CPD Workshops 2018

Leverage Group

Gain your 12 points from the best in the industry.

Santa needs to know!

Santa Claus is coming to town! He’s not Scott Morrison or Malcolm Turnbull; God only knows what they carry in their sacks. Come to think of it, in 12 months time we might get Bill Shorten for Christmas and then we’d surely have the Grinch. But Santa doesn’t care about us adults; he’s here for the kids.

The North Pole has contacted Leverage and Santa himself has requested that we should write to all property managers and strata managers so that all the kids in Australia can be found. In past years, Santa has had trouble identifying where people are because everyone moves house so much these days. Santa has set up a special new website for all real estate agents to advise Santa on where the kiddies are. Santa wants you to do two things:

  • Real Estate Agents should email their sales for the year to santa@northpole.com, this will tell Santa who has bought and sold properties. It will show where all the kids are who have moved but haven’t yet been registered with the North Pole Land and Property Information Bureau.
  • Unfortunately, those who live in rentals aren’t registered on any database that can be accessed by Santa. Santa is urging all property managers to upload to their tenant database of who has children, on Santa.findthekids.com. This will help Santa find the kids who aren’t registered and have no identified address.

Santa has another problem. When Santa first began, he had a chimney to climb down with his sack to leave toys for the sleeping children. But, there are fewer dwellings with chimney’s left in Australia. More people are living in Strata complexes with no chimney access. Santa has requested that we remind all the strata managers to pass a special Santa by-law. This by-law states the following: it is resolved, pursuant to Section 143 of the Strata Schemes Management Act 2015, to grant a common property by-law to Santa Claus of the North Pole. This common property by-law permits Santa to use the fire escapes and access the master keys for the purpose of delivering toys into everyone’s unit.

For you lot owners, if your strata manager won’t pass this common property by-law, just leave your balcony door unlocked so that Santa can climb in.

Kids, remind Mum and Dad, when you live in a unit or place without a chimney, a lock on a window should be left open for Santa’s elf to sneak in.

Obviously, the above is tongue in cheek and not meant with any seriousness. After twelve months of serious combat in business, we all have a right to a little levity.

As somebody once said, Christmas is for the kids. The 30 minutes of Christmas morning, of smiles on their little faces, with the excitement and joy that only a child can have and bring, it’s a wonderful experience for us parents and for us grandparents. I know it’s only 30 minutes of joy, but that 30 minutes lasts us a lifetime.

The Leverage Team would like to wish everyone a Merry Christmas and a successful 2018. We hope that your time with your family and friends makes up for the sacrifice made during the past 12 months and the next 12. Success is wasted if it is not shared with the people we love.

From all of us at Leverage; be safe, be happy and have a fantastic festive season!

Bailey Compton

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.au or call 1300 438 538

The Value of a Strata Search

There are two important documents, which are received in relation to the purchase of a strata lot:

  • A Section 184 certificate under the Strata Schemes Management Act 2015; and
  • A strata report.

Section 184 Certificates are helpful to any purchaser as they:

  • Set out levies to be paid;
  • Set out levies that have been unpaid by the previous owner;
  • Set out how much has been kept in the administration fund and capital works fund; and
  • Identify the level of insurance.

The strata report is done for three really important reasons:

  • To identify defects in the building which are currently being discussed amongst the strata scheme;
  • To identify the functionality of the strata scheme; and
  • To identify what is in the capital works plan so that the person can determine whether they are going to suffer a special levy in the near future.

Owner’s corporations love to fight amongst themselves. They love to make complaints and identify defects whether they exist or not. All this stuff forms part of the strata register and is a clear indicator to any prospective purchaser.

We have found, lately, that persons purchasing property are very diligent about looking at the strata report. Buildings that have a low capital works fund, a capital works plan that sets out a fortune in future work, a non functioning strata scheme and a whole pile of defects, will devalue property.

All lot owners should recognise that when they complain to the owner’s corporation, send correspondence, or brawl in open meetings, all it does is devalue their property. This is not just for now, we are finding that purchasers are wanting to go back anything up to five years to ensure that they aren’t buying into a strata scheme which is going to cost them more than their purchase price. Moreover, they don’t want to go into something which is dysfunctional. People want peace and good order; they don’t want to live in World War III.

Is there any value in brawling in the owner’s corporation? If it will get something important done, yes, brawling is valuable. If it is petty, however, all that occurs is the devaluation of your property.

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.au or call 1300 438 538

5% Deposit

In Sydney, it has become a regular occurrence to sell properties with only a 5% deposit to secure them. To protect their clients, solicitors have traditionally put a clause in contracts to state that the deposit will be paid in two installments, one on exchange and the other on settlement. Alternatively, some solicitors will generally state that where the deposit is not fully paid on exchange, it will be paid at settlement or upon termination.

LawCover, solicitor’s insurers, have written a newsletter this week that solicitors should be mindful of the risks involved with this practice. LawCover point to the case of Boyarsky v Taylor (2008) Where Brereton J indicated that, where the deposit needs to be paid upon settlement, it is a penalty.

https://jade.io/j/#!/article/88950?at.hl=Boyarsky+v+Taylor+%255B2008%255D+NSWSC+1415

What does it mean if it’s a penalty? Simply that it must reflect the true loss of the vendor. It is considered that, if the vendor goes on and sells the property again, they will get the benefit of that 5% from somebody else’s deposit. Therefore, they’ve lost nothing and there is no true reflection of loss.

The upshot of the decision in Boyarsky v Taylor is that, if a purchaser pays less than 10% and they do not settle, the best the vendor can hope for is to only get 5%.

LawCover has told all solicitors that they should make clear to all vendors, in writing, that if they have taken a deposit of less than 10%, 10% is all they can expect. In other words, if you exchange at 5%, and the purchaser doesn’t settle, all you can expect to get is 5%.

It is a practice that we at Leverage Solicitors are definitely going to take up now, because if we don’t, we are likely to have a claim refused by LawCover. I suggest that all solicitors do the same. This letter in itself will turn most vendors off the 5% deposit.

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.au or call 1300 438 538

Tax when living overseas

The proof is always in the eating! This is no different when you’re dealing with new legislation. The ramifications of such legislation are not truly known until you are in the midst of representing somebody.

The Federal Government have introduced a scheme whereby every vendor must provide a certificate to the purchaser to prove that they are an Australian resident and Australian taxpayer for properties which sell over $750,000. Failure of the vendor to provide that certificate to a purchaser means that the purchaser must take 10 percent of the purchase price and give it to the Australia Taxation Office.

Solicitors have been advised that this is to prevent overseas investors escaping from paying capital gains tax. Unfortunately, you can be an Australian Citizen and still be caught by this legislation.

In the past couple of weeks, Leverage has made certain discoveries. First, we had an Australian citizen who was working overseas as a missionary. The Australian Taxation Office reviews all border records and identified that she had lived overseas for many years. They refused to give her a certificate, which meant that when she sells her property, the purchaser must take 10 percent of the purchase price at settlement.

Secondly, we had a couple who had been Australian permanent residents since 2005. One of the couple had returned to their homeland to care for a sick family member. The ATO were able to identify that this person had spent only 16 weeks in the country in the last 3 years. No certificate was therefore issued, as they were not considered Australian taxpayers.

In these circumstances, a solicitor can apply for a variation so that a certificate can be obtained. What grounds the ATO will set for granting a variation and therefore a certificate, is unknown to all of us. There is no clear criteria or guidelines.

If you are intending to go and live overseas, ensure that you put in a tax return. Even if you are earning no money, that tax return becomes fundamental.

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.au or call 1300 438 538

Dispirited at Christmas

I had the following response to my article on “The Spirit of Christmas;”

“What is the purpose of this article? Why should we think that your opinion of Christmas counts for anything?

Especially when you confuse race with religion – they are different things.

People of all kinds live in home units. Some of them are white christians who dislike the commercial nature of Christmas and the artificial nature of a lot of what passes for Christmas celebration. They may also prefer peace and quiet and may well object to Christmas music being piped around the building.

Whether or not the owner’s corporation chooses to allow Christmas decorations or other signs of Christmas is purely a decision for the committee in consultation with the owners. Your opinion carries no weight at all.”

We also received a comment supporting our views:

Interesting comments about Xmas trees, music, decorations etc on common property…and obviously an emotional issue for some people. Especially relevant at the moment with the current national debate about protecting peoples’ respective religious rights, beliefs etc eg my right not to bake you a cake because I don’t like your choice of life-partner.

This article is a worthy contribution to a strata-specific website which inherently covers a community of people all living together, each with their own views, prejudices, etc. What weight we attach to it is a matter of personal choice, but it is relevant. What is also important is that we communicate our views etc to each other in a civil and caring way.

Obviously, my opinion does count!  Well, at least it counts for those who agree with me. Like my critic, I live in a society where the only opinion that counts is my own and those who agree with me. To my critic, his opinion is important to himself and those who agree with him.

The conversation is what is important. As is the necessity of communicating in a civil way.

My critic is, unfortunately, wrong regarding my confusion about race and religion. The Race Discrimination Act 1995 considers that discrimination on the basis of religion forms part of racial discrimination. This is the same in any state legislation across Australia.

I often ask my classes, “What is the first thing that comes into your head about ‘Strata?’” I hear responses like, “buildings”, “whingers”, “arrogance” and “disputes”.

One in four Australians live in strata or community title. It is the fastest growing form of living within our country and it is also the fastest growing business for solicitors handling disputes for people who cannot learn to get on.

What has never been understood is that, strata schemes are a place where people live and do their business. It is their home and they live in this complex, not because they want to but because there are reasons that they must. It is like a beehive with no hierarchy and no queen bee to sort out the drones. It is a number of monocultures placed in the one cosmos hoping that people will get along.

Regrettably, strata living as a form of good living is not working. And whilst my critic criticizes my opinion, it demonstrates why strata schemes are so problematic. Those with strong opinions win and those who have a different opinion are attacked.

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.au or call 1300 438 538

The Reforms are a Reality

 

For some time, Leverage has been discussing the proposed reforms to the Property, Stock and Business Agents Act 2002. Many have asked us if they are real or only discussion. On the 21st of November 2017, Matt Kean, Minister for Fair Trading, issued a press release giving no doubt that the reforms are a reality:

https://www.finance.nsw.gov.au/about-us/media-releases/new-real-estate-reforms-better-protect-consumers?utm_campaign=What’s+New+24+November+2017&utm_medium=email&utm_source=General+Customers

Whether these reforms are good or bad is no longer the issue. The industry, which includes consumers, will need to get on board with the new regime. We thought that the legislative amendments in 2003 were wide covering but the industry is in for a shock. The legislation that Minister Kean refers to will have a greater impact on the operations of agents than ever before.

Kean has demonstrated by the proposed reforms that the government no longer considers business as a priority. They have done this by placing increased pressures on the costs of real estate agents and small family businesses by these amendments. They have also abolished the Business Agents License. This is on the premise that business people do not need protection when selling their business asset. This is consumer legislation and only to protect consumers. If we didn’t already know it, the government is not about small business and the entities that employ two thirds of the Australian population.

The amendments will also affect how you establish a business. By abolishing the corporation license, how you conduct your business and tax affairs will be altered greatly. As a replacement for the corporation’s license, one person will be the licensee in charge of each office. That person will become completely liable for all mistakes within the office. This additionally will change what asset protections the licensee in charge will need to consider when building a business. Again, business is the loser.

The legislation will change:

  1. The way you manage your human resources;
  2. Your agency agreements;
  3. Your compliance regimes;
  4. Your training regimes; and
  5. Your insurance requirements.

Many have talked about the legislation as being the importance of these reforms. Unfortunately, the evil is often unseen. The changes to your business are in what is not written but what the written word creates.

These changes will have a greater impact on business, those working in the industry and those wanting to enter. Whether they are good or bad is not the issue. They are here and you will need to adapt your business to find a way to do business and to make money.

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.au or call 1300 438 538

The Spirit of Christmas

Strata managers believe that Christmas comes when they receive no complaints from any owner’s corporations. I don’t know about you, but I love Christmas.

I once heard a song that said Christmas is for kids. They’re right; it’s for kids, and for those who enjoy being kids. It is the time we come together to enjoy each other’s company and have some level of camaraderie. It is the time that we give without the aim of getting something in return. It is a time we give to our kids with no fear of spoiling them. It is a break away from the grind of our every day existence and a reminder that people are more important than profit.

However, increasingly, those of us who wish to enjoy Christmas have had those dreams eroded. No trees, no Christmas carols, no gifts among the group, no wishing a Merry Christmas, and no discussions of the Christmas break. It has moved to Happy Holidays in the Holiday season with no mention of Merry Christmas. All for the fear of making people uncomfortable, those who disagree with the spiritual purpose of Christmas

We are told it is wrong to have a tree in the owner’s corporation or the community area. We turn to the Anti-discrimination Act 1997 and the Racial Discrimination Act 1975 (Commonwealth). Both these provisions indicate that you cannot refuse any services or vilify people in relation to race or anything associated with race.

We cannot see how having a Christmas tree in the foyer creates any of these problems. The tree is now more commercial than it is religious and even if it was religious, a refusal may be seen as discrimination to those who have the religious conviction.

If you are running a strata complex, we say it is okay to have Christmas trees and to have Christmas carols playing throughout the property. It is even allowable to have a Strata Christmas party. And, the law agrees. In fact, it might actually be an opportunity for those in strata to get along.

 

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.au or call 1300 438 538

Putting a Myth to Bed

Solicitors and barristers have, for some time, had difficulty removing a tenant from a premises. I’ve recently had a solicitor advise one of my clients to put $10,000 into their trust account so that they could remove a tenant. Their intention was to go to the Supreme Court to seek a declaration.  This is a common mistake amongst solicitors. Solicitors believe that the Supreme Court system is far more effective than the NSW Civil Administration Tribunal (NCAT). They might be right in many circumstances, but they aren’t right where the courts don’t have powers.

The notion that the courts are there as an alternative to NCAT in relation to vacant possession is a myth. Section 119 of the Residential Tenancies Act 2010 states that the only court or tribunal which can provide vacant possession is NCAT. It specifically excludes the Local, District or Supreme Court.

This clears up a myth, but takes away a forum where a landlord can receive legal representation. For any action before NCAT, which does not exceed $30,000, solicitors are excluded. This means that, if you have a complicated vacant possession issue, solicitors are excluded from taking action. This is where hard and fast rules of law can sometimes serve to disenfranchise people’s rights.

The only person who can assist a landlord to obtain vacant possession is a real estate agent who holds an agency agreement with the landlord.

If you are a private landlord, please ensure that you obtain the assistance of an agent to terminate anyone. Failure to terminate correctly means that you have to reissue the termination notice. In other words, you have to start all over again.

You need to obtain the services of an agent to terminate and obtain vacant possession. They are professionals who are trained to be in NCAT and obtain vacant possession orders. They may not be a solicitor but they are better trained in this area of obtaining vacant possession. More importantly, they are the only ones recognised to be able to do it!

 

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.au or call 1300 438 538

Check Your Inclusions

It was my first ever settlement. It was the first conveyance I ever undertook and I was pretty excited! I opened a bottle of red and sat down to tell my loved ones why I was the best conveyancer in the world.

A call came from the purchaser I was representing. I answered the phone excitedly with the expectation of thanks and applause for the wonderful job I did. The purchaser’s tone was not one of joy, but one of credulity.

“They have stolen my letterbox,” she screamed at me.

“That’s unfortunate! I’ll buy you a new one,” I responded.

“It was a stonemason letterbox worth $2000,” she stated loudly.

“Maybe I won’t buy you a new letterbox,” I noted.

It suddenly became apparent to me that the stolen letterbox was not such a funny scenario. Our client had purchased the house with a stonemason letterbox out the front. It was handcrafted sandstone and figured like a statue in the front garden.

The law is one of nuances. If something is a fixture, it stays. If it is a fitting, unless the contract specifically provides for it, the vendor can take it away. A fixture is something attached to the structure, which cannot be removed without structural alteration. A fitting is the opposite; it is one that can be taken from the property without making structural change. The stonemason letterbox was simply removed with a forklift onto a truck. It was clearly a fitting.

“Why didn’t you stop them from taking it away?” she pleaded.

“Because I didn’t know it was there,” I noted.

The solicitor or conveyancer never gets to see the building. The only professional who ever sees the property is the real estate agent. The solicitors and licensed conveyancers rely on their purchasers to tell them what is in the property.

On the front cover of the contract, there is a section for inclusions. If there is something special which needs to stay, this must be noted on the front cover to protect you as a purchaser.

Three tips:

  1. When viewing the property, take note of the things you wish to remain behind so you can tell your solicitor;
  2. Make certain you tell your solicitor of these items so they can be inserted on the front cover of the contract; and
  3. Undertake a final inspection to ensure that they are still there after the vendor has moved out.

It is your property and your purchase. Take care of it!

 

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.au or call 1300 438 538