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gold coast estate lawyers

Why Simple Wills Rarely Work Anymore

By | Podcasts, Wills and Estates

The fabric of the traditional family unit has changed and continues to change! Once, Mum, Dad and the 3 kids, were locked into family bliss, or maybe not, but nevertheless they stuck together and consequently from an estate planning perspective, all was relatively easy. But now throw into the mix, second and third marriages, blended families and children that are now adults, who similarly may have broken relationships or other issues, culminating in the once simple estate plan, not being so simple after all.

In this podcast, Estate Planning expert, Richard Dawson of OMB Solicitors discusses the matter.

TRANSCRIPT:

Dan:     Richard, how complex are families today?

Richard:    Very complex, in a word. We have about half of our families are blended families, as you mentioned second and third marriages. Those blended families have children. There’s a number of ways that we can approach estate planning, and there are some common denominators that I always look for in my estate planning with clients so that they can avoid the traps and the pitfalls that may follow. Some of those can avoid family disasters.

Richard:  I think one of the most important things that a person can do as part of their estate planning is to discuss the affairs with the family so that the family members have a realistic expectation of what they can expect to receive by way of an inheritance and so that avoids surprises. It’s really important to discuss your intentions about how you plan to divide your estate, before you go, with your children and other loved ones. You should have open and frank discussions with family members so that you can manage their expectations and flush out any areas of conflict that may be unsettled between siblings for many and varied reasons. Adult children have their own expectations and beliefs. They also have their own investment strategies and their own family dynamics. We’re all human; we’ve all got issues. Quite often adult children have predispositions about what they should receive in the form of an inheritance, but more so some of them even expect to receive an inheritance in a certain way.

Richard:     What we’re trying to do as part of estate planning is to avoid a conflict in a family after death. Because poor estate, or no planning at all, is a recipe for a family disaster. It can also be an extremely expensive exercise if there is no will in place when someone dies.

Dan:  What you’ve just mentioned there … It does certainly deconstruct that whole idea that simply going down to the newsagent and grabbing a will kit isn’t going to cut the mustard.

Richard:  The $20 will kit is what you use before you spend thousands and thousands and thousands of dollars on your lawyer fixing up the problem.

Dan:  Mm-hmm (affirmative).

Richard:  I’ve seen will kits used time and time again, and very few of them are prepared properly and some of them are often invalid and a waste of money and time in the first place.

Dan: There are sort of other examples, I suppose isn’t there … Of organisation, big publicly owned organisations who may offer free wills or whatever the case might be, where you can actually have a lawyer not involved in the construction of these really important documents.

Richard: That’s right. The most commonly used service for free wills is the Public Trustee of Queensland. They promote the free will service, which is a great idea for the community. They do about … From memory, about 35,000 free wills a year. That’s great, but what happens is there a government body and they charge a percentage on your estate administration regardless of how easy or complex it is. With no disrespect to the Public Trustee because there are some very good people who work in there, but they are a government body and we all know that the wheels of the government machine roll very slowly. Whereas, if you’ve got a lawyer engaged in commercial practice, they’re very experienced and they’re usually specialised in estate administration, as am I. We have a lot of systems in place, we’ve got a lot of precedents in place which make estate administration as pain-free as we possibly can. It’s also important the quicker you work and the more experienced you are at it, generally means we can resolve estate administrations and finalise them for the beneficiaries and the executors in a time and cost-effective manner.

Dan:  Now some of the practicalities I suppose Richard, in terms of constructing a good estate plan, fundamental today is choosing the right executor?

Richard: Absolutely. The executor is the person, or persons, who are appointed in the will to administer a deceased person’s estate. They’ve got a number of roles and responsibilities; in particular, they’ve got to identify assets and liabilities of the estate. They’ve got to pay out any debts. They’ve got to pay for the funeral. They’ve got to pay out any estate administration costs. They would have to apply for probate if the estate warranted it. That’s all done before any of the beneficiaries receive their inheritances.

Richard:  There can be more than one executor, but there can be no more than four. I find four is a very impractical number. A sole executor has autonomy, so if you’re choosing a sole executor then it’s important to choose the right person because they will be stepping into the deceased’s shoes, identifying the assets, paying out liabilities, and in a word upholding the terms of the will. So that person must be experienced and have the necessary acumen to be able to administer an estate.

Dan:  Richard I’m assuming that key to this is trying to make the life of an executor as simple as possible. So is there something that can be practically done in terms of making sure that banking details and superannuation details, insurance, et cetera are readily apparent and available to the executor?

Richard:  Yeah, very much so. That’s a good point. I say to clients that estate administration shouldn’t be a game of Sherlock Holmes. The executor has a difficult enough job as it is, and the will-maker should really get their banking, superannuation, insurance, and other investments in order. This greatly assists the executor in managing the estate, and it also saves a lot of time and cost. All too often do I see executors asking for advice as to where they should be searching for a deceased’s assets or investments. The lawyer is not going to know. It should have been the will maker who told the executor, “When I pass away, I’ve got this bank account, I’ve got that superannuation, I’ve got that life insurance. Here’s all my details.” It makes the executor’s job very easy.

Richard: What I try and encourage people when they come in to do their wills … And there are times when I don’t know those person’s assets because they’re closely guarded or they might be new clients, I ask them to put all their bank details and 30 June statements in a sealed envelope, sign across the back of it, and then we keep that with the will. I ask them to update their details, and replace that envelope as time goes by. So that when the time comes for the estate to be administered, we can go to that envelope, open it, and it’s all there. It makes that so much easier than to be digging through all old, outdated paperwork, writing to banks, and … Basically going on a fishing expedition for stuff that may not be there.

Dan: Now we know that there has been this exponential increase in estate litigation, and I’m assuming that it’s front of mind for many people that are considering estate planning. Is there things that people can do to minimise the possibility of their estate being contested or disputed by someone within the midst that’s not happy?

Richard: Most definitely. Every time I take instructions for a will I consider who is an eligible person to contest an estate. A will maker must consider spouses, children, and dependents. Where somebody for whatever reason leaves out a spouse, a child, or a dependent, or leaves them a minimal amount, up goes the red flag. I talk to the client and I explain to them the pros and cons of leaving out or minimising an inheritance for those category of people. Because at the end of the day, a disgruntled beneficiary has the rights in all Australian law to contest an estate and apply to a court for what we call Further and Better Provision from the estate. To get that Further and Better Provision from the estate, lawyers are involved and it’s expensive. It’s very expensive. 99.9% of the time it comes out of the estate. There are exceptions, and there’s a Judge’s discretion as to whether or not if someone’s being vexatious or frivolous in their claim that they can personally have costs awarded against them. But in most cases it is commercially the option that the estate pays. Which means there’s less for everyone to go around. And the lawyers get paid.

Richard:   It’s just not necessary because of improper estate planning or no estate planning at all.

Dan:   Mm-hmm (affirmative). Look, it’s an area of law isn’t there where there are lots of myths, and unfortunately, a lot of these myths do inform the wrongful practices of people who are considering estate planning.

Richard:   That’s exactly right, yes.

Dan:  I’m thinking fundamentally just going through what you’ve discussed, having that open discussion with the family and others that may well be a beneficiary is really important. Secondly choosing the right executor, thirdly getting the legal paperwork in order. Also approaching this piece of very important work through the lens of what can I do to ensure that the estate is safe and not going to be disputed? They seem to be the take-home messages.

Richard: Absolutely. That’s for sure. Probably to add to that is keep everything up to date. If we have a look at where we were 10 years ago, our lives were completely different. We didn’t have iPhones, we didn’t have large superannuation accounts. We were building; property values in some places have doubled or tripled. We’ve had children, we’ve had grandchildren. They’re all the things why you would keep a will up to date and why you would review your estate plan, I recommend, every say three to five years depending on your circumstances. It’s really important to have an up to date will so that it reflects your current wishes, and it also meets your family’s expectations.

Dan:  Great advice. Richard, thanks for joining me.

Richard:  Lovely to have you. Thank you. Bye for now.

resolving construction disputes

How Builders Can Resolve Disputes Quickly

By | Ligitation, Podcasts

The building and construction space is the source of many legal disputes that arise out of complicated contract arrangements. This will often lead to the parties enforcing their legal rights, which can lead to costly and protracted legal battles. To better understand the issues, and what you can do about them, in this podcast, Commercial Litigation expert, Cameron Marshall of OMB Solicitors discusses the matter.

TRANSCRIPT:

Dan: Cameron, is there one intrinsic thing in these matters that tends to be the problem?

Cameron:   Yes, I find that it’s probably, it sounds pretty simple but the thing that can be done is for the parties just to read and understand the contract that they’ve signed, that’s probably the first place to start to try and avoid any disputes.

Dan:   Is it the case that most people don’t, is that common?

Cameron:  I’d say quite a lot unfortunately, it sounds very basic but I see it quite a lot from in my field of work all the time, that disputes could’ve been quite easily avoided by the parties understanding what they had to do, and knowing which way to go when a dispute arises, yeah.

Dan:  Is there something about the contract or particular clauses that you think that are typically the drama?

Cameron:  Yeah, well, not … Yeah, typically they come from a whole range of problems, because I’ve been doing this job for 20 years odd, so I see a lot of different ones. So when I see things such as something as simple as just the parties, or how they may be named in the contract, they need to make sure that the exact legal entity is named. That comes a real problem if we ever have to enforce payment for work being done if we haven’t even got the contractual parties correct, because it gives wriggle room to a party trying to avoid payment, possibly.

Cameron:  Other things like that come up is often when contracts have been negotiated, that’ll take a little bit of time and a start date for the commencement of the work might be included. But, often when the actual contract’s signed, that start date’s passed. So if we’re working on a practical completion date, we’re already halfway through that, we could be halfway through that period and the contractor will be facing some problems down the track, when the completion date’s quickly coming up and he might be getting pressed for completion, etcetera, etcetera. So it’s just those things that need to be sorted out beforehand.

Cameron: The construction schedule’s one that also comes up a lot. It’s one of those things that sometimes gets overlooked in the contractual negotiations, the contractors and the owners and the builders need to just make sure that the construction schedule is one that they can keep, and one that’s realistic. We don’t wanna, again, get into disputes with someone falling behind when the contract, construction schedule itself was just not able to be done.

Cameron: There are even situations where I’ve seen contracts not signed. So-

Dan:  Wow.

Cameron: We get a couple of hundred thousand dollars worth of work and the dispute arises and then one contractor says that they haven’t signed the contract. There’s legal ways of getting around that, but you don’t really wanna have to go there if you just check the contract and make sure it’s being signed by the proper party. So there are some of the examples that I see quite often.

Dan:  Now, Cameron, when things go wrong, where’s a starting point for people to sort of consider how to resolve this, is it typically the case that they don’t do anything at all, they let these things linger, or what’s the best way around it?

Cameron:  Well, again, let’s go back to the contract, let’s see what the contract might say. So let’s talk about a breach of the contract. Normal construction contract if someone’s noncompliant, maybe they haven’t paid a bill, maybe some bit of work is being delayed, then it’s something that can be addressed in the contract by simply providing a notice to the other party. Usually it has to be in writing, but once again, it clears the air and provides certainty as what the other party alleges isn’t done, and it gives time for the other party to do it, and if it’s not done then you can have a look at your legal rights, but again, you go back to the contract, see what it says, and it will guide you through a lot of the problems.

Cameron: There are dispute resolution clauses often in building contracts, now these can be used, I’ve seen one recently where we had a latent defect come up because of soil testing. And it needed to be, there was a dispute between the builder and the contractor, and it needed to be resolved so the parties went through their conciliation process and the arbitration process in the contract which required eventually an independent expert to decide whether it was a latent defect, latent condition sorry, and that resolved that issue so the contract could proceed. It’s not always the case the parties are happy with those rights, but it’s a lot better than going down the legal course if it can be done prior to incurring legal costs, yeah.

Dan:  From a practise perspective Cameron, is sort of traits that you see of builders who may sort of sit on these things longer than they should in terms of bringing the issue to a resolution, sort of practical issues that sort of emanate?

Cameron:   Well, the building site is, I’ve been on them before in my younger days, it’s a different world there, there’s a lot of trust between the parties and a lot of things spoken orally, which is the normal way to do it and good, but it’s not the good legal way to do it. So, what may be said by one party and understood, thought to be understood between the parties that things may be okay, may not be the situation and when a dispute does arise and the lawyers get involved, then again the contract will be the document that we all look at and will be the one that we’ll be trying to enforce. So, it’s one of those situations where on the building site you don’t wanna rest on your belief and understanding of what the other party thinks is the case, or what you think is the case, rather, let’s get it clarified, let’s go back to the contract, make sure what the parties are doing is understood, and then you can go forward. You don’t want, you thought it was the case, ’cause you’ll just end up in problems down the track.

Dan:  So, undeniably, the real take-home message for people listening to this podcast, those that work within, in the industry, is to get advice and make sure these contracts are watertight.

Cameron: Yes, it’s just really … They’re a daunting document when you look at them, but once you’ve had a little bit of experience with them, and you read them, it’s, they’re pretty straightforward and they all have the general similar tone and vein to them, so just understand what you need to do, and if something does go wrong, how do you address it? There are ways to go enforce your legal rights through the courts and the different tribunals, but a lot of that can be avoided simply by knowing what you need to do under the contract and doing that.

Dan: Cameron, thanks for joining me.

levies unpaid body corporate

What Happens When Body Corporate Levies Go Unpaid?

By | Body Corporate, Podcasts

If you own a lot within a community title scheme, then it’s likely that you may be aware that they are required to pay Body Corporate levies. However, it can be a conundrum for many of them, in particular, understanding what Body Corporate levies are, what they are used for, and what happens if you do not pay them, and how Body Corporates encourage the payment of these levies.

In this podcast, Body Corporate Law expert, Juliette Nairn discusses the matter.

TRANSCRIPT:

Dan:  Juliette, what are these Body Corporate levies?

Juliette: That’s actually a very good question, because we often come across it a lot within a Body Corporate. We have the commission members, who obviously know very well what Body Corporate levies are, but for those individual lot owners who live in a strata scheme, they might necessarily not know that they have Administration Fund levies, which is for daily repair and maintenance of the Body Corporate, a Sinking Fund levy, which is for capital work that a Body Corporate undertakes, and also insurance, which is very important to pay on behalf of a Body Corporate.

Juliette: What happens is, the Body Corporate, usually through a Body Corporate management company, will send out a notice and agenda for an annual general meeting, and it’s actually at that time that the lot owners need to read that documentation and look at what is the budget for the Body Corporate in terms of how much money does the Body Corporate need to raise to cover its day-to-day expenses.

Juliette:  We often talk about Body Corporates being a bit like a not-for-profit organisation because a Body Corporate has to get in exactly the amount of money that it needs to pay its expenses throughout a 12-month period. So it’s not a business that actually raises money, or has any revenue.

Dan: So Juliette, where is all this information enshrined? Is there a contract? Is there a document of some sort that somebody can go to and go, “Ah, that’s what my Body Corporate levies are,” or whatever the case might be?

Juliette: Unfortunately there’s not, because the only place it exists is in the legislation, which is called the Body Corporate Community Management Act, and an appropriate module that applies to each strata scheme.

Juliette: So, for example, that information about levies is not contained in your bylaws, it’s not contained in a community management statement. What happens is when I’m a purchaser and I might be looking into purchasing into a strata scheme, I would do what is called a Section 205 search, and that’s actually a letter that gets written to the Body Corporate management company on behalf of the Body Corporate, and the solicitors usually do that on behalf of an individual lot owner who might be buying into a Body Corporate.

Juliette:  What they get back is a little snapshot which says, “Oh, this is the budget for the Body Corporate, and this is what your contribution is, and this is how we pay it in quarterly instalments.” So, that’s the only information, really, that individual lot owners get. So often what happens is a Body Corporate management company might send out a welcome packet to its lot owners that actually explains in a little bit more detail what levies are. We also have a really good website which is the BCCM office website, being the commissioner for Body Corporate in Queensland, and they give a summary of what levies are and what is a Body Corporate debt.

Dan: Can there be a great divergence in what those levies are across Body Corporates?

Juliette: Yes. Definitely, Dan. It depends on the size of the building that you live in, actually, and even the type of plan that’s being recorded. A lot of the high-rise buildings are what we call building unit plans, and those building unit plans, you know, you’ve got one level stacked on top of the other. You’ve got charges for lifts and all sorts of other costs, and maybe even care taking costs or letting fees associated with that Body Corporate, as well as its normal admin.

Juliette: But if you live out, say Ribena or Matriba you might live in a duplex-style complex, or where there are actually individual homes under what we call a standard format plan, and those levies are very different, because they can be much lower from a Body Corporate perspective.

Dan:  So, what happens if people don’t pay these levies?

Juliette: Usually what happens is that the Body Corporate then can’t afford to pay its bills. We often have Body Corporates approach us, or committee members or individual lot owners within a Body Corporate, where they may have run out of money and can’t afford to pay the insurance for their building.

Juliette:  If a Body Corporate gets to that situation where it can’t pay its bills, it then looks very carefully at which individual lot owners haven’t been paying their levies on a regular basis, and will look at implementing processes or steps to recover those levies, which usually include receiving reminder letters. So the people, the lot owners, might receive a reminder letter from the Body Corporate management company, and then maybe a second reminder letter, then a final letter of demand, and also often the Body Corporate manager might make a phone call as well to try and get an understanding as to why that individual lot owner is not paying its levies.

Dan:  So, in contrast, if the lot owner doesn’t pay their levy, what are the penalties? Is there any sort of ramifications on them?

Juliette:   Yes. So in terms of the penalty which will apply to the individual lot owner, because the lot owner and the levies that they pay are basically the lifeblood to the Body Corporate, because there’s no way the Body Corporate receives other money, the penalties are actually very high. So one, not only are your levies outstanding, but the legislation specifically allows the Body Corporate to charge a 30% simple interest per anum charge to each and every levy that’s outstanding.

Juliette:   Now 30% simple interest adds up very quickly when you have outstanding levies, and it’s applied on a monthly basis. It’s actually far higher than what you would pay on a VISA card. It’s far higher than what you might pay, definitely, on your mortgage, and it’s certainly far higher than what you might pay on a loan if you got a personal loan if you’re in some hardship to pay your levies.

Juliette: The reason why the legislators made the 30% simple interest a general rule that applies across the board to all Body Corporates in Queensland is because they wanted lot owners to be penalised, because there’s no other way in which a Body Corporate can raise revenue. It can only come from those individual lot owners.

Juliette:  In addition to that, Dan, if you actually have, and the Body Corporate engages legal representation, being a Body Corporate solicitor to institute legal proceedings against that lot owner, that individual lot owner will become responsible for all the costs. So, the Body Corporate manager’s cost being expenses and outlays, and any expenses and outlays of the Body Corporate, including any legal fees that it incurs as well.

Dan: Is there Body Corporates out there that don’t pay their levies. Does that typically happen?

Juliette:   Unfortunately there are a lot of lot owners out there who don’t pay their levies. Because of the amount of information that we’re seeing these days, particularly through our Queensland Commissioner’s Office, we find that individual lot owners are better educated, particularly if they live in Australia.

Juliette: Fortunately we do have a lot of overseas investment, but some of those individuals who live in Bodies Corporate may not have Australian agents, and so, for example, if Chinese is their first language, or they’re in a country like Japan where the levy notices are being posted to them, one, it’s very difficult for them to understand the reason behind paying levies to the Body Corporate. They’re just aware that they’ve purchased the lot and paid that purchase price, but didn’t realise that there were individual, ongoing costs associated with the Body Corporate. So we do see much more foreign investment in that form.

Dan:  So what can they do to become more aware and make sure that they pay their levy?

Juliette: The best thing to do is that most of these buildings do have a Body Corporate manager appointed, and just contacting that Body Corporate management company and having a good conversation or an email conversation with the Body Corporate manager will enable you to get all of your information. They keep their roll up to date, and the best way is to have a role address by way of not only a postal address, but also an email address, so that they receive newsletters on behalf of the Body Corporate as well as any relevant information from the Body Corporate regarding their levies and their notices of contribution by receiving that information and understanding what levies are for, the Body Corporate manager, through their welcoming packets that they send to individual lot owners, that’s how people are encouraged to pay their levies.

 

 

 

Before You Buy a Property on the Gold Coast, Listen to This!

By | Podcasts, Property Law

The Gold Coast if you know, is renowned for its diverse property appeal, but in 2018 property experts are saying that infrastructure in the Northern and Central suburbs will contribute substantially to an already booming market, not to mention the impact of the Commonwealth Games on the city, but if you’re an outsider contemplating buying into this flourishing market, there’s probably a few idiosyncrasies along with the stable cold hard truths, you need to know before buying that strategically positioned unit on the 24th floor.

Simon Bennett of OMB Solicitors discusses the risks and opportunities.

Dan: Simon is all this glitz and glamour of living on the coast potentially at risk of not doing your due diligence?

Simon Bennett: I think that’s right. I think sometimes purchases of property on the Gold Coast get caught up in the excitement and the glitz and glamour and fail to probably undertake what I would consider basic due diligence when looking to purchase property. Now that could be split up. I think there are two real types of category of buyer. You’ve got your owner-occupiers, so someone who’s buying to actually live in the property. Then you’ve got an investor who is someone simply making a property investment. I think there’s really key characteristic differences between those two.

Dan: How should each of those cohorts look at the market?

Simon Bennett: Well an owner needs to look at livability. Am I going to be happy living there? They really need to pay attention when they’re buying into a body corporate about bylaws and rules because these are things that will govern how they can occupy that property. They really need to determine whether they’re going to be happy living there, as well as whether it’s a good commercial purchase. Where the investor on the other hand, really shouldn’t be looking at, do I like it? Does it feel good? It’s really a numbers game. How’s the return? What’s the likely capital growth? They need to be a little bit more removed from the feel, and as I said before, getting caught up so much in what they might like because they need to remember they’re not going to be living there.

Dan: Simon, for the owner I assume that really looking at the bylaws is going to be important, and maybe even so for the investor. Particularly if they’re looking at Airbnb and those other opportunities, but if we talk about the owner first up is what about the bylaws that they should be really analysing or wanting to understand?

Simon Bennett: Sure. Well the bylaws in really basic terms are set as the rules and regulations by which the owner or the occupier of a unit in a body corporate are governed by. Now these are designed to protect an owner, but they also restrict you. Now when I say they protect, what they do is, they govern all owners and say for example, you can’t change the external appearance of your unit. You can’t hang your washing out over your balcony, so that the view of the building doesn’t get the look of a slum or a building you might see in Hong Kong for example, whereby the washing is all hung out the side. That protects values, but it also restricts what you can do. Another common one is you can’t have loud late night parties, which restricts your use of your unit, but also it protects the general common ownership from being disturbed by other owners.

Dan: Simon, is there a divergence among what bylaws are from a complex to complex? I’m assuming that there may well be some that have very, very tight bylaws and others that are a little bit looser.

Simon Bennett: Yeah, that’s correct. It’s important to look at these if you have a specific concern. One of the most common ones we see is with pets. Now this is a really sensitive topic. Quite often a purchaser, or a potential purchaser in a complex, will not go ahead with a purchase if they can’t take their animals with them. It’s important to read those. Know what your specific requirements are if you are planning on letting, if you are planning on living there and taking animals et cetera. To check those bylaws have an experienced, qualified lawyer read through them, and point out what is important to you.

Dan: Okay. Let’s talk about the investor. There’s all this hullabaloo and excitement around Airbnb, and stories about people making thousands and thousands of dollars each week on their property. The investor that wants to buy, say, a unit at Surfers Paradise has got visions of being able to Airbnb it every night. What do they need to ensure is in those bylaws to allow them to do that without sort of running foul with the body corporate?

Simon Bennett: Sure. It’s important to read the bylaws and find out if there are any restrictions in the bylaws on short-term letting, then a qualified lawyer would need to look further beyond that and see whether that constitutes a valid bylaw or not. It may depend on what the original approval or the development approval was granted to that building for. If there were restrictions on what that building could be used for it would come back to town planning, but it is important as an investor to work out what you can and can’t do with it, not just with that letting process, but whether you’re going to put it with an onsite agent, whether there is an onsite letting agent, or whether you’re able to use a commercial letting agent maybe down the road.

Dan: Okay. Now in terms of the contract, or signing the contract, I mean it never ceases to amaze me how many people will go down and chase the cut-price conveyancing law firm to do their work. When in fact it’s a significant asset for many people. What are the risks of going down that path?

Simon Bennett: Yeah. Look, it amazes me as well. I quite often use the analogy of an individual who’s getting brain surgery doesn’t go out and find the cheapest brain surgeon. You generally want to find the best. For most people, buying a property of this nature is one of the biggest monetary financial transactions they will undertake in their life. They shouldn’t be looking at, necessarily, the cheapest option. They should be looking at getting really good value for their money. They should be looking at engaging an expert in that area. I am an accredited specialist by the Queensland Law Society in Property Law. That is an accreditation given by the Queensland Law Society saying that this person is an expert in that area. It’s really important because let’s get to the contract that you mentioned. Realistically, before you sign a contract you should give your solicitor an opportunity to peruse it for you.

Simon Bennett: As a general rule at OMB Solicitors we’re more than happy to look at our client’s contracts before they sign them, no obligation, and no charge. We would rather look at these contracts for our clients up front to say, “Yes, it’s all fine. You’re okay to sign it or gee, we really need to mend these clauses.” Quite often it’s something really technical. It may be the use of a simple word, may or must or something of that nature, that may need to be amended, but the ramifications are quite huge. What we say is before you execute your contracts, get them checked just for piece of mind. That way we don’t have to sort out problems later on.

Dan: Getting quality legal advice just makes common sense.

Simon Bennett: It does. I must say there is a misconception that you want to buy, I want to sell, straightforward it just happens and people go and put the importance on that transaction that they should. I can tell you this is that these transactions often have major problems, end up in court being litigated, and huge amounts of money are spent. The benefit of having an experienced practitioner looking after your matter is that they will have the experience to, not only deal with problems when they come up, but most often anticipate the problem before it becomes a major issue and cut it off at the pass, and things will run smoothly through.

Dan: Yeah. It’s very true isn’t it, I mean given that OMB Solicitors is a diverse practise law firm, you’ve got their back there should things go off track.

Simon Bennett: That’s right. Quite often throughout the course of a matter like this if we do have an issue I will go and consult with our specific body corporate team about body corporate issues, or I will go and discuss with our litigation team what if A, B, or C occurs how do we stand if that ended up in a court? We can use those other areas of expertise in the firm to assist the client quite informally before the problem arises.

 

airnbnb body corporate

I Want to List My Unit on Airbnb. Do I Need Permission from the Body Corporate?

By | Body Corporate, Podcasts

Have you heard of Airbnb? You probably have and heard also about owners of properties who are making significant money letting their place out on the Airbnb platform. But if you’re an owner of such a property in a strata complex, are you allowed to do it? It’s a commonly asked question, and in this podcast, Body Corporate expert, Tom Robinson, a lawyer at OMB Solicitors, explains more.

TRANSCRIPT:

Dan: Tom, for those unaware of what Airbnb is, what is it?

Tom: It is that short-term, do-it-yourself type letting, which essentially means as an owner, you can let out part or all of your lot to someone else via that online marketplace. Which is interesting because we have been seeing real estate agents are taking control of people’s Airbnb accounts and operating it like another type of rental units for their portfolios.

Dan: It’s been a game-changer hasn’t it? I mean, for many people that once would struggle to try to let out their property, now they’ve got this incredible platform that reaches the masses.

Tom: It does, and even on that, as a bit of an interesting fact. More than 50 million people in more than 34,000 cities around the world are using Airbnb. So it’s big, and it’s understandable that it’s here to stay, and there’s a reason why our body’s corporates are wanting to know when owners are using and listing their lots and units on Airbnb.

Dan: At a practical level, if I’m on the Gold Coast and I own a unit within one of these body corporate complexes, do I need to actually ask permission?

Tom: Look, it’s a very good question, and I’m going to answer it in a typical lawyer way, and I’m going to say maybe. It’s all dependent on the type of body corporate, being that we will have bodies corporates that will be affected by the use of Airbnb, and there will be bodies corporates that are not so affected by Airbnb. And it comes down to not only the type of body corporate, but the regulations, so those bylaws that are in place and apply to all owners and occupiers.

Dan: Is there examples of Airbnb and how it might impact upon the body corporate? By positively and negatively?

Tom: Yeah, definitely. From a good perspective to start with is looking at bodies corporates that are probably negatively affected. They’re the ones that are more or less are going to want to know when lot owner’s listing their unit on Airbnb. Those types of effects that we have seen come across, mostly relate to the type of disruption that is occurring, and that’s by way of your increased noise, your increased foot traffic, the increase in use of common property facilities that the body corporate, the actual physical body corporate itself is not used to.

Tom: Which leads into other issues like insurance. Those bodies corporates that are not designed for short-term accommodation poses a risk to the body corporate in terms of their insurance policy, and whether or not an owner using a lot for a short-term accommodation basis where the building or the body corporate was never designed that way. Is that going to increase premiums, and some insurers are saying “Yes.” Is there appropriate fire safety services systems in place in those types of bodies corporates that aren’t designed for that short-term accommodation like a hotel-style body corporate? You know, if they don’t have those types of fire safety systems or evacuation plans in those buildings, and is that a risk if something does go wrong. Those are the effects that one mostly is seeing by Airbnb and most bodies corporates that are not designed, and never were designed for that short-term type accommodation.

Dan: For these body corporates that are interested n in moving down this path, what do they do? I mean this sounds like an awful amount of work to get ready for this.

Tom: Look, there’s a lot involved, and I think from a body corporate’s perspective they’re generally quite limited. If we look at a couple of quick examples, taking an example of a high-rise building in Surfers Paradise, which has very few permanent residences, it’s designed as that holiday-maker’s hotel-type building. Is the whole concept of that body corporate has been designed for short-term accommodations?

Tom: When we look at those smaller bodies corporates, those little three-story walk-ups that might be down at Burleigh Heads where a majority of residents are permanent, they’re either owner-occupiers or permanent letting. They don’t have an on-site management or any letting staff.

Tom: When we look at those impacts that are on that body corporate, how does the body corporate then try to regulate that Airbnb? And that is by way of its bylaws. The biggest issue with regulating through our bylaws is we don’t have a lot of guidance to go by in terms of what our legislation says, except that our bylaws cannot be oppressive or unreasonable. And with respect to that, we can’t restrict or prohibit someone from using their lot in a lawful way. You’re allowed, as an owner, and your individual property rights, you are allowed the usual lot and let your lot out in any way that is lawful.

Tom: Where we have seen a bit of a win for not so much bodies corporates, but a win for regulating this short-term accommodation and protecting the bodies corporates who haven’t got it in there, is by your local council laws. So Gold Coast City Council, as of 2016, require an application for material change of use if someone wants to use their lot for short-term accommodation. That application carries a application fee of over $8,000, which is quite hefty-

Dan: Yeah.

Tom: … Potentially off-putting for people who are using their lots in short-term letting.

Dan: Tom, the starting point for a body corporate that might be listening to this podcast, what do they do on a case that they’ve got an increasing number of people within their complex that are wanting to play in the Airbnb patch? What do they do now?

Tom: The first thing and the best thing to start with, is review of your bylaws. You want to review your bylaws which you can update, basically at any time throughout a year, and that is having that review to identify what areas need to be regulated more. So the bylaws, as we say, can’t be oppressive or unreasonable, which means they can’t be prohibitory or restrict the use of a person’s lot. But what they are designed to do is regulate, not only the use of common property, but to a smaller extent the use of someone’s lot and their lot property, to a point where the use of the common property and lot doesn’t cause a nuisance. Doesn’t disturb the peaceful use and enjoyment of other people, owners and occupiers, within that body corporate.

Tom: A review of your bylaws is a starting point, because in there you can look at regulating and putting in requirements that an owner must notify the body corporate of their lot being listed in Airbnb. They must ensure that the owner of the lot provides bylaws to every person who comes and stays in their lot under the Airbnb platform. The only difficulty with this, and this is where we will be looking to our legislative writers, is the enforcement of that. Our current enforcement process under our body corporate legislation, is the Commissioner’s Office for Body Corporate and Community Management, the issue that we face is trying to reach someone who is in breach of the bylaws when they’re gone within four days. We don’t have a process, a dispute resolution centre, that can deal with that type of complaint in such a short turnaround. Which means the breach happens, and then is remedied, because they’re no longer there. So that’s where we’re probably falling short.

But at least the bylaws are an informative way to regulate as best we can, as a starting point to Airbnb, and then to supplement that, is looking to our local governments and making sure that those laws are in place. Like Gold Coast City Council putting in the material change of use application requirement. And if lot owners aren’t complying with those local laws, it’s up to our local governments to enforce that, and that is via a notification basis. So yeah.

Dan: There’s a lot to it, isn’t there?

Tom: There is. There is a lot to it, and there’s a lot that we’re hoping to see come about, and we are starting to see that change, and we’re starting to see that there will be an ability under the bylaws, hopefully in the coming years, for a property law reform that we’re going for at the moment, where we might be able to have some more ability to not over-regulate, but have a more of an ability to deal with these types of matters through our bylaws. Which is realistically the best ability and tool for a body corporate.

Dan: Tom, thanks for joining me.

Tom: Thank you very much, Dan.

 

 

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