ByLawyers News and Updates

Scary short-stays

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By Russell Cocks, Solicitor

First published in the Law Institute Journal

One of the innovations adopted by property law principles during the Twentieth Century was the ability to divide real estate into stratas. Previously, ownership of land had traditionally given to the owner of that land the right to that land ‘from heaven to hell’. All the way up and all the way down. An owner was entitled to prevent anyone from burrowing under or building above their land. There were some exceptions, generally in aid of government endorsed enterprises such as mining companies, but the gender specific saying “every man’s home is his castle” was endorsed to the fullest extent by the law.

However, the pressures of living in large metropolises demanded that the law recognise a way that land could be divided not only on a horizontal plane, but also vertically into stratas, so that the teeming masses could be accommodated in as small an area as possible. In Victoria, this led to the Strata Titles Act in 1967 formalising ad hoc ‘company share’ ownership schemes that has festered in preceding decades. The process culminated in the Owners Corporation Act in the early years of the new millennium that sought to bring a structure not only to ownership, but also to the difficulties of cohabitation, in a broad sense.

Indeed, the Owners Corporation Act is primarily concerned with the rights and obligations of the various owners of the land, collectively the Owners Corporation, leaving it to the Subdivision Act to regulate where the lines are drawn, both on the ground and between the various stratas. Regulating Body Corporates under the Strata Title Act proved to be a training ground for the sort of issues that can arise when large cohorts of people occupy a small area of land and VCAT is now the forum for those issues to be aired.

It would be fair to say that the traditional demographic of strata ownership in the second half of the twentieth century were elderly people looking to downsize, a relatively stable and non-litigious group. But the advent of large-scale developments in inner city locations designed to appeal to a younger and more mobile demographic caused a seismic shift in the profile of residents in buildings subject to the Owners Corporation Act.

Nowhere is this more apparent than in the short-stay environment. Inner city apartments, often with in-house facilities such a gyms and swimming pools, are attractive to people who are looking to visit a city for a short time, but the lifestyle of such people is often likely to clash with long term residents more interested in a quiet, stable lifestyle. Complaints by and to Owners Corporation Managers have, by and large, been unsuccessful as the Courts have tended to put the proprietary right of the owner (including the right to lease) above the concerns of other residents. Thus, attempts to pass Rules preventing Short Stays have been held to be beyond the power of Owners Corporations and various other attempts to rely on building regulations have been equally unsuccessful.

This has resulted in legislative intervention, but the solution recognises that not all short-stays are toxic. From 1 February 2019 the Owners Corporation Act will proscribe certain behaviour in the short-stay environment and establish a process whereby complaints relating to breaches of those behaviour standards will be dealt with, initially at least, by the Owners Corporation. After receiving a written complaint, or at its own instigation, the Owners Corporation must give the owner notice of the complaint and require the breach to be rectified and may also refer the breach to VCAT.

VCAT has power to hear and determine short-stay disputes and may issue prohibition orders, award compensation and impose a civil penalty. Prohibition orders may be made when a notice has been served on 3 separate occasions in 24 months but ceases if the property is sold. Compensation may be awarded to an occupier who has suffered loss of amenity, to a maximum of $2,000, and the short-stay occupier AND short-stay provider are jointly and severally liable to satisfy a compensation order and to pay any civil penalty.

This measured approach to a growing problem may be sufficient to ensure that short-stay providers make a greater effort to control the potentially anti-social behaviour of some short-stay users.

By Lawyers will be at InfoTrack Connect18 E-Conveyancing Road-shows

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E-Conveyancing roadshows with Infotrack and By Lawyers 

econyevancing roadshow

InfoTrack is hosting 41 complimentary seminars throughout NSW, VIC, QLD and ACT showcasing the latest in integrated e-conveyancing solutions.

The By Lawyers team will be be attending and presenting at select venues throughout NSW and VIC.

New South Wales

17th of October – Sydney CBD

  • Kate Eason – General Manager Content, By Lawyers – Global
  • Angus Dawson  – Product Champion at By Lawyers

15th of November – Sydney CBD

  • Brad Watts – Managing Director, By Lawyers – Australia
  • Angus Dawson  – Product Champion at By Lawyers

Victoria

9th of October – 22 November –  All locations

  • Renowned expert property lawyer and By Lawyers author Russell Cocks will be attending all Connect18 road-show events hosted in Victoria.

Register here

  • Connect with members of the By Lawyers team
  • Be the first to see a live demo of the latest in e-Settlements solutions – Sympli
  • Learn how to make smooth transition to e-conveyancing
  • Have your questions answered by experts in the industry
  • Earn 1 complimentary CPD point
  • Network with your peers
  • Enter for a chance to win up to $5000 in prizes

 

 

De-regulated Contract of Sale of Land

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By Russell Cocks, Solicitor

First published in the Law Institute Journal

What are the consequences of the sunsetting of the regulations prescribing the standard Contract of Sale of Land?

The Estate Agents (Contracts) Regulations 2008 reached their sunset date on 11 August 2018, pursuant to the Subordinate Legislation Act 1994. As a consequence, those regulations, and amending regulations in 2011 and 2014, are revoked. The standard form contract almost universally used in Victoria for the sale of land is described in those now revoked regulations as the ‘prescribed’ contract and the thought that the prescribed contract has now lost its regulatory basis would appear, at first glance at least, to be a worrying development.

However, fear not. The ‘prescription’ only relates to the form of contract to be used by a licenced real estate agent. It does not prescribe the form of contract that may be prepared by a legal practitioner or conveyancer.

Section 91 Estate Agents Act 1980 authorises the making of regulations specifying the form of contracts to be used by estate agents. For many years the Law Institute of Victoria developed a standard form contract that was adopted as the prescribed contract and printed in the Regulations for use by estate agents. In fact, estate agents, in real estate sales at least, rarely prepare their own contract and usually request a contract from the vendor’s legal practitioner or conveyancer. As the ‘prescribed’ form is acknowledged as a universally accepted form and is available without charge as a public document, it is the form in common use. Proprietary conveyancing programs are permitted to replicate the form prescribed in the regulations and the LIV and REIV sell their version of the form (with appropriate logos) to their members in print or digital form.

The revocation of the Regulations notionally leaves that minority of estate agents who choose to prepare contracts, rather than requesting them from legal practitioners or conveyancers, without a prescribed form of contract. But s 53A Estate Agents Act 1980 authorises agents to use contracts that are approved by a professional association within the meaning of the Legal Profession Act 2004 and the prescribed contract was so approved by the LIV before being prescribed in the Regulations and the revocation of the Regulation does not affect that approval, at least at present.

The short answer for estate agents concerned by this development is to stop preparing contracts and request contracts from the vendor’s legal practitioner or conveyancer. This, with respect, is simply good practice in any event.

The de-regulation has no effect on legal practitioners, who are free to adopt any form of contract, subject to other statutory constraints such as the Australian Consumer Law and Fair Trading Act 2012. Whilst the current contract does include a warranty in GC2 1 that the general conditions of the contract are identical with the general conditions prescribed in the Regulations, that warranty would appear to be unaffected by the revocation of the Regulations as proof of the form of the de-regulated contract will remain possible from parliamentary records. Thus, we can expect that the ‘prescribed’ contract will continue in general use into the near future.

Allowing the Regulations to sunset appears to have been a deliberate choice by the government. This may be due to a desire by the government to undertake wide ranging reform of the property law sector as a result of the Consumer Property Law Review 2016. That Review investigated a proposal to prescribe a form of contract of sale of land that would be obligatory for ALL sales, or at least to prescribe certain minimum terms that would be obligatory in all contracts. Whilst those proposals have not as yet seen the light of day, the decision to allow the Regulations to sunset without replacement indicates that changes might not be far away. Indeed, the government could have chosen to extend the Regulation for a further 12 months, but apparently decided not to do so.

It would be fair to say that recent changes, including CGT and GST Withholding, have resulted in unwieldy Special Conditions being introduced into the LIV contract. Whether the deregulation of the contract and the other changes that may flow from the Review will result in other forms of contract becoming common is yet to be seen but the life of a property lawyer, despite widely held expectations to the contrary, is never dull.

Tip Box

  • ‘Prescribed’ contract regulations revoked.
  • Only affects estate agents.
  • Does not affect legal practitioners or conveyancers.

Lost trust deeds

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By Russell Cocks, Solicitor

First published in the Law Institute Journal

Many properties are held in the name of Trustees. Having access to the original Trust Deeds can present problems.

Property lawyers often have to deal with properties owned by trustees, either corporate or individuals, and this adds another layer of complication to what is regarded by the public as the ‘simple’ process of conveyancing. Often the client is not even aware that the property is owned by a trustee, or at best has a minimal understanding of the consequences of such ownership. The process is complicated even further when the transactions involves a financier, which is often the case.

The concept of a trust has been around for centuries, but its impact on day to day transactions greatly increased in the 1970s and 80s when accountants decided that the trust concept provided substantial advantages for the average taxpayer, partly as an asset protection mechanism but principally as a tax-saving device by distribution of income within the family. Hence the prevalence of the ubiquitous Family Trust that seemed to push its way between the Average Joe (or Josephine) and their assets. In fact, the asset protection motivation was quickly dissipated by financiers requiring personal guarantees in respect of trust borrowings and the tax benefits were whittled away by the imposition of maximum tax rates on income directed to infants. But like a runaway horse, once mounted, it is difficult to get off a Family Trust.

The Family Discretionary Trust typically consists of a trust deed with extensive Trustee powers recited in standard form and then a Schedule setting out the particulars relevant to the particular trust. Such documents were often purchased ‘off the shelf’, much the same as company incorporation documents, and as they were a mechanism designed principally for tax minimisation, little regard was had to the niceties of trust law. Four copies of the Trust Deed would usually be executed, with the accountant, lawyer and client having a copy each and the fourth copy generally staying with either the lawyer or the accountant. It would be fair to say that the execution process might not always be carefully undertaken and some of the four copies might remain unsigned. From time to time financiers might seek copies of the Deed and a prudent lawyer, accountant or client would hopefully ensure that the original Deeds were held in safekeeping but, as is fitting for a document that was designed to record a fantasy, that was often not the case.

Forty or fifty years after these structures were put in place, problems are arising when the original documents cannot be found. The purpose of the documents were to record the Trustee as the legal owner of assets, both real estate and personal property such as bank accounts and shares, and when it comes time to deal with these assets the Trust Deed establishing the Trustees right to deal may need to be produced. This situation was considered by the Supreme Court in Application by South Melbourne Continental P/L 2018 [VSC] 398.

This was a typical situation of a small business established by a patriarch thirty-five years previously that had been conducted successfully over those years, held substantial assets and was now ‘operated’ by a son on behalf of the family. But the Trust Deed could not be found and this presented problems in dealing with the assets and the business generally. The Supreme Court has a number of powers relating to trust property, including Order 54 Supreme Court (General Civil Procedure) Rules 2015 and an ability to make orders under the Trustee Act 1958. However, the Application was unsuccessful as the McMillan J. was not satisfied that all possible attempts to locate the Trust Deeds had been carried out and it may be concluded from the judgment that the powers vested in the Court will not be made available without extensive evidence relating to the original terms of the Trust Deed and the attempts to locate the documents.

This outcome may be contrasted with the successful Application in D.R.McKendry Nominees P/L 2015 [VSC] 560 where an argument based on the presumption of regularity, that does not appear to have been argued in South Melbourne Continental, was successful. A similar argument found favour with McMillan J. in a case concerning a lost Superannuation Deed in Re Thomson 2015 [VSC] 370.

Vendor statement now automated in By Lawyers Contract – VIC

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Vendor statement now automated!

We are excited to announce that the By Lawyers Contract of sale of land (VIC), which makes things easier by incorporating the vendor statement, has now been updated to include intuitive automation, to assist users when they are creating the vendor statement.

Upon opening the precedent document, the user is prompted to make a series of elections by the use of check boxes – and text boxes are also included where a description is required.

Users simply select and input the relevant information to be included, which is then automatically generated in the document, showing only relevant disclosure information.

This process reduces the time required to complete a vendor statement, reduces the risk of a disclosure being defective due to error and results in a statement that is much more readable.

Just another way that By Lawyers is making the practice of law a little more enjoyable.

 

Combustible cladding – Conveyancing – QLD

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New regulations for combustible cladding

From 1 October 2018, amendments by the Building and Other Legislation (Cladding) Amendment Regulation 2018 (QLD) (the Regulation) to the Building Regulation 2006 (QLD) require owners of private buildings to undertake a three-stage process, managed through an online system, to identify whether a building is affected by combustible cladding.

Buildings covered by the Regulation are class 2-9 buildings of Type A or Type B construction for which building approval was given after 1 January 1994 and before 1 October 2018.

The Queensland Building and Construction Commission (QBCC) is the regulator responsible for the online checklist and register.

For further information on the three-stage rollout, see the QBCC website.

Duties of an owner on sale of affected property

A change of building ownership attracts statutory duties for building owners. If one or more of the relevant stages has been completed, an owner must give the new owner:

  • notice, in the approved form, about the extent to which the original owner has complied with Part 4A; and
  • copies of each document given by the original owner to the QBCC under Part 4A.

They must also give the QBCC a copy of the notice given to the new owner. Failure to do so may attract a maximum penalty of up to 20 penalty units.

The By Lawyers Conveyancing (QLD) publication has been updated accordingly.

A full description of the sale and purchase process – Conveyancing – NSW

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By Lawyers is pleased to announce the publication of new reference materials within our Conveyancing Guides which provide a full description of the conveyancing process for both sale and purchase. These descriptions provide details on the procedure to follow when conducting a sale or purchase, using the precedents available in the By Lawyers Conveyancing (NSW) Guides, together with LEAP and InfoTrack.

The full descriptions follow the typical progression of a residential sale or purchase and include screen shots to assist with the procedural aspects of running the matter in LEAP. These descriptions are not intended to be a substitute for our comprehensive Conveyancing commentaries, or the detailed Matter Plans and To Do lists provided in our Guides – rather they are intended to be complementary, providing the user with more detailed explanations on the very practical aspects of running a conveyancing matter from start to finish.

Areas covered include:

  • How to open a file;
  • How and when to order quality and title searches;
  • How to create the contract with the correct order of documents;
  • How and when to enter matter information into LEAP;
  • Arranging an exchange;
  • Completing settlement figures and directions – adjusting council rates, water, sewerage, strata.
  • Preparing for settlement – both paper and electronic.
  • Post-settlement procedure.

While these new resources are ideally suited to those with little or no hands-on experience with conducting conveyancing matters, they will also be of benefit to those unfamiliar with running conveyancing matters in LEAP, or who need to step in and conduct a conveyancing file for another team member who is on leave.

Another great advantage provided by these full descriptions is the ability to delegate conveyancing tasks to junior staff and have them understand the conveyancing process without having to direct them every step of the way.

Like all of the practical resources in the By Lawyers Conveyancing Guides, these new reference materials provide firms not currently taking on conveyancing work the ability to do so easily.

Mandatory electronic lodgement- Conveyancing – VIC

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Mandatory electronic lodgement applies in Victoria from 1 October 2018. Are you ready?

Legal practitioners and licensed conveyancers acting in a transfer, mortgage/discharge of mortgage, or caveat/withdrawal of caveat, from that date must lodge the transaction electronically.

From 1st October 2018, the Registrar will not generally accept paper lodgement of any of the above instruments. However, the Registrar will accept paper lodgement if an instrument cannot be lodged electronically for any of the reasons set out in the Request to accept paper lodgement form, which is available on the Property and Land Titles website.

For further details, see the ‘E-Conveyancing’ section of the By Lawyers conveyancing commentaries and our related article ‘A brief explanation of the transition to E-conveyancing’, which includes information on how to get connected and the full timeline for implementation, both accessible from the Matter Plan in our Conveyancing Guides – Vic.

Notice to complete – Conveyancing – NSW

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The commentary in the By Lawyers Conveyancing NSW Guide and 1001 Conveyancing Answers (NSW) has been updated to highlight some important considerations brought to light in the recent decision on the NSW Court of Appeal in Namrood v Ebadeh-Ahvazi [2017] NSWCA 310, namely the importance of issuing a Notice to Complete before purporting to terminate and the distinction between the completion date and the actual date of completion.

The ‘completion date’ is specified in the contract, but because time is not of the essence and settlements are often delayed, the actual completion date can be a later date. Any provision in a contract providing that something must be done on or by completion is not necessarily a requirement that it be done on or before the completion date

The facts in this case were that the contract of sale provided for work to be done on or by completion. When the completion date passed a notice of termination was served by the purchaser without first serving a notice to complete making the completion date of the essence. The work was subsequently finished and as no essential completion date had been established by a notice to complete, the purported termination by the purchaser failed, was deemed a repudiation of the contract and the deposit paid was forfeited to the vendor. The fact that a time and date for settlement is agreed does not of itself make time of the essence and justify termination.  Either the essentiality of time must be agreed at the outset, or it must be made essential by serving a notice to complete.

This case also highlights the potential issues that arise with inserting special conditions regarding compliance with works notices, which necessarily override s 11 of the Law Society Contract by virtue of the definition of ‘normally’ therein.

The commentaries in the By Lawyers Conveyancing Guides – Acting for the Purchaser and Acting for the Vendor, as well as the relevant sections of 1001 Conveyancing Answers NSW, have been updated accordingly.

 

NSW – Conveyancing – Sale – Replies to requisitions

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Responding to a recent subscriber request, we have added new standard replies for the following Law Society requisitions:

  • Residential Property 2018;
  • Strata Title (Residential) Property 2018;
  • Commercial 2018; and
  • Strata Title (Commercial) Property 2018.

These replies are in our Conveyancing – Sale (NSW) guide and form part of By Lawyers extensive library of replies to requisitions, which comprises replies to all common forms of requisitions including those produced by the Law Society of NSW and Australian Law Stationers.

Note: when using the By Lawyers Contract for Sale of Land requisitions are not required – by operation of clause 11 of the By Lawyers Contract, the warranties given by the vendor in the contract replace requisitions.

The main function of requisitions in modern conveyancing is to remind the vendor of the implied obligation to deliver a good title. But in the vast majority of matters the vendor’s title is completely uncontroversial. For this reason a practice has developed of including requisitions and answers in the contract. In our view the better approach is to raise only requisitions that need to be raised, rather than standard requisitions that are largely irrelevant and receive a standard response.

In a typical conveyancing matter using the By Lawyers contract there should be no need to raise requisitions except where the purchaser’s enquiries reveal a likely defect in title. The vendor warranties implied into all contracts by the Conveyancing (Sale of Land) Regulation 2017 are included as a reminder to vendors and for the information of purchasers.

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