In this video, Body Corporate Solicitor, Elisha Quigg discusses the differences between a Standard Format Plan and a Building Format Plan in a Body Corporate and how the obligations of maintenance differ between these two types of registered plans.
In this video, OMB Solicitors‘ Partner, Juliette Nairn discusses Section 163 of the Body Corporate and Community Management Act 1997.
In this video, Tom Robinson, Associate at OMB Solicitors within the Body Corporate team talks about the different types of resolutions that may be considered at General Meetings including how they are calculated and when do they apply.
Hi, I’m Tom from OMB Solicitors, I’m an Associate here in our body corporate team and today I thought we’d talk about general meeting resolutions, what are they? Which ones? How many do we have? When do they apply, and also how do we calculate them?
But I also wanted to touch on poll voting as that tends to form part of the types of resolutions that are considered at a general meeting. Now, it may seem like a simple topic, the general meeting resolutions and the types that we have, but I do get quite a few queries from lot owners and committee members about when those types of resolutions apply, but also how they’re appropriately calculated and I guess the reason we tend to get a lot of these queries is when there obviously is a disputed motion.
So how many of these resolutions do we have for a general meeting? Keeping in mind that a general meeting is either your annual general meeting, which must be held once a year, or an extraordinary general meeting which can be called at any time throughout a body corporate’s financial year. There are four types of resolutions for a general meeting.
The first and the most common is an ordinary resolution. The second that we tend to hear about more commonly is a special resolution. Then we have resolutions without dissent, and the most uncommon resolution being a majority resolution.
So starting with an ordinary resolution being our simplest form of resolution, it is our starting place for all general meeting resolutions is put at an AGM or an EGM. Specifically, you start with any motion that goes to a general meeting being an ordinary resolution, unless the legislation specifically states otherwise.
So, an ordinary resolution applies to pretty much anything unless it’s specifically stated otherwise and it’s calculated by determining that there are more yes votes than no votes. So pretty simple, if we use a basic example of 20 people vote on a motion, we need 11 or more votes in favour of the motion for it to pass.
Moving on to resolution without dissent, this is a type of motion that cannot have a single dissenting vote against it. So using our example of 20 people vote on a motion.
Now, extensions don’t apply to any motions, they are not calculated, they are recorded that an owner has decided to not vote on a motion, but they do not go towards yes or no votes, and assuming that all these votes are valid, if we look at a resolution without dissent and 20 people vote on the motion, you’ll need all 20 of those votes to be in favour of the motion.
If you have a single dissenting vote, the motion will fail. So when do our resolutions without dissent apply? Is the most common time is when we are recording the allocations of exclusive use or long term leasing or licensing of areas or the whole of common property.
That disposal of common property will require a resolution without dissent and of course, our legislation specifically states when a resolution without dissent is required for those types of matters.
One important thing to remember about a resolution without dissent is that even if a lot owner is unfinancial, keeping in mind that if an owner is unfinancial, they are restrained from exercising their vote, but on a resolution without dissent, they can actually exercise a vote.
But it’s the only time that they can exercise it whilst they’re unfinancial and only if it is a resolution without dissent. So that moves us on to majority resolutions, sounds very similar to ordinary resolutions, but is actually quite different.
It’s also the most uncommon type of resolution we come across, and it’s really only used in very, very limited circumstances. The most common circumstance that it is used is when a letting agent is transferring its management rights.
Now, that’s not a usual sale or transfer of management rights, but rather when the letting agent is transferring its management rights. That requires a majority resolution at a general meeting. Now, to calculate a majority resolution, it requires at least 50 % of the total number of lots of owners entitled to vote, to vote in favour of the motion.
So sounds pretty confusing when we say it out loud like that. But basically, if we take an example of having 20 owners vote on the motion, we need at least 50 % of the lots to vote in favour of it.
So let’s say the scheme is 20 lots, or let’s say they’re 50 lots actually, let’s say we’ve got a 50 lot scheme, but only 46 lots by way of their owners can vote on the motion, assuming, let’s say in this example, four of those owners are either unfinancial or haven’t submitted their corporate company nominee forms, then you need at least 50 % of the total number of lots entitled to vote being 46.
So in this instance, we’d need more than 50 % of 46 being more than 24 votes in favour of the motion. That is how we determine a majority resolution, now, that doesn’t matter how many dissenting votes there are, even if there are none, you still need to have more than 50 % of the total number of lots.
So the main difference here between a majority resolution and an ordinary resolution is we’re talking about lots in a majority resolution versus the actual votes cast in an ordinary resolution. That now leads us on to special resolutions.
Now, the reason I’ve left this one last is because it is generally the most complicated one to calculate, mostly because there’s three aspects to it, and each of those aspects must be achieved in order for the motion to be passed.
A special resolution is most commonly used when we record a new CMS recording new bylaws. Now, that’s not recording exclusive use bylaws as that requires a resolution without dissent, but just your general day to day bylaws. How do we calculate it? There are three aspects, as I said. We’ll use an example of a hundred lot scheme this time.
The first aspect is you must have two thirds of all votes cast in favour of the motion. The second aspect is you cannot have more than 25 % of the number of lots voting against the motion, and the third aspect is you must not have more than 25 % of the combined contribution lot entitlement of the dissenting votes being more than 25 % of the total contribution and entitlement for the entire scheme.
Now, I’ll explain that through the next example using 100 lots. So looking at the first aspect and our 100 lots example, let’s say 50 votes were cast in the motion. So if another 50 owners didn’t vote, only 50 out of 100 lots voted on the motion. We need two thirds of 50 votes to be cast in favour of the motion, so we need 34 or more votes in favour of the motion.
If we get that, that’s the first aspect ticked. The second aspect is we can’t have more than 25 % of the number of lots. Now, again, we’ve shift from votes cast to lots. So 25 % of 100 lots is 25. So we can’t have more than, in other words, 26 in this example, votes against the motion.
Assuming we don’t get that again and we’ve ticked that requirement, the last one is the contribution requirement. What we need to do is we need to calculate the combined contribution lot entitlements for all dissenting votes, if there are any, and make sure that that total combined contribution of those dissenting votes do not total more than 25 % of the scheme’s contribution total.
As a real basic example, let’s just assume that this 100 lots scheme, all 100 lots have an equal contribution of one. Then again, you couldn’t have more than 26 %… Sorry, 26 contribution lot entitlements totalling the dissenting votes cast against the motion.
So it can be quite a complicated resolution to calculate. I also hear quite a few variations of a special resolution, I hear the 75 % rule and other aspects for three quarter rule, which is actually quite incorrect. So it’s important to know not only how we calculate this motion, but obviously when it also applies.
Those are the four types of resolutions. What also sometimes complicates matters even more is when we’re at a general meeting and someone decides to put their hand up when a motion has failed and they say, I want a poll vote.
So what is a poll vote? When can it apply and how is it exercised and calculated? So a poll vote can only be exercised on an ordinary resolution, so our most common resolution, as long as it is not by secret ballot.
So it has to be an open ballot, ordinary resolution motion, and the person who requests the poll vote must not only be entitled to vote on motions at that meeting, but they must also physically be present at the meeting.
Now, the way that it’s calculated is to whether or not a poll vote will overturn a motion. Use an example, again, of 20 lots, if a motion is defeated because there was 12 no votes versus eight yes votes, if one of the owners who are in the minority being one of the eight owners who voted yes, request a poll.
If the eight owners who voted yes, if their total combined contributions are more than the total combined contributions of the 12 owners who voted no to the motion, then the motion will actually be overturned and deemed passed. So the poll vote can also put a bit more of a spanner in the works when we have our general meetings, especially when we’re dealing with the different types of resolutions.
But if you ever have any questions about your resolutions, when they apply, how they’re calculated, and some of them are complicated, please do not hesitate to contact myself or another member at OMB Solicitors, and we’d be pleased to help.
In this video, Litigation and Dispute Resolution Senior Solicitor Cameron Marshall explains how we can help you with matters regarding Litigation and Dispute Resolution.
In this video, Dispute Resolution Senior Solicitor Cameron Marshall talks to us about issues for Bodies Corporate when entering into a contract.
Good morning. Cameron Marshall is my name, I work at OMB Solicitors as a Senior Associate in the Litigation Department. Today, I want to talk about five things from a body corporate’s perspective when entering into a contract for building work to be carried out at a body corporate’s building.
It’s very important when a body corporate is looking to engage a contractor in doing some work is to understand how a contract works. You should see a solicitor, of course, but some basic things that you need to make sure that are covered, I will go through now, they’re pretty simple.
The first one’s the parties, now, the main thing is you need to know who you are contracting with and in Queensland, whether they’re licensed to carry out the work. I’ve seen a lot of cases where builders have engaged in work in contracts, but they haven’t got the appropriate work to carry out such work.
This is very important when you’ve got multi-high rises because only an open builder can carry out such works and a lot of contractors out there may not have that qualifications. If you engage a contractor that doesn’t have the right licence, that could have problems with insurance, et cetera, down the track.
Next thing you need to understand when you’re looking at a contract is what work are you asking to get done? It needs to be set out in the contract clearly so that both you as the committee understand what work your builder is to carry out, and so he understands what is to be carried out, so it should be in fairly simple English, attached as a scope of works to the contract so the parties are aware of what’s going on.
The third thing is insurance, very important for an embodied corporate committee to ensure that insurance is in place. So you ensure that the builder has the appropriate insurances. Naturally, the body corporate will have its own insurance, but you need to make sure that the bill is also appropriately covered.
Now, you’ll need to make sure that they’ve got public liability insurance for both personal injury and property damage, work cover insurance to make sure all their workers are covered, and that should also extend to any subcontractors that they have and the final one is the works insurance.
Now, that affects if there’s any damage to the actual physical works getting carried out whilst the contract is in place.So that’s important that those things are in the contract, a lot of the time they’re not.
The next thing that needs to be covered is payment; when is the body corporate committee supposed to pay the builder? Is it upon demand? Is it upon a certification being provided by the project manager saying that all the work is being carried out in accordance with the contract? Either way, the body corporate committee needs to know when they’re supposed to pay.
So when it comes time to pay, they know that they’re not getting hoodwinked or short sold on work that hasn’t been completed, that will be very important when you report back to your body corporate members, no doubt at the conclusion of the work or if things go over budget.
So there five things that are quite easy to make sure that are in the contract when you’re entering into that stage. But importantly, you should always see a solicitor because they are very complicated documents and also the works can be quite expensive and will hopefully last a long time if they are done correctly and the body corporate is covered appropriately.
The last point that I want to go through is the issue of retention money. Retention monies are monies that are held back from the builder or the contractor to cover any building defects or problems that might arise after the work is being carried out.
Now, this can be done in a number of ways, it can be cash retention from each of the payments that are due to the builder. So the builder would give you an invoice and you would pay less than a certain amount of retention monies which are held back.
Another way is by way of bank guarantee. Either way, I would advise that the body corporate committee should ensure that there is some retention money scheme in the contract, a lot of the time there’s not.
It just provides that extra safety, if there are defects that need to be fixed, at least the body corporate has recourse to some amount of money from retention monies to fix those defects if the builder is not willing to.
In this video, Body Corporate Solicitor Elisha Quigg talks to us about the BMS document and what it all means for Body Corporates.
Hi everyone, my name’s Elisha Quigg (Hodgson), a solicitor at OMB Solicitors. Today I’m going to be talking to you about five frequently asked questions in relation to building management statements.
Now, this topic is particularly relevant for our body corporate managers and our lot owners who pick up this document called a BMS and ask the question, what is this document? So the document is a recording of all of the information and the relationship between the commercial and residential components of a building.
Now, there could also be other components such as retail, which would have separate BMS’s. But what I’m going to be talking about today is the relationship between a building which has both residential and commercial components.
Now, the first question probably is, what is a BMS? So the building management statement is a document which sits over the top of those two schemes, the residential and commercial and what it does is it records the relationship and all the management covenants, which both benefit and burden those schemes.
Now, some of the management covenants include both insurance obligations in respect of the building, services utilities, such as electricity, plumbing, shared facilities such as storage facilities, or even car parking or garages, and any other management of that particular building.
Now, with the BMS, it is important to note at the outset that this document isn’t governed by the Body Corporate and Community Management Act. It’s actually governed by the Land Titles Act. So if you pick up your building management statement, you’ll see on there at the top left hand corner, it will show you that it is registered pursuant to the Land Titles Act.
Now, the BMS is essentially a contract, it’s a contract between the residential component of the building and the commercial component of the building.
Now, there are a lot of management covenants that you need to consider in the BMS, which can be quite particularly onerous for individuals to try and understand and manage, and this is what leads me to the first question is, who manages the BMS?
So the BMS is managed by generally representatives of both the commercial and the residential component of the building. Those representatives have particular guidelines in the BMS in relation to how to raise levies, how to appoint contractors, how to call meetings, and as well as how to resolve any dispute resolution, disputes within that building.
Now, it can be quite onerous for those two individuals to manage the entire scheme on behalf of those two entities. Now, that’s why it leads me to my next question in relation to, can you get any assistance with appointing perhaps a body corporate management company or a building management services to actually assist with that process?
Now, the answer to that question is yes, however, it’s not a particularly straightforward answer. So with the building management group, which is the two representatives appointed from those two schemes, there is no actual ability for those two individuals to go ahead and sign contracts, enter into administrative agreements in their individual capacity and the reason being is that they’re not actually a separate legal entity.
So the building management group is not a separate legal entity that is capable of entering contracts, capable of suing, or capable of being sued. The only way in which a decision to appoint a body corporate management company or a building management company to assist with the management of the BMS is if you get the agreement and you get the stamped, sealed, signed administrative agreement by both the residential and the commercial component.
So all of your agreements need to be agreed to unanimously by the two entities. So this sort of leads me into the next frequently asked question, and that’s in relation to opening a bank account. Now, it’s all well and good for the two representatives of the building management group to trot along down to the bank.
Now, the bank’s going to ask them, okay, so who’s the entity who’s opening up this bank account? They’re going to look at each other and go, oh, can we open it in our name? Well, that’s great, but that means all the funds are going to be going into those individual representatives.
So the way in which the bank account actually needs to be opened, is it will be opened in the name of the Body Corporate for residential and the Body Corporate for Commercial trading as the building management group, because that gives the actual entity being those two individual schemes, the residential and the commercial.
So it isn’t entirely straightforward and it’s important that you can understand that it’s not just the two representatives forming the building management group. It is actually the individual schemes entering into these agreements as well as opening these bank accounts.
Another way that you can get around opening up a bank account is if the building management group, so the representatives of the BMS, come together and make a decision in relation to incorporating the building management group into a separate legal entity.
Now, this can be achieved, but is only recommended in circumstances where you have quite onerous obligations under the building management statement, because there are quite a number of requirements to comply with if you are going to incorporate your building management group into an incorporated association.
So another frequently asked question that we get is in relation to dispute resolution under the BMS. This is quite a complicated issue and as a first point of call, we always tell our body corporate managers or our lot owners to go to the BMS and to read the terms.
If there is a disagreement about, for example, the apportionment of who’s paying for the cleaning of the garage, then simply the first point of call is always to read the overriding document, as that is the contractual agreement between the residential and commercial.
Now, if there is a dispute, there are specific dispute resolution provisions provided for under the BMS. However, it depends on the circumstances of the matter. But in some instances, if there is a dispute, generally what will happen is we will send a notice of dispute and then it will be referred to adjudication.
Now, the parties need to agree on who the adjudicator is, and my opinion is, if they’re already in dispute, how are they going to agree on anything else?So quite, quite often we see circumstances where the matters referred to dispute resolution, but they end up butting heads and they can’t agree on a particular issue and the matters then referred to a court of competent jurisdiction.
So that is just the general process that we see. It is all well and good if you have two representatives that form the building management group, making these decisions and trying to resolve matters amicably.
But quite often what we see, what happened is even if an adjudicator makes the decision, it then has to be enforced and the only court that is able to actually enforce an adjudicator’s decision is in a court competent jurisdiction.
So you might find yourself in either a Supreme Court, District court, Magistrate’s court, depending on the circumstances. But in any event, we always recommend the starting point is read your BMS and try and resolve the dispute and if you’re having any trouble, contact a solicitor to give you some advice and some guidance about how to enforce or how to enforce the BMS, or also how to resolve any disputes involved.
So some of the issues that we’ve discussed today in the frequently asked questions included, well, what is a BMS? Who can manage the BMS? Can you enter into agreements in relation to the BMS? Dispute resolutions and how to deal with that? And also setting up the BMS generally.
Now, there are a whole range of issues in relation to BMS’s, which I won’t go into detail today. But if you do have some specific questions or you have a funny circumstance or there’s some type of interpretation of your BMS you’d like some clarity on, please don’t hesitate to contact our office, we’d be more than pleased to have a quick review and to to give you some advice or some guidance if required.
So if you’d like to contact OMB, please do so, our number is (07) 5555 0000. Thank you.
In this video, Body Corporate Solicitor Elisha Quigg talks about a case law to illustrate the issues for Bodies Corporate when facing Nuisance Communication.
Hey guys, Elisha here from OMB Solicitors. Today, I’m going to be talking to you about nuisance communication, particularly with respect to the day to day management of a body corporate.
Now, quite often, volunteer committee members and our wonderful body corporate managers come across a nuisance lot owner, there’s a lot of things that you can complain about living in a body corporate; your neighbour’s got the TV up too loud, or the child downstairs is screaming in the hallway.
But there’s a fine line between when that communication and the complaints made to your volunteer committee members and body corporate managers become nuisance in itself. A couple of cases that have been handed down by the Commissioner in the Body Corporate Community Management Commissioner’s office deals particularly with this area.
So I thought, what a good opportunity to have a video podcast today to give you an idea of, what is nuisance communication and how can we deal with it? So with nuisance communication, it’s best to first look at the recent case law.
So there’s a couple of cases which can help us out in identifying what is nuisance communication. The first being Tank Tower, now, that is a little bit of an older case, but it’s quite important.
In that case, there was a lot owner who was sending voluminous amount of material to the body corporate manager and the caretaker, often several emails in a particular day and that communication was not only repetitive but also quite threatening and offensive.
So when we’re thinking about, okay, this communication has come in and it’s becoming quite repetitive, or the tone is not very nice, or it’s quite threatening in nature, have a think about what you might be able to do with that.
Another case is Deagon Village, now, that’s a more recent case. This case in particular, involved a lot owner who was sending, again, voluminous amounts of material to the body corporate manager that was both aggressive, threatening, and really the allegations that were made in that correspondence was quite baseless.
Now, often in that position, you have to think to yourself, well, what can I do about that and how can I deal with this sort of communication? Now, those cases both found that nuisance communication had occurred, and the adjudicator eventually found that certain restrictions would be imposed on that particular lot owner as to that communication.
Now, if you’re in this position and you find that you’ve got a nuisance lot owner that’s consistently harassing you, sending both voluminous, repetitive, and threatening email correspondence or telephone correspondence communications, then these are some of the things that you might need to think about.
Number one, so if you are receiving this type of communication, what can you do about it? Well, there’s a couple of tips and tricks that we recommend that you implement into your own practice as the daily management of a body corporate to ensure that you can deal with this effectively and not to utilise all the resources of the body corporate in dealing with this sort of communication.
Now, firstly, it’s important to note that in the adjudicator’s office, the ability to bring an action against an individual lot owner for nuisance communication can arrive in a couple of ways, and that is either enforcement of a bylaws.
So for example, in Tank Tower, there was a bylaw in there that said that if there was any nuisance communication, then they would essentially be in breach. Now, the body corporate relied upon that bylaw to actually commence an action.
But in that case, the Commissioner also considered the Section 167 of the Body Corporate and Community Management Act in relation to nuisance. Now, the application of that specific section is quite narrow, it basically says that if a lot owner causes nuisance or interferes unreasonably with the use or enjoyment of another lot included in the scheme, or if that nuisance communication was within or lawfully on common property, then they would be found in breach of the legislation.
However, what happens if this communication isn’t occurring in the lot property or common property, but rather, let’s say, an investor from overseas who’s got a property in the scheme. Well, their communication isn’t technically within the scheme, but it is directly related to it.
So in Tank Tower specifically, there was an issue in relation to whether or not that section actually applied. Now, this is where Deagon Village, the new case handed down by the Commissioner’s office is quite important because in Deagon Village, this was a case where there was no body corporate bylaw relating to nuisance.
So essentially the body corporate had to rely upon the provision of Section 167 of the Body Corporate Community Management Act in order to bring an action, and given the communication in that case was between a lotter and who was off site and also a caretaker, well, there was some question about the actual enforceability of that section of the act.
Nevertheless, it’s important that I identify it to you that this case was quite successful because even though the Section 167 wasn’t necessarily applicable in this situation and there was no bylaw, the adjudicator still found that number one, nuisance had occurred, and number two, that to ensure that the resources of the body corporate were being used in a way that would achieve the overall objectives of the legislation.
Then they actually found that restrictions should be imposed upon that lot owner, and these restrictions included things like the minimum word count on an email when communication can be made to the body corporate or their representative and the like, so Deagon Village is a really important authority which can really help us assist our body corporate managers and volunteer lot owners if they come into this situation.
Now, we don’t like going into adjudication if we can avoid it. So here are a couple of tips that can help you in ensuring that you avoid having to go to adjudication, but you can still deal with these nuisance lot owners.
So number one, we would recommend that if it’s not already included in your community management statement, just update your bylaws to include a nuisance bylaw, it just makes the process a lot easier. Number two is implement a communication policy within the body corporate.
If you circulate this communication policy, it’s going to give your lot owners an understanding of how you wish to communicate and what is acceptable or not.
That’s also going to assist us in any future adjudication if we need to go down that step, and of course, in the worst case scenarios, there is an option there by virtue of Deagon Village, that if you do need to take steps further, then you can seek some orders that are made in the adjudicator’s office, the Commissioner’s office.
So there’s a couple of tips to help you with dealing with these lot owners. If you have any questions at all about how to deal with nuisance lot owners, or you would like some assistance with drafting motions or amending bylaws, then we’ll be more than happy to assist you with that process.
I hope you have a wonderful day.
In this video, Body Corporate Associate Elisha Quigg talks about legislation as it was applied to a case matter to illustrate the issues for Bodies Corporate when facing Levy Recoveries.
Hi, everyone. My name is Elisha Hodgson, I’m a solicitor here at OMB Solicitors. Today I’m going to talk to you about body corporate levy recovery, and specifically, I’d like to touch on the litigation process and when we institute proceedings, what are the steps that are taken in our process?
The legislation surrounding the recovery of contributions owed to a body corporate is the Body Corporate and Community Management Act and the applicable standard accommodation and small schemes modules applying to that scheme.
The legislation indicates how we can recover contributions, and we need to follow that meticulously in our processes. At OMB Solicitors, we have prepared and we have perfected a process in recovering outstanding contributions owed to a body corporate and I’m going to explain to you how that process works.
When we receive initial instructions from the body corporate, it is usually in the form of instructions requesting a letter of demand to be issued. This is always our first port of call and we always review the matter entirely before we issue that letter of demand.
It’s important to understand who the lot owner is, what their financial status is, and a bit of the background about where they’re currently residing, and any contact that has been made prior to the matter being referred to our office.
Once a letter of demand is issued, we then allow an opportunity for that debt to be paid. If the debt’s not paid, a quick phone call doesn’t go astray, and we also touch base with the body corporate manager and the committee, if need be, to get an indication of whether or not they’ve had any contact with the lot owner.
It’s always our recommendation, though, that if the lot owner does reach out to the body corporate or the body corporate manager when it is gone to legal, that they refer all that correspondence to our office to deal with appropriately.
Once a letter of demand has expired, the next step is a claim and statement of claim. Now, the claim and statement claim is always lodged in the magistrate’s court, which is the court that has jurisdiction to hear the matter.
If the claim and statement of claim is not responded to within 28 days, then a default judgment can be applied and the body corporate can then go ahead and enforce that judgment. Often we find some issues in relation to service, so once a claim and statement claim is filed, we then have to proceed with service.
We’re finding more and more regularly across our desk issues in relation to service, which we either progress to an application for substituted service, where we substitute serving the claim and statement of claim personally by instead doing it by way of another method that will bring it to the attention of the defendant.
So once the claim and statement of claim is filed and served, we can then progress to default judgment, and that is usually how the process works. In the middle, sometimes we get contact from lot owners in which we would try and facilitate payment plans if the circumstances allow for it.
What happens then if we do file a claim and statement of claim, it’s then served on the defendant and we don’t hear from them, but instead we get a defence filed in the proceedings. Well, that’s when it comes across my desk, so defendant levy recovery is a process in which I manage here at OMB Solicitors with the watchful guidance of Juliette Nairn.
In that process, once the defence is filed, the body corporate then has 14 days to file a reply, and essentially what that reply is, it is a document which responds to any new allegations raised in the defence.
Once the reply has been filed, we quickly set the matter down for a compulsory settlement conference in the court to see if we can resolve the matter in a practical sense. Nine times out of 10, the matter is finalised either prior to a final hearing or at the settlement conference stage.
But if it does have to progress forward, there are a number of steps that need to be taken, including disclosure, and then a request for trial date and trial. That is a short snippet of the process in relation to the recovery of contributions from a lot owner and what you can expect in the court resolution process.
If you do have any questions about our processes and how it works and what we’re required to comply with in terms of our rules with the court, please don’t hesitate to ask us any questions that you may have, or if you have any particularly difficult matters.
For example, you can’t arrange for service or you’re having trouble contacting the defendant or you don’t know where they are, we’re very good at locating those defendants and trying to resolve the matter in a commercial manner with the most minimum cost to the body corporate.
In this video, Body Corporate Associate Tom Robinson talks about Assignments & Variations of Management Rights and what it means to ‘vary and ‘assign’ them.
Hi, I’m Tom Robinson from OMB Solicitors, I’m an Associate here, and today we’re going to talk about assignments and variations of management rights. I thought a good starting point would be identify exactly what we’re talking about when we talk about management rights.
Specifically, when we mention management rights, we think of them as a bit of a package deal. So, usually, management rights consist of a caretaking agreement, a lending agreement, and then also a caretaker’s law. Now, an assignment or variation of those management rights essentially happens when a request comes through from usually the current caretaker.
Starting with assignments, the legislation framework deals with how assignments can occur and the rights are behind that with respect to a caretaker being able to assign those rights, and essentially that’s exactly what it is, it’s a transfer of the ownership of the management rights from one or the current caretaker to a proposed purchaser.
So there’s normally three parties involved in that transaction; the body corporate, the current care taker being the seller, the proposed new care taker being the purchaser. What usually occurs in the first instance is the caretaker solicitors, so the seller, will send a covering letter to the body corporate, which will enclose certain documents.
That request will be a formal request for the body corporate to consider giving its consent to that transaction. That consent can’t be unreasonably withheld by the body corporate, but the body corporate can certainly have consideration to a number of of factors.
What usually comes behind that letter is also a deed of assignment, a motion, and then some resumes and references. Once that comes across, it’s important for the body corporate to consider getting its own independent legal advice.
The reason this is so important is not only because the caretaker and the seller or the purchaser are both represented by their own independent lawyers. The documents are therefore drafted by those lawyers and they’re legally binding on the body corporate, but also because the cost associated with the body corporate considering an assignment transaction are actually paid for by the outgoing caretaker.
So there’s no real reason why a body corporate would not get legal advice to ensure that what they’re voting on and the terms of that deed of assignment are in the best interests of all owners. So taking that into consideration, those documents have come across, the body corporate’s got their lawyers engage in the due diligence process starts.
Part of that process will usually be obtaining further information. Such documents might include police checks, bankruptcy searches, letting licences, and any amendments to the terms of that deed of assignment.
Now, the reason that’s so important is to make sure that the body corporate, when it’s going to determine that motion to consent to the assignment, they have all that information that they believe they reasonably need.
That can also include, obviously, an interview occurring. An interview can occur between the committee and the proposed purchaser, but it can also be done by an independent facilities management company, and that’s a decision for the committee to make.
On that point, it’s always important to remember, in an assignment matter, the committee can make the decision on behalf of all owners, they don’t have to, it can actually go to a general meeting, but it’s very common for a committee to make that decision because it’s quite easy, they can do it, and they normally get all the information they need.
Now, once that process has gone through, all the information is received, they’ve had an interview, the committee is happy and there’s no concerns, then the next step is preparing for settlement, and that starts with the consideration of the motion. So the committee will then determine that motion subject to it being resolved.
Then, the deeds and so forth will then be prepared and the committee can execute those deeds. They’ll then go through a process of stamping, settlement will be scheduled and the body corporate will obviously ask for either the caretaker’s solicitors or the purchaser’s solicitors to act as their own paid agent, and then settlement will occur.
At that time, checks will be drawn and provided to the body corporate along with a signed deed, and that’s your assignment transaction in a very simple nutshell. The main difference between though an assignment and then a variation is that the variation is obviously that varying the rights and the terms of the agreements themselves.
When we think about these variation matters, similar process as where they start is the same as the assignment matters, whereby a request by the current caretaker will come across and that will include the covering letter, a deed of variation, and a motion.
There might be some other documents provided as well, depending on what is required for that specific type of variation. But again, the transaction is only going to be between the current caretaker and the body corporate. So there’s only the two parties in this instance and the body corporate is requested to consider entering into that deed of variation.
That motion must be put to a general meeting, though, so it’s considered a lot owner’s motion. So one thing to always check is whether or not the motion is submitted by the caretaker, if they are a lot owner, or if they’re not a lot owner, who is the lot owner that’s submitting that motion?
Once that motion is put forward, it must be put to the general meeting and it will ultimately be determined by the owners. The deed of variation can be an important time for a body corporate to consider any other amendments, and that is obviously going to be a negotiation with the caretaker and of course, that means both parties need to agree.
Ultimately, if the motions put by the caretaker, it will be put in the form that it’s submitted and the owners will determine that motion. The important thing to remember is obviously in these transactions, when that advice or that initial letter comes across to the body corporate, the body corporate should consider getting its independent legal advice.
The reason that’s so important is, again, this is a legally binding document that’s drafted by the caretaker solicitors and the body corporate has a responsibility to obviously act reasonably and act in the best interests of all owners.
So costs and the variation are a little bit different to assignments, there’s no requirement for those costs to be paid by the caretaker, but it’s common that they are.
At the end of the day, it’s a relatively small fee for a body corporate to get that independent legal advice to make sure that the motion, the deed of variation, that anything else that is circulated with those documents are appropriate and valid.
So if the motion is resolved, then the body corporate is obliged to enter into those documents. Same sort of situation, the general meeting will occur, the motion will be voted on, and then ultimately the body corporate will be obliged to enter into that deed of variation if the motion is resolved and that would be the end of a variation matter, and that simply forms part of a historical document for the management rights.
Quite a lot to take into consideration with respect to variations and assignments, obviously, two different types of transactions, but very common.
They can occur simultaneously at the same time and they can occur separately. OMB solicitors, obviously, we deal a lot with these types of transactions, we act exclusively for bodies corporates. So if you are going through one of these processes at the moment, please do not hesitate to give us a call.
In this video, Body Corporate Associate Tom Robinson talks about these insurance-related issues when Body Corporate Committees are dealing with caretaking arrangements.
Hi, I’m Tom from OMB Solicitors, I’m an Associate in our OMB Solicitors body corporate team and today I thought we’d have a bit of a discussion about body corporate insurance.
Specifically, though, I’d like to focus on workers compensation insurance or work cover and volunteers workers insurance or voluntary workers insurance. The reason I wanted to bring up these two types of insurances is because we’ve had a few queries from some committees recently about the types of caretaking that they’re now undertaking at their schemes.
Now, the reason we’re talking about different types of caretaking is because we’re starting to see a lot of our long term management rights agreements come to an end. Now, these are the long term agreements that the developers entered into originally when they were the original owner on behalf of the body corporate 20, 30, 40, 50 years ago, and now they’re starting to come to an end.
So our body corporate is in the position especially with our smaller schemes, where they have an opportunity to explore other types of caretaking arrangements. So what we’re starting to see is a lot of these smaller sized schemes are developing and exploring these alternative options for caretaking of their body’s corporate common property.
Now, the reason this is coming about is, like I say, because a lot of these longer term agreements are coming to an end. But what they’re exploring is your shorter term engagements, some of them of which are actually on up to only a month to month basis.
So what this results in is your individual people like your Joe blogs down the road who’s coming in to maintain certain areas of common property. That’s how this comes into your workers compensation insurance, your work cover, and your voluntary workers insurance.
Now, the reason we’re bringing these insurances up is because when we look at our work cover insurance, which is under our Workers Compensation and Rehabilitation Act, is basically if you engage a person under a contract of service to do anything, then work cover insurance is required.
Now, whilst it’s usually only applicable to employees, it’s not necessarily a be all and end all in the sense that you can still include subcontractors and contractors in that arrangement depending on the specific type of engagement that is there.
Now, the reason I mentioned that is because a lot of our contractors, especially on a shorter term basis, might be under an individual and under an ABM, and in that instance, work cover insurance will need to be taken out, it won’t apply to your companies or organisations, hence why this is mostly applicable to our smaller schemes.
But what that does is essentially if someone comes onto the body corporate’s common property and performs work under a contract of service, the body corporate’s common property becomes a workplace and with that, we need to make sure the body corporate is protected in case there is an accident or injury or anything like that that happens on site.
That’s what the workers compensation or work cover insurance will protect the body corporate from. So the starting point is contact our insurer, contacting our insurer or our insurance broker and identifying, do we have workers’ compensation insurance in place? And if not, asking for a quotation for that amount of cover, which is usually a pretty nominal fee.
So there is no reason why a body corporate shouldn’t be looking at getting workers compensation insurance. Our advice is find out if you’ve got it, if you haven’t got it, get it unless you have a very good reason why you don’t need it. Now, what that leads into is then our voluntary workers insurance.
So voluntary workers insurance is a little bit different. It’s basically to protect the body corporate from anyone who attends on our common property and performs work or tasks that are of voluntary nature.
So that might be our keen activist lot owners who like to go out on site, do a bit of gardening, maintain the pool, change a light bulb in the stairwell, and things like that where we’re not asking them to do it and they’re not getting paid to do it, it’s completely voluntary.
But of course, that may set the body corporate up for liability for injury or worse if that person happened to injure themselves on the common property.
Now, voluntary workers insurance is usually included with the body corporate schemes insurance, but I have seen instances where it’s not, so it’s very important to contact our insurer again or our broker and make sure that we have that as an absolute minimum insurance in place.
Again, it’s normally just chucked in as part of your insurance policy, unless it was specifically requested not to be in there, which would be quite strange, then it should be included. But if it’s not, again, having it included, there shouldn’t be a situation where we don’t have voluntary workers insurance.
It’s a very nominal fee to have it included, like I say, it’s normally just part of your policy anyway, starting point, contact your insurer here and find out whether or not we have that insurance.
So I guess just in summary about these two types of insurances is with especially our smaller schemes where they might be employing or contracting individuals, or you’ve got committee members or owners who are quite keen to maintain areas of the common property, we have those appropriate insurances in place and that they’re sufficient to protect our scheme and our body corporate.
So as a starting point, contacting our insurer, finding out whether or not we have those insurances in place and if we do, if we don’t, sorry, why haven’t we is the question we need to ask and basically getting it and only not having it if there is a sufficient reason as to why.
Your broker should be happy with that if we obviously have brokers available, if you do have any questions about your insurance, of course, though, you can contact OMB Solicitors.
We’d be happy to have a look at those policies and let you know and provide your advice as to whether or not you have those insurances in place and guide you to the right areas to make sure that we have those insurances.
In this video, Body Corporate Associate Tom Robinson addresses some of the questions we are asked regarding Body Corporate By-Laws.
Hi, I’m Tom from the OMB Solicitors team here, and I’m an Associate in our Body Corporate team. Today, we were going to talk about bylaws and also the five frequently asked bylaws that we deal with.
Later on in the video, I’ll also be supported by Annaka Faulkner, who’s a paralegal in our Body Corporate team, to go through those questions. But I thought before we get started, we’d also look at a bit of the history of where we find our bylaws and why bylaws are so important.
Our current legislation is the Body Corporate and Community Management Act, otherwise known as the BCCMA. It came into effect in 1997, as part of that legislation change, it was a requirement that all bodies corporates in Queensland, registered or recorded with Queensland land titles a new Community Management Statement.
Now that CMS is the one and all document that is to include all information of a body corporate that’s generally required at any time, being the specific details of the lots of the body corporate, the survey plans, if there’s an exclusive use plans attached, contribution and interest schedule lot entitlements, but also, most importantly, our bylaws.
Before that, we were regulated under another legislation which is known as a BUGT or Building Units and Group Titles Act, where it didn’t really have community management statements, which means when we transitioned to our current legislation.
There was a three year interval that bodies corporates in Queensland, being every body corporate, was required to record this new CMS, and if they didn’t do that within three years, so by the year 2000, then the Queensland Land Titles Office would record a standard or default CMS.
That default CMS is only about a page long, doesn’t include a lot of information and has limitations with respect to the actual bylaws that are applicable to the schemes. But whereas those CMSs that we record since that time in the appropriate forms include your bylaws and are usually valid and forcible under the legislation.
When we have to look at those standards, one page CMSs, usually to actually be able to identify those bylaws, we have to do a number of searches, including a historical title search and then identifying if there have been any change of bylaws.
This can be quite a timely, long and costly process because there can be up to 10 or 20 of these change of bylaws documents, and even then, if we do all those searches and we piece together all of those bylaws, it can still be a matter of missing documents and things like that being the time that has passed.
So it’s very important for a body of corporate to check to see what is their current registered CMS, and then if we need to record a new one and move away from that default one page CMS, that is a priority for the body of corporate.
So we have that nice and new compliant one and all document of a new community management statement. So with all that information in mind, we thought we’d now discuss the five frequently asked questions that we come across in our working day to day basis.
One of the most common questions that comes across my desk and in our office is to do with the short term letting increase that we have in Queensland, specifically, Airbnb. What we usually come across is, are owners allowed to use their lot for a short term accommodation purpose? Or or can a body corporate restrict that?
The short answer to the body corporate’s question is no. A body corporate cannot restrict an owner renting or letting their lot on a short term basis. So the answer to the owner is yes, they can do that and they can operate their lot through Airbnb.
There are obviously council requirements that owners must ensure that they comply with when they go through a short term accommodation process. But that doesn’t mean the body corporate doesn’t have any ability to regulate the use of someone using their lot through Airbnb.
Specifically, what a body corporate might look at doing is putting bylaws in place that take into account the increase in nuisance or noise or use of recreational facilities in the body corporate due to that increase in short term letting.
Another question that comes across my desk quite often from owners and committees and body corp managers is how do we regulate alterations to lots and or common property?
Dealing with the common property aspect first, depending on the way the scheme is subdivided, we usually have two types of subdivisions in Queensland, being a building format plan of subdivision or a standard format plan of subdivision.
Under a building format plan or BFP, generally speaking the alterations to common property, which is generally the whole exterior of the building or buildings, is regulated under the legislation.
What we can look at regulating in the bylaws is just a bit of a replication of what’s in the legislation and taking it a little bit further to make sure that the aesthetics and the appearance of the scheme do not change without getting the appropriate consent required under a body corporate.
When we deal with lot renovations, that’s when it becomes a bit more specific, and again, dealing with it from a building format plan subdivided scheme, that’s the buildings and the bodies corporates that generally have more impact from lot renovations.
Specifically, your BFPS are more your townhouses that share joint walls or your high rises that have ceilings and floors that are obviously dividing lots. So, renovations to floor types, so hardwood flooring is always going to be an issue in terms of acoustic levels.
So as part of that, your bylaws are where you need to look at regulating how those types of renovations can occur. For example, dealing with hardwood flooring, you might need to get acoustic reports from the owner and so forth, certificates of certification, and all those matters can be included in the bylaws itself.
When we look at the legislation, it’s very limited in what it requires for any alterations to lot property. Rather, it only regulates that an owner must keep it in a clean and tighter condition. When we look at your standard floor plan lots, they are different from the perspective of usually the aesthetics or the exterior of the scheme is actually the lot owner’s responsibility.
So, they’re responsible for painting, replacing their roofs and all those matters because it’s contained within their surveyed lot area. From a bylaw perspective that, that exterior of the lot is an alteration to lot property and again is covered from that perspective of making sure that we don’t have a bunch of multi-coloured lots within our bodies corporate.
What I might do now is hand you over to Annaka Faulkner, who’s one of our paralegals, to talk about the other types of frequently asked bylaws that come across our desk in our office.
Hi, I’m Annaka Faulkner, and I’m one of the paralegals here in the body corporate team. One of the frequently asked questions that we get here at OMB Solicitors in relation to bylaws is whether a body corporate can legally tow a vehicle that has been parked illegally on common property.
The answer is yes, but under certain circumstances. The body corporate must obtain an order from an adjudicator in relation to towing. If you do not have an order from an adjudicator, you will not be able to tow the vehicle, your CMS needs to include a towing bylaw, which the adjudicator may rely upon when seeking an order in relation to towing.
Another frequently asked question that I get in relation to bylaws is regarding pets and how body corporate can regulate owners keeping pets within their lots. So a body corporate can regulate them through their CMS.
So the bylaws cannot be prohibitory in relation to pets, but they can set out specific conditions that lot owners must comply with in order to keep a pet inside their lot. Another frequently asked question that I get in relation to bylaws is communications.
We get a lot of questions in relation to owners sending copious amounts of correspondence, whether it’s to committee members, whether it’s to body corporate managers. A lot of them, they might send 10, 20, 30 bits of correspondence daily, weekly, so they are ways that you can regulate this.
You can regulate owners sending correspondence via your community management statement again, you have to make sure that you have a nuisance by law and a correspondence by law, which sets out certain conditions that owners can comply with in relation to sending in correspondence. In the instance that a owner breaches these bylaws, then you can issue contravention notices.
Those are our five frequently asked questions about bylaws that have been coming across our desks at the moment. But stay tuned for further podcasts and articles which will deal with how do we create enforceable bylaws that are not prohibitory or oppressive or unreasonable and valid and enforceable under our legislation.
But if you have any questions in the meantime, please do not hesitate to contact myself, Tom or Annaka from our office, and we’d be happy to assist you with any needs regarding your CMS and your bylaws. Thank you.
In this video, Body Corporate Partner Juliette Nairn introduces our Body Corporate team and talks about how we can help.
In this video, Property Law Associate Jessica Thomas talks about legal considerations for New Zealand Citizens thinking about purchasing Property in Queensland.
Hi, my name’s Jess Thomas, I’m an Associate here at OMB Solicitors and today I’ll be providing some advice to our Kiwi cousins across the ditch about purchasing property in Australia.
The first issue I’d like to discuss is the Foreign Investment Review Board approval and whether or not a New Zealand citizen must apply for approval before they enter into a transaction to purchase property in Australia.
The answer is no, a New Zealand citizen does not need to apply for Foreign Investment Review Board approval before entering into a transaction in Australia.
The second issue I’d like to discuss is stamp duty and in particular, Additional foreigners’s acquire duty. Now, Additional foreigners acquire duty is an additional amount of stamp duty imposed on foreign purchases.
The rate of AFAD is currently 7 %, so this is on top of the standard rate of stamp duty that is imposed on a purchaser in Queensland. There are some exemptions to this, however, a New Zealand citizen who holds a special category visa when entering into a transaction is exempt from paying the Additional foreigners acquire duty.
Now, a special category visa is granted automatically to a New Zealand passport holder when they enter Australia. We act for a number of New Zealand clients at OMB and we encourage you to seek proper legal advice before entering into any transaction involving residential land in Queensland.
In this video, Property Law Partner and Accredited Specialist (Property Law) Simon Bennett takes us through Small And Medium-Sized Developments
I’m Simon Bennett, Property Partner OMB Solicitors. Today I’m going to talk to you about small and medium sized developments, and when we talk about small and medium sized developments, we’re talking about various options, including land, units, industrial, or anything of that nature.
When I talk about small to medium, it could be a duplex in a residential property, it could be something up to, say, 30 or 40 units, it doesn’t really matter about the size so much. The first thing we look at when we look at a small to medium sized development is the purchase or the acquisition of the land.
Now, this is a key time in that process because we need to contract carefully and we need to make sure that when we contract, there’s appropriate special conditions which protect a buyer to ensure that they can make the appropriate inquiries, carry out the relevant due diligence, and if all of those things are satisfactory, we can proceed with the purchase.
Now, if they’re not, we need the opportunity to be able to terminate that contract with minimal cost to our purchaser. Once we’re satisfied that the contract documentation is satisfactory and will protect us as a buyer, we conduct the appropriate due diligence and subject to that all being okay, proceed to the purchase of the actual site.
Now, that’s an important stage, but the next stage is equally important, which is engaging the appropriate contractors. A developer or a purchaser may decide to do that earlier, but it is important that in doing so, they take recommendations or make appropriate inquiries about getting the relevant experts.
Now, we might be talking about town planners, architects, surveyors, or people in that vein to help us make the relevant inquiries with respect to the land we’re buying, and also to start to plan about the type of development that we may be undertaking.
It’s important we build a strong relationship with those experts, both from a client perspective and from a solicitor’s perspective, because unless the parties are talking and there’s proper communication between everyone, all of the various aspects may not be covered when we’re looking at a development site.
So, we’ve engaged in the contract process, we’ve got our consultants lined up, we’re satisfied with the piece of land and we’ve completed the purchase. What we need to think about now is how we’re going to sell this development, and it’s not quite as simple as a normal sale of an existing property where you can pull out an REIQ contract and effectively fill in the spaces.
With a development, once the appropriate approvals have been obtained, we need to prepare quite a complicated document which we commonly refer to as an off the plan contract. Now, this document has substantial disclosure obligations on the developer, pretty much designed to protect a buyer.
So, in a circumstance where we’re doing an off the plan development, we don’t have a constructed pre-existing item that we’re selling, be it a unit, piece of land, or industrial shed.
So, these contract documents off the plan need to adequately describe not only the type of development, but the inclusions, the specifications, the timing, and things like that to protect the buyer ultimately, and that’s governed by quite restrictive legislation.
So, that purchaser is protected that they will ultimately be sold the product that they think they’re buying. At the moment, we might be selling them a piece of thin air effectively, a concept of what a unit might look like is currently 10 stories up on a block of vacant land, so we need to lock in exactly what we’re going to do.
So that contract is quite detailed, and you’ll need an expert to help you construct that document who will, in conjunction with your body corporate expert, your surveyor, et cetera, get together and produce a suite of documents which will then be provided to a prospective purchaser.
These will include things like creating a body corporate. So, in the instance where we’re building unit or, say, an industrial shed as part of a complex which will be constructed by way of strata titling or body corporate, we’ll have to produce the documentation to disclose how that body corporate will be set up.
The body corporate will involve a community management statement which will set out the lot and interest entitlements of each of the prospective lots. It will set out things like the bylaws, which are the rules and regulations by which people who own a unit or a shed, for example, would be governed.
These are both restrictive and protective of a potential purchaser, and what I mean by that is they will restrict a buyer, let’s say in a unit high rise situation or low rise, that they may not be able to hold parties until two o’clock in the morning.
But it protects your buyer as well because they know that their neighbours can’t hold a similar event and disrupt the living there. They may not also be able to change the external appearance of their unit without body corporate consent, thus protecting the other owners and maintaining the values.
So, these sort of things need to be drilled down on. We also need to set levies, which is the component that a buyer will pay for the ongoing operation of the development that is the body corporate. If there’s no body corporate, there will still be disclosure obligations with respect to, for example, the land with survey plans and the light to be disclosed in those disclosure documents, so these contracts are quite substantial.
Once we get through that and we get through the sales project, what happens at the end of the development? Well, when we get to the end, we’re going to need to pay out your funder because most development projects obviously have finance, we’re going to need to get to settlement.
But before we can do those things, the development is going to have to be approved by the local council and certified and signed off on and the plan will be sealed through council. Those sealed plans then go to the Department of Natural Resources and Mines, who will then attend to the registration of the plan.
At that time, our single piece of land will be subdivided into a substantial number of separate totals, one for each lot, which are then capable of being sold.
Once we get to that stage, the settlement phase is triggered, and as your solicitors would organise the settlements, including adjustments of the price, and then arranging for the payout of your financier. After we get through that settlement phase, your obligations won’t finish.
There is still a general defects period which may be set out in the terms of the contract whereby a purchaser can notify a defects in the premises which would be required to be fixed or attended to by a developer. As a general rule, the contracts will be drafted so that a buyer will conduct an inspection prior to settlement.
But even if there is defects, they can’t delay the settlement, these will be attended to usually in a period of, say, 90 days after settlement by a developer. Once we get through all of the settlements, then our work is largely done and the developer can enjoy the fruits of their labour.
In this video, Property Law Partner and Accredited Specialist (Property Law) Simon Bennett talks about Commercial & Retail Leasing from a Landlord & Tenant Perspective.
Hi, I’m Simon Bennett, property law partner at OMB Solicitors. Today I’m going to have a chat to you about leasing, both from a landlord and a tenant’s perspective.
So leasing is the arrangement between the owner of property or the person who has the right to control that property, sometimes a lessee themselves, and a party who takes possession or has the right to use it under an agreement. This agreement usually takes the form of a lease.
It can take the form of a licence or some other tenancy right. So this is what we refer to when we talk about leasing i’m talking generally to you today about what will roughly be referred to as commercial leasing, so that is distinct from residential leasing, which we’re not going to discuss.
The landlord and the tenant both have competing and distinct interests when entering into a transaction of this type. The landlord is concerned about their real asset, their property, and ensuring the value of that is protected and making sure that they secure the income and that they are otherwise protected from the party who’s occupying their building.
Now, a tenant is concerned about getting quiet enjoyment. That is the right to use the property without being interfered with. They’re also interested about how much money they’re going to be paying, and is there any capacity for the landlord to increase that payment?
Is there any additional charges for things like outgoings? Does the landlord have a right to terminate under any circumstances? And we can talk about a couple of those clauses that we need to look carefully for when we’re reading the documents.
But the most important thing that we look at is whether the lease is a retail lease or a general commercial lease, and the reason for that is the different rules apply. So a retail lease is generally a lease of a premises where the business in the premises is a retail business.
Now, those businesses are defined in a schedule to the Retail Shop Leases Act, which is the legislation which governs this area. But there’s another time when a business which isn’t listed as a retail type of business can be caught, and that is where that business is in a premises in a retail shopping centre.
Now, without going into too much detail, a retail shopping centre is generally a centre which has five or more shops of retail nature. So, for example, you could have a business which is clearly not retail, let’s say a legal firm, but it’s in a centre where there are five or more retail shops and the lease of that premises will be caught by the Retail Shop Leases Act and the lease will generally, generally be retail.
So what does that mean? Well, when the Retail Shop Leases Act applies, there’s certain rights and obligations on the parties. For a landlord, there’s disclosure obligations. There’s limitations on what they can and can’t do in the lease and its terms.
For example, a landlord can’t charge certain outgoings under a retail lease that would otherwise be chargeable under a commercial lease. Quite usually, the costs of the landlord are passed on to a tenant for preparing lease documents. But again, under a retail shop leasing arrangement, this can’t be done.
So the landlord will have to bear their own costs. The landlord has other obligations under a retail lease, which will include things like reminding a tenant of when an option comes up. Now, an option is an option on the tenant, usually, to extend the lease for a further period of time. There’s obligations and rights for a tenant under a retail shop lease as well.
The tenant has disclosure obligations and when signing a retail lease, usually the tenant will be required to get independent financial advice and legal advice about the lease. There’s rights attracted to a lease for the tenant as well and those rights are protections around what minimum standards the lease must comply with.
So I’ve already talked to you about the restriction on costs and outgoings being passed. But there’s other restrictions on a landlord regarding, for example, the demolition clause and compensation or relocation clauses and compensation. So this Retail Shop leases Act does provide protection to a tenant.
Under a commercial arrangement, a lot of these protections aren’t in place and the parties are free to contract on terms which are commercial. The main thing to focus on for a landlord, as I alluded to earlier, is increasing or protecting the value of their real property.
So as I indicated, that includes the collection of rent when that’s payable, and what rights they’ve got to increase it. Now, usually rent will be increased on a yearly basis and a specific mechanism for increasing rent will be included in the lease, that could be in accordance with the consumer price index, it could be a set percentage increase, or it could be some other mechanism.
Now, a tenant, as I indicated, is really concerned with their security. They need to know that they’ve got the sole right and exclusive right to use that premises for the period set out in the lease, and if there are options that they can exercise those options without interference for a further term.
They also need to know that they have got an ability to calculate what financially they’re going to be responsible for under the lease. So that will include rent, it could include outgoings, but they need to make sure that it doesn’t include an ability for the landlord to pass on additional costs which may come up, so uncertain costs.
The tenants should also be really careful around demolition clauses, which is a clause giving the landlord the right to demolish the building and terminate the lease early, or alternatively, relocate the tenant from the premise they’re in to some other premises within the building or the complex in the event that it suits the landlord’s interests.
Again, under a retail leasing arrangement, there’s protections in place for a tenant, but these clauses should be read very carefully. Generally, when entering into a commercial or a retail leasing arrangement, both a landlord and tenant should seek expert property law advice.
So that they’re aware of both their obligations and their rights under the documents they’re signing.
In this video, Property Law Partner and Accredited Specialist (Property Law) Simon Bennett gives us insight into the complexities of Buying A Business.
Hi there, I’m Simon Bennett, Senior Partner of OMB Solicitors, and I’m going to be talking to you today about buying a business. The importance of buying a business is that it’s a complicated transaction, not necessarily governed by the purchase price or the size of the business you’re buying, more about the type of business and what’s involved in that transaction.
So looking at buying a business, if you are, the first thing you should be thinking about is conducting your own due diligence on the business you’re looking to buy. So, that means looking at the financial sustainability, usually with an accountant or a financial advisor, and this is key.
Then making your own inquiries about the type of business, the customers, the sustainability. I’d recommend looking at both the risks to that business and the possible benefits of that business. Once you’ve bought it, it’s yours.
So you need to understand what might go wrong, and I would also recommend that you look at preparing a business plan for how you’re going to operate that business once the purchase goes through. There’s quite a bit of work to be done up front buy you in checking out the business, and as I said, taking those financials, if you do get them early, to a financial advisor or an accountant to get some financial advice.
Once you get through that stage, it’s really important that you speak to your lawyer about the transaction as a whole. But particularly, the first thing I like to think about is what entity are we going to buy the business in? It’s really unusual that you would go about buying a business in your individual name.
It’s most common that you would purchase a business through a company or a combination of a company and a trust of some description, be a unit trust or discretionary trust. Now, I think it’s essential that you make these decisions on advice from both your accountant and your lawyer, and they should be working in conjunction.
The reason for that is accountants tend to look at a certain aspect of the transaction, and lawyers will tend to look at another aspect. But in conjunction, it’s really important that they communicate to work out the best method and the best entity for you to use when buying a business.
So let’s say we’ve got the due diligence done and you’ve decided you want to go ahead with this purchase and you’ve set up the entity, it’s now time to go to contract, and unlike buying a very simple residential property, the contract really should be prepared by a qualified and experienced lawyer.
There’s quite often a number of detailed special conditions that are going to need to be added to contracts of sale for the purchase and sale of a business, and these are fundamental to protecting you as a buyer in the process from contract to settlement.
We’re going to look at things like making a contract subject to finance, verification of the final books and records that they give you through your accountant. It may include copyright or IP material that has to be transferred, it may include a transfer of licences.
Most importantly and regularly, it involves the transfer of a lease or an assignment of a lease or a grant of a new lease. Now, if the premises where the business is situated is key to the business, we have to make the contract subject to you gaining tenancy or tenure of that premises, and this involves an assignment of the existing lease or negotiating terms of a new lease.
There’s quite a bit involved legally around checking out the terms of that tenancy and making sure that the lease is satisfactory, knowing the rental increases, making sure the uses are appropriate, etc. So, drafting clauses around all of those things are really important.
Another issue which is really important with businesses is staff. The contract needs to provide details about what’s going to happen with staff. Are you, as the purchaser, going to take on staff? Are you going to select certain staff? Are there certain key staff that you have to have? And if you don’t get those staff, then the sale or the purchase isn’t to go through.
So, good communication around those elements and conditions is really important, and drafting those clauses appropriate to what you need is similarly really important.
Once we get to that stage where a contract has been finalised, the parties agree and it’s signed, it’s really on to the lawyer then to start conducting appropriate searches, and depending on the type of business, the lawyer and in conjunction with the accountant and the buyer will determine what searches they think are appropriate and make those checks to make sure really that when you get to settlement, that you are buying the assets and the benefits of the business that you think you’re getting without the liabilities.
We don’t want to be taking over liabilities of the business that you don’t want. Once we get through those searches, we get to the next stage, which is settlement, and at settlement, we obviously purchase the business, we hand over the money and we gain title to either chattels, assets, the business, goodwill, licences, tenure of the property, etc, and that’s a really important stage.
Obviously, but it doesn’t stop there, quite often after settlement, there’s a number of things that your lawyer will still attend to, it could be finalising the registration of, say, a transfer of the business name, lodging forms with relevant departments, etc.
Then on completion of this, hopefully, we’ve got you in a position where you’ve got the business of your dreams and you can make a success of it, and it’s all that you hoped it would have been.
In this video, Property Law Partner and Accredited Specialist (Property Law) Simon Bennett takes us through the considerations when Undertaking A Property Development.
I’m Simon Bennett from OMB Solicitors, and I wanted to talk to you today about the prospect of undertaking a development, and particularly how OMB Solicitors could help with that development.
So when we talk about a development, it could be a large development, or it could be something as small as a simple duplex, cutting one block into two. There are various types of developments that you could be undertaking.
It could be a land subdivision where you’re just dealing with vacant blocks of land being cut up, it could be dealing with a unit development, either a low rise or a high rise development. It could be mixed use, or we could be talking about a commercial or industrial development.
So there’s a number of steps in the process of undertaking a development, and usually the client would look to identify a block of land as the first stage, and that would involve finding the block of land and making some initial inquiries about its suitability for the development.
Then OMB solicitors would come in and help the client get to a contract. So secure the rights to purchase the property, maybe subject to some conditions, some further inquiries or a due diligence, and we would help them through that process whereby we might look into the title of the property to make sure that there’s no encumbrances or restrictions on the use of that land for the purpose that the client wants.
Things like contaminants, which could prevent or add substantial cost to a development of that land, and any other such items. So getting the right form of contract would be really important, and then undertaking that due diligence from a legal perspective and assisting the client to make sure that that land will be fit for the purpose for which they want to buy it.
Once we get through that stage and the client determines that is the piece of land they want and it’ll be useful for their development, then we’ll proceed with the normal transaction of purchasing the property, including financing or any other requirements right through to a settlement of the land.
So that would be what we would consider the first stage of the process, and then the next stage starts to get interesting because, realistically, with that land, we now need to get some development approvals in place to allow the proposed development, whatever that may be.
This will involve the engagement of a number of experts to help with town planning, surveying, and things of that nature. Once the development approval is obtained, we get to the next really important legal stage, which is drafting the documentation which will allow the land or the units, whatever it may be, to be pre-sold.
These are generally referred to as off the plan contracts, and that term generally refers to the pre-selling of property, land, units, whatever it might be, before there actually built and it’s quite strict and it’s quite detailed what needs to go into these documents, and it’s really important that they’re done correctly because you’re selling a concept or an idea, you’re selling something which yet hasn’t been built.
So in the case of a unit or a high rise, we’re selling a piece of air on a vacant block of land that is going to be turned into a unit and an end purchaser is going to buy.
So the documents really need to be detailed to restrict the seller into building exactly what they’ve told the end buyer that they’re going to build, and there’s a lot of protection placed around the buyer in these documents.
So we’re drafting these pro forma off the plan contracts and depending on the type of development, they’re going to vary greatly, and they’re really important documents, as I said, because if we’ve got a unit development, we’re going to need to draw at the same time a community management statement to create a body corporate for the unit.
So in that situation, there’s levies, budgets, and the like, exclusive use areas to be drafted in, and there may be caretaking and letting agreements as well if there’s management rights involved in that unit complex. For a land subdivision, there won’t be necessarily be a body corporate, so we might not need those things, but we’re still going to need a very detailed disclosure statement setting out exactly what we’re going to develop and the importance of getting these document right, really come at the end of the matter when we’re looking to complete those sales.
So we’re getting those off the plan contracts drafted with all the associated disclosure documentation is a key component. Once we’ve done that, the client will then be able to market for sale and execute contracts for the off the plan development, and as part of that, they’re entitled to take deposits.
Although those deposits are governed, must be held in a trust account until final settlement. So there’s quite a bit of legislation, as I said, governing what must be done on those documents, and if you don’t comply, those agreements just won’t be binding.
Importantly, the Land Sales Act and the Body Corporate Community Management Act are both quite restrictive in what needs to be in those documents. So the developer has been successful in gaining a number of presale contracts. The development proceeds, building approval is obtained, and the building gets completed.
At that stage, we can assist the client with their respective experts to finalise the plans of registration. When they come out of the local authority, they’ll go to the Department of Natural Resources and Mines for registration and a separate title to each of the separate lots is then created.
This is the trigger for the settlement under those off the plan contracts that we talked about and from that point, it’s quite frantic to push and usually on a 14 day period or something like that, get each of the buyers to settlement, and this is where the contracts can get tested and it’s essential that they were drafted correctly at the outset.
Because quite often if the market conditions have changed, let’s say the properties were sold in a strong market, and then the settlements are occurring in a weaker market, some of the buyers may be looking for opportunity not to proceed with those documents.
So it’s really important at the early stages to get them correct, and we would then proceed to hopefully settle all of those contracts and complete the development.
So the process, as you can see, is really from a greenfield site to an absolutely completed development on behalf of the client and it’s a detailed process along the way, but it’s certainly one that we at OMB are familiar with and have helped many clients complete their development successfully over the years.
In this video, Body Corporate Associate Tom Robinson talks about the Roles & Responsibilities of Body Corporate Committees and the sometimes onerous tasks involved.
Hi, I’m Tom Robinson from OMB Solicitors, I’m Associate here and I work in the Body Corporate team and today we’re going to have a chat about the roles and responsibilities of committees and what is the onerous side of that type of role.
I thought the best way to get started was to have a quick look at how a committee is made, created, and appointed, and essentially, the starting point is that a committee can consist of up to seven members. Of that seven members, you’ll have an executive component committee and then also your ordinary members component of that committee.
The executive members are essentially your chairperson, secretary, treasurer. With that role, there’s not really any more responsibility, power, or authority than any of your ordinary members of the committee.
Rather, they have some additional tasks that they do take on, which mostly, with most of the bodies corporates, are delegated in one sense to a body corp manager, and the purpose of that is your body corp manager is engage to take on that administrative role.
So when those executive members don’t have those tasks, your body corp manager takes care of them. They’re essentially the same as any other member on your committee that can be up to seven.
When your committee is elected, it’s done at an annual general meeting each year. The important thing to remember is that you’re only realistically got a one year term on your committee, which is a good thing to remember and then you will be either reelected, reappointed, or there will be a new committee that will come on, so that’s done every year.
Once we have a formed committee, which is done at each annual general meeting, essentially that role of the committee is to look after that day to day administrative management and operation of the body corporate, and essentially what that means is to make and implement the decisions of a body corporate.
A committee has a number of power to make certain types of decisions, and with that, there are also decisions that they can’t make. Some of those restricted decisions will be decisions like you can’t affect the rights or responsibilities of owners.
You can’t change the levies, and of course, any motions or decisions that require a general meeting resolution, whether it’s ordinary special resolution without dissent, they must be at a general meeting and the committee can’t make them.
Some of the other decisions that a body corporate can make, which are quite voluminous, they all have to be done with a basis of reasonableness, and the reason they have to be a reasonable decision is because they are bound by a code of conduct, and that code of conduct basically says that a committee must act fairly, honestly, with confidentiality, and most importantly, in the best interests of all the owners and the reason that’s so important is because a committee can make a decision without any input from owners.
Rather, the only notification that owners will get is minutes and those minutes will come from the committee meeting or the voting outside of committee meeting, and I guess the important part to remember there is that if a committee makes a decision, it must be minuted and they must hold a formal meeting.
There’s no such thing as informal meetings and the reason that’s so important is because it does bind the body corporate and a lot owners have a right to know what the decisions are that a committee are making. So with all that in mind, that’s essentially their role, it’s that day to day management and operation of a body corporate.
But what’s the onerous side of it? What are the risks associated with being on a committee? There are some. There are some, there are some risks, despite the fact that there is obviously Office Bearer’s liability for our committees, which is through the body corporate’s insurance policy.
But essentially, before we go into that type of risk, one of the most common things we’re seeing that’s coming through is with respect to communication. Lot owners can be a bit picky with members and their decisions because they don’t have, in most instances, a right.
So they can be bombarded, those members this can be bombarded and targeted and attacked by a lot of correspondence coming in from what we call a minority group of nuisance owners.
But the flip side of that is obviously, if a committee is communicating with owners, it has to be very careful that if it’s in the minutes, explanatory notes, or even chairman’s letters and those other types of communications.
That there isn’t any false misleading defamatory statements that are made because that can potentially set up a claim against the body corporate, and that ties back into why a committee must act reasonably because that decision is one that is by the body of corporate.
The other aspect that we tend to find is, like I say, there are risks associated with committee members making decisions, and when we talk about that, we like to think of the committee members as a group of volunteer laypersons. So in other words, they shouldn’t try to take on the roles and put on other hats like the roles of accountants, lawyers, engineers, project managers.
Those roles should be best left to those parties, and even if a member on the committee is one of those, it avoids that conflict of interest, which can occur and we don’t want to see that happen.
The reason being is the committee’s scope is rather limited in what they can and can’t do and if they go outside of that scope, whilst there is that protection of Office Bearer’s liability insurance, there are decisions out there where if a committee member does seem to go what we call rogue, then they potentially could be personally liable and not protected under that policy as an exclusion.
They’re probably the main onerous parts of being on a committee and the risk to be mindful of. Essentially, as long as a committee makes reasonable decisions and they stay within their scope and engage the appropriate experts, they will be well and truly protected, and realistically, it can be a bit of fun, and I guess to sum it all up, if you’re not on a committee and you’re part of a body of corporate, have a go.
There’s no requirement to be on the committee and certainly there’s no requirement to stay on the committee. It’s quite easy to resign if you want and at best it’s only for one year term. But otherwise, that’s probably the best part of those those roles and responsibilities.
So we do also come across those situations whereby committee members do get themselves in those situations where they need to engage those appropriate experts and get that advice, and obviously OMB Solicitors, we can provide a lot of that advice to those committees.
Whether it’s assisting with drafting the type of correspondence to go out, reviewing the minutes, especially if there are topical and competitive topics that are going to be put to the owners, whereby there might be an influx of correspondence coming in, then we can certainly review those types of documents.
We can assist with the engagement of other experts that need to be. But that also includes that we can have that relationship with your body corp managers who take on part of those roles and responsibilities of your committees and give just any of that general advice to assist a committee with its decision making authority and power, including making sure that they stay within their spending limits, making sure that they don’t hit any of those restricted issues, and assisting them with even attending at the committee meetings and general meetings to provide that type of advice.
In this video, Wills & Estates Solicitor Steven Mahoney talks about Superannuation myths, who should have a Will and other reasons why it’s important to be prepared in the event of your death.
My name’s Steven Mahoney and I’m an associate at OMB Solicitors. Today I’m going to take you through the five common myths associated with estate planning.
In order they are, one that superannuation forms part of your estate. Two, that if I die, everything will go to my spouse anyway. Three, that estate planning is only for the wealthy or elderly.Four, that is economical and cost efficient to draught my own will, and five, that anyone can contest my will, so what’s the point of drafting one.
Turning to these in order of the points so, superannuation forming part of your estate. This is often the light bulb moment for a lot of my clients when I advise them that your superannuation is actually governed by an independent piece of legislation and doesn’t form part of your estate.
This is further compounded when I tell them that your superannuation can only be gifted to certain dependents which are as part of your superannuation.
Now, a dependent under the superannuation provisions is either a spouse, a child, someone who you’re in an interdependent relationship with, or your legal personal representative, which is the executor of your will.
This is again important because if you do not have what is called a binding death benefit nomination, which is a fancy word for a will for your super, it is an independent trustee of the industry super fund who will make this decision for you.
Now, there are three certain documents that you can implement to ensure that your superannuation benefits do pass to your nominated dependent. Now, this is via a non-lapsing binding death benefit nomination, which will ensure that it doesn’t lapse a binding death benefit nomination.
Which is usually only valid for a period of three years, or a non-binding death benefit nomination, which is purely just a wish that is given to the trustee to make a decision at their discretion.
So turning to point number three, which also does tie into the superannuation, is that estate planning is only for the wealthy or the elderly.
Now, because a lot of people do have a death benefit or life insurance policy attached to their superannuation, people often neglect to think of the actual size or value of their estate, and quite often this is a lot larger than people give consideration to.
It is also extremely important to give rise to other things such as your digital assets or social media platforms and who you may wish, or more importantly, may wish not to have access to following your passing.
There is also the importance of appointing a guardian for any minor beneficiaries or minor children as well as gifting pets to any certain individuals which you may see fit. Point number two is what’s the point of having a will that everything will go to my spouse anyway?
If you die without a will, you are deemed to have died intestate. Now, if you do die intestate, there are the intestacy provisions of the relevant act which will apply. It is therefore essential to ensure that you do have a will, to ensure that the intestacy provisions of the act aren’t enlivened in which a set formula will dictate which beneficiaries are to receive what.
Point number four is that it is economical and beneficial to draft your own will. Now, many people aren’t aware of the intricacies or important provisions which must be contained within a will.
Now, this includes the important revocation provision, the appointment of executors, the importance to ensure that a will is witnessed by two independent parties who aren’t a beneficiary of the will or cannot be a spouse of any of those beneficiaries, and point number five is that anyone can contest a will and this is obviously a big grievance for a lot of clients who think, what is the point of establishing a will, anyone will contest it.
Now, people often have internal family conflicts, either with siblings, parents, but it’s very comforting for the fact to advise clients that the only eligible applicants to contest a will is a spouse, a child, which also includes a stepchild and an adopted child, as well as someone who is a financial dependent.
Now, if you don’t fall within these categories in Queensland, you are unable to contest a will. So in order to contest a will, there is also consideration which must be given to the timeframe of doing so.
In Queensland, you must notify an executor within six months of your intention to make a claim upon an estate, and you must also file court proceedings within a court of competent jurisdiction within a period of nine months.
It is important to realise that each state does have their own rules which are applied to contesting an estate, and one which is very important is in New South Wales, in which a notional estate is also given consideration as to your trust and companies and your involvement with those as well as grandchildren can contest an estate.
So I hope this video has been of assistance and we welcome you to contact any of our experienced members here at OMB Solicitors if you do wish to further discuss your estate planning affairs.
In this video, Wills & Estates Solicitor Steven Mahoney explains why it’s important to have these in place even before you take a trip overseas.
My name is Steven Mahoney from OMB Solicitors, I’m an Associate here and I’m going to take you through today briefly the explanation of what is a will and an enduring power of attorney and the importance of having those documents in place before you duck off to a quick trip overseas, or it might be an extended vacation.
Firstly, it’s pretty important to understand what is a will and what is an enduring power of attorney, they aren’t concurrent documents. So taking through firstly, an enduring power of attorney is a document which is in existence whilst you’re alive and a will comes into play and only comes into play upon your passing.
So the first thing in many, people head off overseas, they’ve got considerable assets back home, don’t have their estate planning in order. What if something goes wrong? That’s what I want to take you through today and the potential implications that’ll have for your family and also potentially for your loved ones.
So the enduring power of attorney is going to be a document that deals with if something happens to you overseas and we need to take care of your financial matters or your personal matters, that document is going to appoint someone to deal with that on your behalf.
So that might be a parent, it might be a partner, it might be a friend. Having that in place is extremely important and sometimes what I’d say is the most important document you’ll ever sign, because when you’re dead, you’re dead, you don’t have control of that.
But whilst you’re alive, you want to make sure that someone you trust is dealing with your financial manners, both personal and financial, in a manner you see fit.
With your will, we also need to make sure that you’ve got that in play if something were to happen to ensure that your assets are going where you wish to your loved ones and to those who you obviously desire, and one of the things that many young people think, they don’t believe they do have an estate but it’s important to understand your superannuation as well, which might have a death benefit component attached to it, which can have some sizeable amounts.
That in essence doesn’t form part of your estate. So it’s extremely important whether you do have an industry super fund with one of the main industry funds to ensure that you have a binding death benefit nomination in place.
Again, that’s just a fancy word for a will for your super, but we need to make sure as well that that’s going to go across to those parties which you wish to see fit, and it’ll obviously make sure that we take into account both your will, which deals with all of your estate, as well as your superannuation.
Getting those in play, it can be very simple, it can require a quick, simple chat which we can set up in a matter of days. Come in, have a chat to us, get everything sorted to make sure that nothing happens to you whilst you’re overseas and to make sure everything’s in place for now and into the future.
