the advice of health authorities – anyone instructed to self-isolate by a medical professional must take the request seriously and stay home to avoid putting others at risk. This means you don’t leave your property, you don’t go to work or school, you don’t go on outings and you don’t have visitors. The only time to leave the house is to seek medical attention.

Know the facts by sourcing accurate information, from credible sources such as the Department of Health. Employers are advised to remain calm and use common sense.

Visit this website for more information: https://www.wa.gov.au/organisation/department-of-the-premier-and-cabinet/covid-19-coronavirus-latest-updates.

Tim Hayter, Principal, Mid West Lawyers

This information is general in nature and should not be relied upon as legal advice. Formal legal advice should be sought for your particular circumstances. 

Covid-19 – Rent Relief for Small Business and Not-for-Profits

The WA Government will waive rental payments for small businesses and not-for-profit groups in Government-owned buildings for six months to help these lease holders respond to the impacts of COVID-19. This is the first time the WA Government has waived rental payments for any lease holders.

The WA Premier and WA Treasurer announced $25 million had been allocated for the rent relief plan for small businesses and not-for-profits that lease from Government agencies and trading enterprises. 

The plan will benefit businesses such as convenience stores in train stations, cafés in government buildings, and restaurants in tourism precincts. It will also benefit eligible small businesses leasing land from the WA Government, such as caravan park and eco-tourism operators.

A raft of individually tailored measures including more flexible opening hours, and facilitating takeaway and delivery options are also available to tenants across Elizabeth Quay and Yagan Square. DevelopmentWA has been working closely with each lease holder to support them during this difficult period.

Legislation is also in place that allows pastoral lease holders to request rent payments be reduced, waived or delayed where the lease has been adversely affected, or if the lease holder is suffering personal financial hardship due to poor economic conditions in the pastoral industry.

The rent relief builds on the recently announced moratorium on the termination of leases for non payment of rent for six months for commercial tenancies suffering financial distress, to be implemented by State and Territory Governments in response to the COVID-19 pandemic.  

Small businesses include those owned and operated by an individual, partnership or proprietary company with a relative small market share and are not a subsidiary of a larger business, as defined by the Small Business Development Corporation Act 1983.  Not-for-profits include all charities and associations defined by the Associations Incorporation Act 2015.

Visit this website for more information: https://www.wa.gov.au/organisation/department-of-the-premier-and-cabinet/covid-19-coronavirus-latest-updates.

Tim Hayter, Principal, Mid West Lawyers

This information is general in nature and should not be relied upon as legal advice. Formal legal advice should be sought for your particular circumstances. 

Covid-19 – Small Business Relief

As a result of the Covid-19 pandemic the WA Government has declared a State of Emergency for Western Australia, which has led to small business suffering a loss.

The Small Business Development Corporation has created a COVID-19 assistance centre to provide dedicated guidance on available support options, including:

  • information on available stimulus packages and eligibility requirements;
  • advice on preparing businesses to manage impacts;
  • other resources.

To access the service, contact 133 140 (8.30am to 4.30pm weekdays) or email info@smallbusiness.wa.gov.au 

For information on a range of other support they offer, including a series of free online webinars covering key topics relating to small business issues, visit the Small Business Development Corporation website or follow their blog for regular updates on the rapidly changing business environment.

The WA Government is investing $114 million in measures to support WA small and medium businesses including:

One-off grants of $17,500 to small and medium businesses

  • Small and medium businesses whose annual Australian Taxable Wages are between $1 million and $4 million will receive a one-off grant of $17,500 to assist them to manage the impacts of COVID-19.
  • No applications are required. Grants will automatically be paid from July 2020, but there may be delays for taxpayers whose tax status changed during the 2018-19 assessment period or who commenced as new employers in 2018-19 and 2019-20.

Fast-track payroll tax relief for small businesses

  • The payroll tax threshold will be increased to $1 million from 1 July 2020, six months earlier than planned.

Deferred payment 2019-20 payroll tax available to small and medium sized businesses

  • Small and medium sized businesses affected by COVID-19 can apply to defer payment of their 2019-20 payroll tax until 21 July 2020.
  • The deferral is available to employers who pay $7.5 million or less in Australian Taxable Wages and have been directly or indirectly impacted by COVID-19, compared to normal operating conditions.
  • Eligible businesses will be able to defer payment of their 2019-20 payroll tax until 21 July 2020.

Further information on how to apply for a payroll tax deferral is available on the Department of Finance website.

Tim Hayter, Principal, Mid West Lawyers

This information is general in nature and should not be relied upon as legal advice. Formal legal advice should be sought for your particular circumstances. 

Commercial Leasing and COVID-19 Mandatory Code of Conduct released

The economic impact of COVID-19 on business generally, and commercial leasing arrangements has been the focus of many landlords, tenants and governments.

On 7 April 2020, the Federal Government released its much-anticipated Mandatory Code of Conduct – SME Commercial Leasing Principles during COVID-19 (Code).

The Code adopts and builds on principles emanating from National Cabinet Meeting discussions concerning commercial tenancies and is to be implemented by states and territories through legislation or regulation. It imposes a set of leasing principles to apply to commercial tenancies (retail, office and industrial) between owners / operators / other landlords and tenants, in circumstances where the tenant is an eligible business – a small-medium sized business (with annual turnover of up to $50 million) that, due to financial stress as a result of the COVID-19 pandemic is eligible for the Commonwealth Government’s JobKeeper programme.

For a franchise, the $50 million threshold applies at the franchisee level, and for retail corporate groups, the threshold applies at the group level.

The Code is intended to apply for the period during which the Commonwealth JobKeeper program remains operational.

What are the objectives of the Code?

The Code’s purpose is ‘to share, in a proportionate, measured manner, the financial risk and cashflow impact during the COVID-19 period whilst seeking to appropriately balance the interests of tenants and landlords.’

The mutual benefit of landlords and tenants implementing measures to foster business continuity is acknowledged, and it is anticipated they will negotiate transparently and in good faith to reach tailored solutions.

Agreed outcomes should consider the financial impact of the COVID-19 pandemic on the tenant (its revenue, expenses and profitability) with appropriate arrangements having regard to the present impact and a reasonable recovery period.

Effectively, the Code enables eligible commercial tenants to receive rent relief in the form of waivers or deferrals (proportionate to trading reduction of their business) to help them survive the pandemic and beyond. The Rent Relief Policy requires eligible tenants to continue to engage their employees through the JobKeeper program and uphold the substantive terms of their leases.

What are the Leasing Principles?

The Code’s Leasing Principles should be applied, on a case-by-case basis, when negotiating temporary arrangements. Key principles include:

  • Landlords are prohibited from terminating leases for non-payment of rent during the COVID-19 pandemic period (or reasonable subsequent recovery period).
  • Subject to negotiated amendments, tenants must otherwise commit to and fulfill the substantive terms of the lease. Failure to do so will forfeit protection under the Code.
  • Landlords must offer proportionate rent reductions in the form of waivers and deferrals of up to 100% of the amount ordinarily payable, based on the reduction in tenant’s trade during the COVID-19 pandemic period and subsequent reasonable recovery period.
  • A rental waiver must be no less than 50% of the total reduction in rent payable over the COVID-19 pandemic period, or greater in cases where the tenant’s capacity to fulfill their obligations under the lease would otherwise be compromised. The landlord’s financial ability to provide such additional waivers must be taken into consideration.
  • Unless otherwise agreed, payment of deferrals must be amortised over the balance of the lease term and for a period of no less than 24 months, whichever is greater.
  • Landlords may not apply fees, interest or other charges with respect to rent waivers and deferrals.
  • Reductions in statutory charges (land tax, council rates) or insurance should be passed onto tenants reflective of how these are proportioned in the lease.
  • Landlords are prohibited from calling in a bank guarantee, personal guarantee or security deposit for non-payment of rent during the COVID-19 pandemic period and/or a reasonable subsequent recovery period.
  • Apart for retail leases based on turnover rent, rental increases are to be frozen for the duration of the COVID-19 pandemic and a reasonable subsequent recovery period.
  • Tenants should be provided an opportunity to extend a lease for the equivalent period of a rent waiver and/or deferral period.
  • Where agreement cannot be reached, matters should be referred, and subject to, relevant state and territory resolution processes.

What should tenants and landlords do?

Tenants and landlords are commercially reliant on each other and should negotiate in good faith to reach practical solutions that will sustain both, not only during the pandemic, but into the future. Many negotiations will be challenging and complex.

Negotiations should consider:

  • the Mandatory Code of Conduct and relevant state / territory legislation and regulations;
  • the terms of the current leasing arrangements, including headlease / sublease arrangements which will add complexity to the negotiations;
  • Government financial assistance such as Commonwealth Government JobKeeper assistance for eligible tenants;
  • any loan repayment holidays provided by lending institutions to the landlord;
  • the documentation required to show actual losses / decreases in turnover suffered by a tenant due to COVID-19 (bank statements, accounting records);
  • realistic timeframes for recovery with possible extensions to moratorium periods;
  • any variations / extensions to the term of the lease.

The Western Australian Government has indicated that landlords should not be asking tenants to provide evidence of existing savings to prove financial hardship. This may be an indication that the test will relate to changes to a tenant’s financial situation resulting from COVID-19. The position in Western Australia is expected to become clearer as emergency legislation is introduced.
Negotiations can be facilitated with the assistance of a commercial lawyer and agreed variations documented in writing and, where relevant, registered on the title of the leased premises.

Conclusion

As the present crisis continues to evolve, so too do the measures to address the numerous economic challenges faced. It is yet to be seen how the states and territories
will incorporate the Code into their various laws and regulations.

In preparation for the implementation of these measures, New South Wales has enacted the COVID-10 Legislation Amendment (Emergency Measures) Act 2020 (NSW) to allow regulations to be made under key Acts such as the Retail Leases Act 1994 (NSW). It is likely that other states and territories have already or will introduce similar laws.

We are here to assist throughout these difficult times and encourage tenants and landlords financially impacted by the coronavirus to contact us for independent tailored
advice and assistance.

If you or someone you know wants more information or needs help or advice, please contact us on + 61 8 9921 6040 or email thayter@midwestlawyers.com.au.

This material incorporates information based on our understanding of proposed or pending measures to address the impacts of Coronavirus (COVID-19) and may continue to change as developments unfold.

 

 

Beware when buying property off the plan

The term “buying off the plan” usually refers to purchasing a property that is not yet registered as a separate lot with the government department responsible for land title registrations, or not yet built.

Buying off the plan can refer to the purchase of a block of vacant land that is part of a subdivision, or a house or unit being built for sale where the land on which it stands is not yet registered as a separate title. 

Selling property “off the plan” allows a land owner to develop the land in a less-expensive way, as the developer can negotiate lending rates with its Bank at a lower rate if some of the land, houses or units are already sold to buyers.

This is an advantage to the land developer and can also be attractive to a prospective purchaser who buys into an “off the plan” property in the early stages of the development.

There are however risks for the buyer of property “off the plan” and a diligent purchaser should take care when entering into this type of purchase contract.

A contract for the purchase of property “off the plan” is a contract that does not have a precise completion or settlement date due to the incomplete nature of the building project and the subsequent separate registration process for the title to the land or new building.

“Off the plan” contracts generally include several clauses that are different to those in a standard contract for a registered lot. The major difference is the timeframe for the owner to complete the subdivision or the building on the land.

You should keep in mind that like the economy, property market conditions fluctuate and with long-term building projects such as luxury high-rise units, the value of the units may change prior to completion of the building and your contract. The price you agreed to pay stays the same regardless.

Your deposit could be tied up for some time between signing the contract and settlement. Paying a deposit by way of a Deposit Bond (not always available in all states) or bank guarantee may be a better choice than a cash deposit when buying “off the plan”. If you terminate the contract your bond or guarantee can be cancelled, and you do not need to take steps to recover your cash deposit.

Tim Hayter, Principal, Mid West Lawyers

This information is general in nature and should not be relied upon as legal advice. Formal legal advice should be sought for your particular circumstances.