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Wednesday, 2 August 2017

More of our top tips for negotiating and entering off the plan contracts

1.    Defects.  With respect to defects normally off the plan contracts will provide that the Developer has a certain amount of time to rectify any defects in the final construction upon being given notice by you the Purchaser of those defects.  Where we see differences between an off the plan contract which is heavily weighted towards the Developer, as opposed to where rights are evenly distributed between the Developer and Purchaser, is the amount of time that you have to bring those defects to the Developer’s attention and also the amount of time that the Developer has to rectify those defects. That period of time can range anywhere from 14 days to 12 months.  It is important that this particular clause provides for enough time for you to make a proper assessment of any defects which exist, after they have come to your attention, and that the Developer then has to rectify those defects within a reasonable time.
2.    With respect to completion or sunset clause it is quite often that the Contract needs to be completed within a certain amount of time.  That is to say, the Developer has a certain amount of time within which they must finish the project before the Purchaser receives a right to terminate the Contract at will.  That period of time or that Sunset Date ranges and differs greatly from Contract to Contract.  It is important to clarify what the sunset clause date is and when the build must be completed so that you are fully aware of your rights to terminate in the event you wish to do so. 
3.    Regarding the payment of the deposit; developers, for obvious reasons, will want their prospective purchasers to pay the full deposit as soon as possible.  However given that the finished product may not be available for a long period of time, often years, it is typically advantageous for a purchaser to insist upon only an initial deposit being paid within the first stage of the project and then the balance deposit being paid at a later date, sometimes months later.  This ensures that your financial assets are not tied up in a project which may not come to fruition for a long period of time, if at all. 
4.    Stamp duty is a relevant consideration.  In Queensland stamp duty is typically payable on the purchase price within 30 days from the registration of your lot in the scheme or on settlement (whichever comes first).  It is highly likely that you will need to pay stamp duty on the Contract prior to settlement.  As stamp duty is often a significant sum, it is important to make sure you have sufficient liquidity to pay that stamp duty when it falls due.  

Monday, 17 July 2017

Our top tips for negotiating and entering off the plan contracts

1.    A cooling off period of up to 5 days applies to most contracts.  If you decide not to proceed with the Contract within 5 days after signing it you can write to the Developer and advise them, and they must accept your termination of the Contract.  However the Developer has the right to charge you an amount up to 0.25% of the purchase price. 
2.    Purchasing a property that has not yet been built comes with certain risks.  One of those risks is that the plan contained in the Disclosure Document is a drawing of a property that is not in existence yet.  The plans and documents contained in the disclosure, including budgets and other body corporate documents, contain the Developer’s vision for a property that will exist at some point in the future.  They are not representations of or guarantees that the property will match precisely these preliminary plans and estimations.
3.    With regards to a deposit the maximum deposit that can be taken from a Vendor from a Purchaser in Queensland is 10% without triggering the Instalment Contract provisions in the Property Law Act 1974 (Qld).  This is the case for both standard residential property purchases and also off the plan property purchases. 
4.    With respect to inclusions, finishes and fittings, although the Contract usually provides some specificity in relation to these things, the Contract also typically provides the Developer with a discretion to alter those finishes and materials in certain circumstances.  That clause is usually checked and balanced by phrasing to the effect that the Developer cannot choose fittings and materials that are of a lessor quality than those contained in the Disclosure Document and the Contract. 

5.    Off the plan contracts usually contain a statement to the effect that the Contract is the entire agreement between the parties.  This clause is significant in that if the Contract does not contain terms that have been negotiated between yourself and the Developer pre-contract, then those negotiated terms and conditions do not apply.  It is important to ensure that any items, terms, conditions, warranties or guarantees which you have negotiated with the Developer prior to entering into the Contract find their way into the substantive content of the contract.  

Sunday, 11 June 2017

Can an attorney under an EPOA make a Binding Death Benefit Nomination?
Our last newsletter explained what EPOA’s and BDBN’s are and their legal effect. Didn’t receive our last newsletter? Contact us and we’ll send our last edition to you personally.

Quick re-cap
An Enduring Power of Attorney (“EPOA”) is a legal document which grants a person (the “Attorney”) the power to make important decisions for another person (the “Principal”) in the event the Principal loses the mental capacity to make their own decisions.

A Binding Death Benefit Nomination (“BDBN”) is an instruction given to a superannuation fund to pay all monies held by them on your behalf to your nominated beneficiaries.

The question
What happens if the Principal has lost capacity and cannot make or renew a BDBN, or more specifically: Can the holder of an Enduring Power of Attorney make a BDBN?

A BDBN is not a document which must be executed by a person personally, as is the case with Wills and Transfers of real property. An Attorney under an EPOA can make, confirm and even amend or revoke a BDBN for the Principal, particularly if there is an express power in the EPOA authorising them to do so.

An Attorney has the power to change the beneficiaries who receive your superannuation on your passing. When creating their Will, most people will assume that the money they have in superannuation will be available to the estate. The Will is then made having regards to the size of the estate.

For example, a person who has $500,000 in superannuation and another $500,000 in real estate and personal property might expect to have approximately $1Million to dispense with under their Will (assume they have used a BDBN to have 100% of their super paid into their estate). That person might provide in their will for payments to their spouse, children, charity or other persons based on that figure of $1Million. If the Attorney amends the BDBN so that the money isn’t paid into the estate, their won’t be enough money in the estate to provide for the spouse, children or charity under the Will, and the provisions of the Will are rendered incapable of completion.

The question highlights the importance of ensuring that any Attorney you choose to appoint is one you hold the highest trust in.

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