June 21, 2016

News & Articles

  • Major changes to Stamp Duty and Property in Victoria

    Victorian Government announce major changes to stamp duty and property transactions

    Model house and financial information

    The Victorian Government’s latest budget has introduced major changes to stamp duty and grants affecting properties in Victoria. There are great opportunities for first home buyers to take advantage of after 1st July, 2017 but investors need to be wary of changes, particularly to do with spouse transfers and off the plan purchases.

    First Home Buyers – Stamp Duty

    There will be no Stamp Duty for first home buyers purchasing a property up to $600,000 and a duty concession for first home buyers for purchases between $600,001 and $750,000. This will apply to contracts signed after 1st July, 2017.
    Click here for more information

    First Home Buyers Regional Grant

    A grant of $20,000 will be available for homes built in regional Victoria. This will apply to contracts signed after 1st July, 2017 and before 20th June 2020.
    Click here for more information

    Off the Plan Concession

    From 1st July 2017, the Off the Plan stamp duty concession will only apply to buyers who intend to occupy the property as their principal place of residence and not for investors.
    Click here for more information

    Transfers between spouses

    From 1st July 2017 to 30th June 2020, property transfers between spouses and de facto partners involving commercial and investment properties will no longer be exempt from stamp duty.
    This is a major change to the legislation and will greatly affect investors.

    Australian Defence Force FHOG

    A minor change is that members of the Australian Defence Force no longer have to live in the property they purchase to receive the First Home Owners Grant of $10,000 or $20,000 for a regional property.
    Click here for more information

    Vacant property tax

    A vacant residential property tax will be applied to some properties in Melbourne if the property is vacant for more than 6 months of the year.
    Click here for more information

    If you believe any of theses soon to be introduced measures above may affect you then please contact our office as soon as possible.

  • Pre-settlement Inspections

    House in a shopping trolley

    If you’ve purchased a property you’re entitled to inspect the property up to a week before settlement. It is highly recommended that this be done as close to settlement as possible. Make sure you arrange the inspection with the real estate agent well ahead of time so you can do it when most convenient to you.

    How many inspections can I do?

    You have the right to only one final inspection however if a problem is found and is to be rectified then you are entitled to inspect the property a second time just to ensure this has been done.

    What should I be looking for?

    The property is expected to be in the same state as when you first made the offer to purchase but “allowing for fair wear and tear”. What this means is that if you first looked at the property three months ago it is acceptable for it to look like someone has been living there for three months (even if the property is vacant).

    There is no obligation for the vendor to thoroughly clean the property. They don’t have to steam clean the carpets, wash the skirting boards or mop behind where the washing machine used to be, for instance. Saying that though, it shouldn’t be an absolute mess unless it was expressly communicated that it was to be sold like that (for instance a property that you would expect to be demolished or an old house sold at a lower price because of the state it is in).

    Check to make sure nothing is damaged (that wasn’t already damaged before). Make sure rubbish has been removed. Make sure the vendors or tenants have actually vacated.

    What is a fixture?

    The rough answer is anything that is “fixed” to the property and can’t be easily removed. The dishwasher and stove can’t be removed easily because of plumbing and gas connections. The clothes washing machine however can be removed easily. Lightbulbs can be removed but light fittings must stay. Curtains can be removed but curtain railings can’t. Carpets have to stay but rugs can go.

    These are some of the issues that can arise at pre-settlement inspections:

    Lawn overgrown

    The lawn is expected to be kept at a length that complies with the local council regulations. It is acceptable if it is more overgrown than the initial inspection as long as it abides by council regulations.

    Rubbish/furniture left behind

    This is a common one. Unless expressly specified in the Contract, non-fixtures including furniture and rubbish are to be removed prior to settlement. If things are left behind, contact Lake Streetand request that they communicate with the vendor’s solicitor to ensure those items are removed.

    Damage to the structure (eg. holes in plaster, broken tiles, etc.)

    This comes down to two simple questions. Was the damage already there at the first inspection? And if so, was there a Special Condition in the Contract stating that the damage was to be repaired?

    If the damage was there at the first inspection then there’s really nothing that can be done unless there is a Special Condition requiring repairs.

    Appliances not working

    Another common issue. If a fixed appliance such as a heater, aircon, rangehood or similar isn’t working at the inspection, again communicate with the agent to request it get fixed. If it can’t be proved that the appliance wasn’t working originally and there is no special condition to say it should be working then the vendor may refuse to fix it.

    Often the vendor will have cancelled the electricity and gas connections prior to the inspection so it’s advised to have them connected in your name in advance.

    Remote controls and/or manuals missing

    There is no obligation on manuals being supplied and often the vendor advises that remote controls are lost. Most appliance manuals can be downloaded from manufacturers websites and replacement remotes may need to be ordered directly from the manufacturer as well.

    Holes left in the wall after taking down TV mount

    Settlement must proceed. TV mounting is a fixture and should stay. This should have been address in the sale Contract.

    What Can You Do About It?

    Firstly, talk to the real estate agent about it. Some agents are really helpful with contacting vendors and discussing the problem. A lot of times the vendor is aware of the issue and is already in the process of rectifying it.

    Next, talk to your solicitor. Give them details about what the issues are. They can advise whether this is something that can be pursued and then can contact the vendor’s solicitor prior to settlement to request that it be fixed.

    There is a General Condition in standard Contracts which provides for an amount of up to $5,000 be held back from the vendor and paid to a third party for repairs, provided the purchaser also pays an equal amount to the third party. Settlement can then proceed without delay and the dispute be resolved afterwards. Just be aware that this option does tend to be costly so you need to weigh up if it is worth it.

    If there is a special condition in the Contract which specifies that a certain, or all appliances be in full working order then settlement can be delayed until that appliance is fixed. However both parties may prefer to withhold money, settle and sort the problem out after.

    Key Points

    – Make sure to arrange the inspection time well in advance

    – Ensure electricity and gas are connected in time for the inspection so you can test appliances

    – Check with the agent that the problem is not already being dealt with

    – Don’t be scared to ask for a second inspection to check if something has been rectified

    – Remember the real estate agent acts for the vendor not the purchaser

    – Any Special Condition in the Contract, if not fulfilled, can hold up settlement without penalty until it is rectified.

  • Xmas & New Year closing dates

    Xmas Tipple

    Please be advised Lake Street Lawyers will be closed as of Midday, Thursday, 22nd December, 2016 and re-open on Monday, 9th January, 2017 due to the Christmas and New Year holiday period.
    Best wishes for a safe and happy new year.

  • Closed Monday 31st October

    Racehorses
    Lake Street Lawyers will be closed on Monday 31st October, 2016 for the long Melbourne Cup weekend. We’ll be back to business as usual on Wednesday. Hope you back a winner!

  • Estate Planning – Testamentary Trusts

    Elderly couple putting will in a box

    Depending on your own circumstances, rather than a “basic” will, a will containing a testamentary trust should be considered.

    The benefits of the Testamentary Trust include:

    • Income earned from the assets held by the Testamentary Trust can be split amongst the beneficiaries, including children and grandchildren, thereby minimizing taxation. This can also be achieved by an executor varying income to beneficiaries at particular times depending on the circumstances of the beneficiary(s).
    • Asset protection benefits can also be achieved as the assets in the Testamentary Trust are not treated as assets owned by a beneficiary.  This will offer protection in a bankruptcy situation, or where there is a subsequent marriage of any beneficiary. Further asset protection outcomes can result through capital not being distributed and remaining in the testamentary trust (for income generating purposes for instance).

    Estate planning considerations go hand in hand with reviewing one’s will. In practical terms, this often takes the form of reviewing the terms of a family discretionary trust deed, and what will happen in the event of death of the appointor of the trust. In this regard, it is critical that the precise terms of the trust deed are followed in considering any amendments to ensure that the proposed amendment of the trust deed is effective and that a re-settlement of the trust does not result, so as to cause unintended taxation consequences.

    It is often the case, that in the event of the death of the appointor of the trust, that person’s spouse is added as the new appointor, and sub-trusts are thereby created for the child or children. This will create a degree of certainty for the family members in terms of the benefits of the family trust assets which will flow to particular beneficiaries of the family trust.


    The content of the FAQs and all other content on this website is intended only to provide a summary and general overview on matters of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the Content is current but we do not guarantee its currency. You should seek legal advice from Lake Street Lawyers before acting or relying on any of the Content.

  • Buying a business

    Women running a business

    There are a lot of considerations that go into purchasing a business. If you have never purchased a business before then navigating the legal and accounting landscape of a business transaction may be unfamiliar territory. This article provides a brief rundown on a number of common things you should be mindful of when purchasing a business.

    What are you buying?

    Buying a business differs quite substantially to simply purchasing a property. When buying a business you will often be acquiring numerous different types of assets that may include equipment, vehicles, stock-in-trade, goodwill (the inherent value of the business), intellectual property and often even the premises itself.

    It is imperative when purchasing a business that you have a clear idea of what is included in the contract price and how the purchase price has been divided among the various different assets. Not only will this give you certainty over what is yours come settlement day, it might save you thousands or even tens of thousands of dollars in GST or capital gains tax in the future.

    What aren’t you buying?

    Lease

    It is common for a business to be run out of a leased premises. Often this means that you will need to acquire the lease associated with the business or you might be left holding the rights to a business but with nowhere to run it from.

    Most leases require the consent of the landlord before they may be transferred to a new tenant and the landlord will want to see some financial evidence that you will be able to continue to make the rental payments. In most cases they will also require some sort of bond and, depending on the landlord, may require other securities as well.

    You will want to ensure that the lease contains sufficient clauses to renew. After all, you don’t want to grow the business for two years only to find out that your lease is up and it’s time to move out.

    You will also need to clarify your and the landlord’s obligations that apply both during the term of the lease and once it ends. These obligations are often a surprise to new business owners, who might seek to move onto larger premises only to find out that they are required to fund thousands of dollars of work to restore the premises to a different condition prior to leaving.

    Leases are complex documents. To touch on every aspect of a lease is beyond the scope of this article, but this is where the role of a legal advisor will be invaluable to you.

    Staff

    It is not at all uncommon for managerial staff to be key players in the business. Often they’ll be worth their weight in gold and this is particularly so where you are acquiring a business in an industry where your previous expertise is limited. If there are important staff members that you wish to retain, you should open the lines of communication between yourself and those individuals at the earliest opportunity.

    It is also necessary to be aware that you may acquire obligations for unpaid leave entitlements and long service leave if they continue to work for you. This is often accounted for with a corresponding adjustment in the purchase price to allow for these future contingent liabilities. If you are at all unsure about your obligations in relation to staff, you should seek professional legal advice.

    Restraint of Trade clauses

    Purchasing a business can often be an exciting time, but it can just as quickly turn into a disaster if you haven’t taken the time to dot your I’s and cross your T’s. Many a case has been litigated due to clauses restraining trade and competition (or failing to do so properly) upon the sale of the business. This is a common theme among many businesses, but is particularly prevalent among hairdressers and similar service industries.

    Picture this: You’ve just purchased a hairdressing salon. As part of the purchase you’re receiving all client details and lists of customers. You plan to grow the business over the next few years as your brand awareness blossoms and your satisfied customers tell their friends. You need to make money in the meantime though, and that’s why you bought the business to begin with rather than start your own from scratch.

    The first few months are going well, but you start to realise that business is slowing and the repeat customers are dropping off. After a bit of investigation, you realise that the previous owner of the business has opened up another salon just five minutes up the road and she has been calling all the clients of your salon. Furious, you organise an appointment with a lawyer to see what can be done.

    The advice you will receive is directly related to the clauses in the contract. If you have negotiated an iron-clad restraint of trade clause prior to the sale of the business, then you’ll be entitled to commence legal proceedings against the former owner for a breach of contract. If the restraint of trade clause is vague or ambiguous, or there is no restraint of trade clause at all, then you may end up holding a very expensive pair of scissors.

    Summary

    There are numerous reasons to buy a business, but chief among all of them is to make money. If you’re considering obtaining legal advice or professional accounting advice but remain unsure whether the cost is worth it then you should be thinking long and hard about your decision to purchase a business. In most business transactions the answer is that you simply cannot afford not to obtain professional advice. The advice of an experienced lawyer will save you thousands of dollars in legal fees down the track when something goes wrong and will provide you with certainty and peace of mind so that you can get on with running your business and avoid the pitfalls that are all too common in business transactions.


    The content of the FAQs and all other content on this website is intended only to provide a summary and general overview on matters of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the Content is current but we do not guarantee its currency. You should seek legal advice from Lake Street Lawyers before acting or relying on any of the Content.

  • “The police told me I’m going to lose my licence. I have a job, family and bills to pay. Is there any way I can keep it?”

    Driver with traffic signs

    The question above is probably the most common question asked in traffic matters. The answer will differ depending on your circumstances but there are a few general rules that can help to guide you through the quagmire of information out there.

    The first thing to note is that Victoria has some of the toughest traffic penalties of any state in Australia. The Road Safety Act imposes mandatory sentencing provisions for all speeding offences exceeding 25km per hour and all drink driving offences exceeding 0.07 BAC. So what does this mean for you?

    It means that if you, like many of my clients, have been issued with an infringement notice or Summons for exceeding the speed limit by 25km per hour then you must defend the charge or have it withdrawn if you want to keep your licence.

    Unfortunately, the magistrate hearing your matter is not able to take your personal circumstances into consideration and is forced to issue a licence suspension if you plead guilty to an offence which carries a mandatory sentence. This means that pleading guilty often means dusting off your Myki and looking for the nearest bus stop.

    Now you might say that you weren’t speeding or you weren’t going as fast as the police claim, or that their device wasn’t accurate because of the terrain surrounding the location. While some or all of these might be true for any given offence, the Road Safety Act allows the Court to assume that the speed shown on a radar device is correct unless you provide evidence to the contrary. This means individuals that choose to defend matters using their own testimony alone are almost always unsuccessful.

    But it’s not all bad news. Most of the traffic matters that lawyers win are won or withdrawn because the police fail to comply with technical requirements of the law. There are numerous regulations relating to the testing and certification of radar devices and breath analysers. If the police have not complied with the regulations then their evidence will be inadmissible and the charges are often withdrawn.

    By way of example, the Road Safety (General) Regulations stipulate that a radar device must be tested and sealed by a testing officer within the previous 12 months and that the testing officer must be satisfied that the device is in a ‘satisfactory electrical condition’ and has been properly calibrated to ensure that the margin of error is no greater than 2km per hour. The regulations state that the testing officer must keep records of their test for 7 years.

    It is not uncommon for the police to have failed to perform the necessary certifications for their devices or for the records of those tests to be mysteriously absent. If this is the case, the evidence will be thrown out and the charges will be without basis. This means that you often won’t need that bus pass after all.

    The take home message is this:

    • If you have been issued with a traffic infringement that carries a mandatory penalty of licence loss then you must defend the charge if you wish to retain your licence;
    • The magistrate cannot allow you to keep your licence no matter how dire your personal circumstances are;
    • It is uncommon that traffic matters are won on the basis of your own personal evidence;
    • Most traffic matters are won or lost on the basis of technical requirements relating to technology, testing and record-keeping.

    If losing your licence is simply not an option for you, you cannot afford to leave stones unturned when it comes to scrutinising the police evidence. It is surprising how often the police have made a technical error in their paperwork and the charges are not able to proceed.

    So if you’ve been issued with an infringement notice or Summons, get in touch with Lake Street Lawyers and let an expert sort things out.


    The content of the FAQs and all other content on this website is intended only to provide a summary and general overview on matters of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the Content is current but we do not guarantee its currency. You should seek legal advice from Lake Street Lawyers before acting or relying on any of the Content.

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    If you need help with any legal matters call Lake Street Lawyers on 03 8390 5870.