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National Cabinet Mandatory Code of Conduct (Code) for Commercial Tenants and Landlords released on 7 April, 2020

How can we assist you?

The Code for Commercial Tenants and Landlords released on April 7th by the National Cabinet contains complex provisions that if not properly understood by you, could lead to an outcome for you that is sub-optimal and which could penalise your business financially for many months to come.

In this article we have provided a summary of the main provisions contained within the Code however, we encourage you to seek assistance. Our Commercial Leasing Team is ready to assist you to negotiate with your Landlord/Tenant. [...]  READ MORE →

Matthews Folbigg
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Code of Conduct for Commercial Tenancies – Released

By Anica Cunanan, Law Clerk at Matthews Folbigg Lawyers

Undeniably, the financial impact of COVID-19 has triggered a myriad of changes to the laws. The National Cabinet has released a mandatory Code of Conduct in relation to the commercial property sector. This sets out the principles to be applied to adjustments to rent during the COVID-19 pandemic.

The Code is based upon a series of good faith principles to be applied to commercial tenancies during this unprecedented time. It will apply to those tenants who are eligible for the JobKeeper programme, with annual turnover of up to $50 million (“SME Tenants”). [...]  READ MORE →

Matthews Folbigg
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COVID-19: Critical Matters for Commercial & Retail Tenants and Landlords

COVID-19: Critical Matters for Commercial & Retail Tenants and Landlords

New Laws

The NSW Government now has the power to set new rules for retail landlords and tenants, the details of which will be known in coming days.

Although the new laws (currently) only relate to retail leases, nevertheless there are substantial challenges for both commercial and retail tenants and landlords to consider as set out below arising from the COVID-19 situation.

What is expected?

For retail tenants and landlords it is expected that the new laws will address such matters as evictions, bank guarantees/bonds, tenant defaults, rent abatements, and mandatory/core trading hours. [...]  READ MORE →

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COVID-19: Leases

For our property clients, these are challenging times and we are here to make sure that you receive appropriate support. We have outlined below an area of immediate concern which we encourage you to review and contact us if you require further advice.

Leases

We have already seen landlords and tenants suffering from the negative impact of Covid-19. Some tenants are not able to pay rent and have asked for a reduction/abatement and some landlords have had trouble keeping up with their mortgage and loan repayment. [...]  READ MORE →

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Obtaining access to a neighbouring property

If there is a close boundary between your property and your neighbour’s property, temporary access to your neighbour’s property may be required if you intend to carry out works to your property, such as renovations.

Obtaining access

If you and you neighbour agree to terms of access, it is beneficial for both parties to enter into a licence agreement to set out the terms of the access including, the length of time and any agreed compensation. However, if initial negotiations between yourself and your neighbour fail, you make need to seek a statutory order to permit access. [...]  READ MORE →

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Tax Sting – Living/Moving Overseas

If you are living and conducting a business outside of Australia, you may still be liable to pay tax to the Australian Government if you are considered to be a “resident” for tax purposes.

Who is a Resident?

Essentially a “resident of Australia” or “resident” for the purposes of the Income Tax Assessment Act 1936 (1936 Act) is a person whose domicile is in Australia unless the Commissioner is satisfied that the person’s permanent place of abode is outside Australia.

What is a Permanent Place of Abode?

In the recent Federal Court of Australia decision of Harding v Commissioner of Taxation the concept of “permanent place of abode” was discussed at length. [...]  READ MORE →

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Purchasing off-the plan: is it the right way to go?

Purchasing off the plan

An off the plan contract refers to a contract for the sale of a residential lot (the subject lot) that has not been created at the time the contract is entered into. Essentially, a purchaser is buying a house or apartment before construction has finished. New laws set to commence on 1 December 2019 aim to provide stronger protection for purchasers in response to a number of concerns arising from recent off the plan developments. Whilst the process of buying a brand new property (as is the case with off the plan) can be exciting, it is prudent for purchasers to consider a number of matters and obtain legal advice before committing to the contract. [...]  READ MORE →

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Changes to Property Transactions

IMPORTANT CHANGES TO PROPERTY TRANSACTIONS
The Conveyancing (Legislation) Amendment Act 2018 introduces changes that will provide better protection for purchasers buying property off the plan and more flexibility to those using electronic land contracts and deeds.

Off the plan Contracts:
An off the plan contract is used to sell a property such as a strata unit without its own separate title, given the property does not exist at the time contracts are exchanged.

Off the plan contracts can be beneficial to both property developers and purchasers. For property developers, finance is generally dependent on the percentage of lots that have been pre-sold. [...]  READ MORE →

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Unjust Put and Call Options – When a developer Comes Knocking

When a developer approaches you to buy your home (and you’re interested), you need to ensure you get as many facts as you can and seek legal advice. Sometimes the developer may not wish to purchase your land straight away, and you may enter into an agreement to sell and purchase land in the future.

A ‘Call option’ is essentially an approved right granted to the buyer by the seller of a property. This right requires the seller to sell the property to this buyer on the agreed terms at a future point in time. For example, you agree to sell you home to the developer in 2 years for a million dollars. A call option is beneficial in that the price agreed upon will not change irrespective of pricing fluctuations in the property market. A ‘put option’ is an approved right granted to the seller by the buyer. This right enables the seller to request the buyer to buy the land at a future point in time. [...]  READ MORE →

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Commercial Law – Tips for Small Business

Commercial Law – Some tips for small business owners

Many people operate small businesses and many people are setting them up. From a commercial law perspective here are a few simple but effective tips:

  • It is well known that you should try and separate assets from business risk. That is why many people operate under a company structure. It follows that you should not use the trading company to acquire any assets, that is, other than the business itself. For example, premises should be purchased in another name and, if possible, any valuable assets such as intellectual property or even expensive equipment should be held in another name and licensed to the trading entity.
  • If a husband and wife operate a business under a company structure there is no need for both to be directors (as opposed to shareholders). The role of director carries considerable personal risk and there is no need to expose all the couple’s personal assets to that risk.
  • A small business owner will inevitably be required to provide personal guarantees to the bank, suppliers or a landlord. It is a good idea to keep a copy of any such personal guarantees in a safe, accessible spot.
  • Similarly and particularly if you shop around for the best insurance deal from time to time you should keep a copy of your policies in one spot. This is very important for workers compensation policies where a claim would be handled by the insurer at the time of the injury and not the insurer at the time of the claim.
  • If you operate from leased premises you should check that the lease term has not expired and that you have diarised the latest date to exercise any option to renew.
  • Keep your company’s share register up to date and make sure all board and shareholder meetings are properly minuted. The minutes do not have to be extensive but they should clearly set out what was decided.
  • Make sure your terms of trade are clear and comprehensive. They should be consistent with your quotes, order forms and invoices. In particular customers should be provided with your terms of trade before you enter into a contract with them.

These aspects are also important if you are thinking of selling your business, either by way of a sale of assets or a sale of shares. Often time is wasted and extra expense is incurred if things are not in order at this time.

Please think about these tips, act accordingly and then get on with running or setting up your business.

Phillip Brophy is a Senior Commercial Lawyer and practices extensively in the commercial law and property law. Phillip can be contacted on 9806 7452 or phillipb@matthewsfolbigg.com.au for a friendly discussion. [...]  READ MORE →

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AIRBNB – LEASE OR LICENCE?

Does an AirBnb arrangement create a lease or licence?

Due to the advent of online letting platforms such as AirBnb, short-term rentals have become increasingly popular. However, these kinds of arrangements present many legal ramifications.  The case of Swan v Uecker [2016] VSC 313 is a recent example of how AirBnb can create confusion about whether such arrangements can be classified as a lease or licence.

The Facts:

A landlord leased a two bedroom apartment to a tenant under a lease. The terms of the Lease permitted subleasing but required the consent of the landlord. . However, without consultation with the landlord, the tenant entered into what they classified as “licences” with Airbnb guests. These “licences” allowed AirBnb guests to stay in the apartment for between three and five days and occupy the entire apartment without the tenant being present. As part of the arrangement, all of the bookings were made online, the guests agreed to leave at the end of their stay and the premises were said to be the tenant’s principal place of residence. [...]  READ MORE →

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Property Law – Retail Leases Act Changes

Parties to retail leases need to be aware of amendments to the Retail Leases Act 1994 (NSW) (“RLA”) that have come into effect on 1 July 2017.

Some of the key changes to leasing of retail premises and their effects are identified below:
  • New Lessor Disclosure Requirements– Requires full disclosure in the lessor’s disclosure statement of any obligation of the lessee to contribute to the lessor’s outgoings and prevents recovery from outgoings that are not disclosed. This means a lessee will not be liable to pay any amount in respect of any outgoings unless the liability to pay the amount was disclosed in the disclosure statement for the lease.
  • Turnover Rent – Lessees may find shelter from turnover rent clauses in leases by utilising online transaction which now excludes online sales revenue, except where the goods are delivered from or at the premises (or the Centre) or where the transaction takes place while the customer is at the premises.
  • Minimum 5 year term repealed– The requirement for a minimum term for retail leases has been removed meaning lessees will no longer have the security provided by legislation of guaranteeing the use of a premises for no less than 5 years. Section 16 of the RLA has been removed.
  • Outgoings– Definition extended to include management, operation, maintenance or repair of the retail shop building or land, and other fees charged by a lessor, for services provided by the lessor.
  • More compensation for lessees – Lessors will now need to pay the lessee compensation if they terminate the lease within the first six months, on the basis that the lessor didn’t provide a disclosure statement or because the disclosure statement was incomplete, contained information that was materially false or misleading.
  • Additional ground to withhold consent to an assignment – Where a retail shop lease has been awarded by public tender, a lessor will be entitled to withhold its consent to an assignment if the assignee fails to meet the criteria of the tender.
Other changes to the RLA to be aware of:
  • Agreement for Lease – The RLA will apply to an agreement for lease in the same way that it applies to a lease. Accordingly, a lessor must ensure that it provides the lessee with a lessor’s disclosure statement 7 days before the agreement for lease is entered into. Failure to do so gives the lessee a right to terminate within the first 6 months.
  • Excluded Premises – Premises used wholly for certain non-retail purposes will be excluded from the scope of the RLA, including ATMs, vending machines, public telephones, children’s rides, internet booths, private post boxes and certain storage uses.
  • Market Stalls – The RLA will not apply to stalls in a market unless the market is a ‘permanent retail market’ (as defined in the Act). The RLA has also been amended to allow the regulations to modify the operation of the RLA NSW in relation to shops in a permanent retail market, including by providing for a mandatory code of conduct for lessors and lessees.
  • Return and Registration of Lease– The timeframe for the lessor providing a copy of the signed lease to the lessee has been amended from one month to three months. A lease for a term of more than 3 years will need to be registered within 3 months after the executed lease is provided by the lessee, unless there is delay in obtaining head lessor or mortgagee consent or requirements under the Real Property Act outside of the lessor’s reasonable control.

Note: a retail shop lease is for a term of more than 3 years if, for example, it is for a term of 1 year with an option to  renew for a further term of greater than 2 years.

  • Bank Guarantee– A lessor will now be required to return any bank guarantee within 2 months after the lessee has performed all obligations secured by the bank guarantee.
  • Mortgagee Consent– Lessors are no longer entitled to recover any expenses involved in the lessor obtaining the consent of the mortgagee of the premises leased.
  • Consent to an Assignment of Lease – Amendments to clarify the procedure that must be followed by a lessee and lessor in order to obtain the consent of the lessor to an assignment of a retail shop lease and for a lessee to be released from liability to the lessor after assignment (see ss41 and 41A of the Act for details). If the lessor fails to provide the lessee with an updated disclosure statement, the lessee is now required to prepare its own updated disclosure statement which it must complete to the best of its knowledge.
  • Demolition – The protection given to lessees where their retail shop lease contains a provision allowing a lessor to terminate the lease on grounds of proposed demolition of the property has been extended to a proposed demolition of any part of the building, instead of the building in its entirety. The lessor can only terminate provided the proposed demolition cannot be conducted without vacant possession of the premises.
  • Penalty Notice – There is a greater emphasis on the ability for an officer of the Department of Industry, Skills and Regional Development to issue a penalty notice to a person if it appears that the person has committed an offence under the RLA NSW.
  • Increased jurisdiction of Tribunal – The monetary limit on the jurisdiction of NCAT will be increased from $400,000 to $750,000.
Property Law – More Information

If you would like to discuss the Retail Lease Act changes or want more information or advice from a property lawyer, please contact Anna Zdrilic, a Principal in our Commercial and Property Law Group on 02 9806 7425 or email annaz@matthewsfolbigg.com.au.

DISCLAIMER: This article is provided to clients and readers for their general information and on a complimentary basis. It contains a brief summary only and should not be relied upon or used as definitive or complete statement of the relevant property law. [...]  READ MORE →