QLD: Is your business' lease registered?

A lease which is in a registrable form (a Titles Office Form 7 in Queensland), can be registered on the title for the property. Once registered, the lease is shown as an interest on title, noting the name of the tenant and the commencement and expiry dates, along with the next option term (if there is one). Registration has potential benefits for both the Tenant and Landlord.

Tenant:

If the landlord sells/transfers the property, the new owner/landlord may not be aware of a tenant’s lease. Any lease which is longer than 3 years (including the option periods) is not protected unless it is registered. If registered, the lease interest is said to be “indefeasible” (think… “undefeatable”). For short leases (3 years or less, including the option periods), there is automatic protection (under legislation).

A tenant’s interest can be defeated if it is not protected (either by automatic ‘short lease’ protection or by registration on title), for example, by a new owner (who doesn’t have notice of the tenant’s interest) or by a mortgagee bank who repossesses the property.

If a tenant’s interest is defeated, the tenant may look around for someone to blame, like the original landlord who made contractual promises (which is one reason why registration is potentially beneficial for the landlord too).

Landlord:

Firstly, having all leases registered on title can be attractive to a potential buyer. Property investors (and their financiers) tend to like seeing everything is in order and having a complete record of all leases in existence on title is nice and neat. 

Secondly, if a landlord sells/transfers the property, with an unprotected lease, and the new owner/landlord refuses to honour the tenant's lease and/or option period(s), the original landlord risks being in breach of contract. The breach is that the original landlord promised to provide a lease and/or an option period to a tenant and failed to deliver on that promise.

Ideally, when a landlord sells/transfers, all of their obligations to a tenant are transferred over to the new landlord, but this can depend on the wording of contracts and notices given, and is a messy and uncertain way to deal with the issue. 

Instead, registration of a lease on title serves as a notice to everyone (including, for example, a buyer of the property) that there is a lease interest in existence. The buyer cannot then claim not to have had notice of it. This protects the original landlord from the risk of contractual breach by ensuring the new landlord is aware of, and must honour, the tenant’s lease.

Registration is usually at the cost of the tenant (most lease precedents provide this).

Something to think about! 

As always, you should always seek advice specific to your particular lease/property and your individual circumstances.

Is your Business Name registered?

As most business owners are aware, it is common practice to trade under a ‘trading name’. Not to be confused with a legal name, a trading name relates to your business trading activities. This name can be anything (within reason) and commonly reflects the services or products which your business provides. However, some business owners may be unaware of their obligation to register their business name and the consequences of not doing so (carrying on business under a name not registered can mean a penalty of 30 penalty units which equates to $6,300 currently).

In May 2012, ASIC took control of the registration of business names, incorporating the previous State registers. Having a national register (maintained by ASIC) makes searching for business name availability much easier (and a lot of administrative sense)!

When starting a new business, a name is a very important feature. It typically tells the public who you are and what you do, helping to attract business. If left unregistered, you risk losing out on your desired business name to someone else, as well as committing an offence under the Business Names Registration Act, which can lead to hefty monetary penalties. Registration is a fairly low cost (amidst all the other costs of setting up and running a business).

More information on business name registration can be found at the link below:

https://asic.gov.au/for-business/registering-a-business-name/

Some questions you may be asking yourself:

Do I need to register my Legal Name as a trading name?
No, if trading under your legal name, there is no need for that name to be registered.

Does registering my business name give me exclusive rights to that name?
No, if you want exclusive rights to that name, it is best to register a Trade Mark.

Can I have more than one business name registered to my ABN?
Yes, you can have multiple business names registered to one ABN. 

Can I alter the business name after it is registered?
No, unfortunately once a name is registered it cannot be altered. To get the name which you are seeking, you must apply for a new business name. 

What are the costs of registering a business name?
The cost of registering a business name depends on the timeframe you register for. Currently, a 1-year registration costs $36.00 and a 3-year registration costs $84.00.

Where can I find out about the availability of a business name?
You can find out if a name is registered by searching here:
https://asic.gov.au/for-business/registering-a-business-name/before-you-register-a-business-name/business-name-availability/

It is recommended you also search to see if there is a registered Trade Mark for your desired business name (to avoid infringing a registered Trade Mark). You can search for Trade Marks at IP Australia: https://www.ipaustralia.gov.au/ 

While you're in search mode, it's also a good idea to see if the web domain name is also available!

Special thanks to Myles Heath (law student) for his assistance with this article!

QLD Residential Contracts and the Cooling-Off Period!

Having just celebrated Easter (hope you all had some quality time off), we’re in amongst a bunch of public holidays.

So, it’s probably a good time for a quick ‘refresher’ on how ‘Cooling-Off’ works!

You may (or may not) be aware that there is typically a ‘Cooling-Off Period’ in Queensland under most contracts for residential properties (when buying).

The cooling-off period is not just 5 ordinary/calendar days, but 5 ‘business days’.

A ‘business day’ is a day which is not a Saturday, a Sunday or a Public Holiday (in the place where any relevant act is to be or may be done).

The way we work out the cooling-off ‘period’ is a bit tricky! It usually starts on the business day a copy of the contract is received by the buyer (at any time). It then ends at 5pm on the fifth business day.

It’s best to talk to your solicitor before attempting to terminate under the cooling-off provisions. Usually your solicitor will send the relevant notice of termination for you (if that’s what you want, after weighing up the pros and cons).

Easter example:

The buyer receives the fully signed Contract on Thursday, 18 April 2019 (this counts as business day 1 of 5, not day 0). The cooling-off period ends at 5pm on Monday, 29 April 2019 (business day 5). In addition to the Saturdays and Sundays not counting towards the 5 business days, Good Friday, Easter Monday and Anzac Day also do not count!

‘Cooling-Off’ isn’t as great as it may initially sound. Beware of the termination penalty of 0.25% of the Purchase Price! Any easy way to think of this is $250 per $100,000 of the Purchase Price of the property. For example, for a $500,000 property, the termination penalty would be 5 x $250 or $1,250. This can only be deducted from a Deposit held, so if there is no Deposit held, no termination penalty to be collected by the seller.

The cooling-off period can be waived (given up entirely) or shortened by the buyer, by written notice to the seller.

As with most areas of law, there are exceptions. Below are some examples:

• A cooling-off period does not apply to a contract formed on a sale by auction (or entered into with a registered bidder no later than 5pm on the second clear business day after a property is passed in). 
  
• Some other examples where a cooling-off period does not apply:
• A contract formed because of the exercise of an earlier granted option;
• Where the buyer is a publicly listed corporation (or subsidiary of);
• Where the buyer is the State or a statutory body;
• Where the buyer is buying at least 3 lots at the same time.

Law in QLD - What happens if you die without a Will (and why you shouldn’t)?

If you die without a Will, you are said to have died ‘intestate’. If you die intestate, you don’t have a say over what happens with your estate assets when you pass away.

What are the rules of intestacy?
Certain default rules of succession apply to the estates of those who die intestate (without a Will). As represented below, estate assets will go to the spouse and ‘issue’ (biological children and/or grandchildren depending on who is living), and then in the absence of a spouse or issue, then onward to the parents of the deceased, and so on through to the outer rings. Ultimately, if you have no living relatives when you pass away, your estate assets may pass to the Crown (the Government).

Why you shouldn’t die without a Will:

No executor
Without a Will, you won’t have a validly appointed executor who can take care of the process/paperwork of dealing with your estate. Instead, a person or persons will need to apply to the Court to be appointed as your administrator. There is a default hierarchy as to who the administrator would usually be (a person lower on the list would need to give reasons why they should act instead of someone higher on the list).

No say on how your estate assets are shared/distributed
When you don’t have a Will, you don’t get a choice who receives your estate assets. So, if you’d rather distribute your assets in a way that doesn’t follow the default intestacy rules, such as choosing a brother or sister to inherit your belongings instead of a parent, you should make a Will to provide for this.

Increased stress for your loved ones
When someone passes away it is already an emotional time, and not having a Will can amplify this stress. If you have a Will, the process can run more smoothly, and your loved ones will have one less thing to worry about.

Leaving your children without an appointed guardian
If you have children (or are potentially planning to have them), you can appoint a guardian or guardians in your Will. Naturally, there are other (sometimes very costly) court processes which can assist in resolving who is to be the guardian of your children if you don’t have a Will (or fail to appoint a guardian in your Will). However, exercising a conscious choice in respect of a suitable guardian seems the preferable (and certainly more thoughtful) approach.

More costly administration costs (generally)
Having a valid Will can reduce the financial cost of administration of your estate as, in most cases, there is already an executor appointed (avoiding the need to apply to the Court to appoint an administrator) and a distribution detailed in the wording of the Will. Unless the Will is challenged, this distribution (who gets what) is generally followed.

Foxlaw can assist with Wills and estate planning (the other things you need to take care of besides the Will document itself). We can also prepare Enduring Powers of Attorney. Organising your estate planning ahead of time ensures you don’t add unnecessary pressure on your loved ones at an already difficult time. Hope for the best, but plan for the worst!

Special thanks to Jemma McKenzie (law student) for her assistance with this article!

Preparing your Business for Sale in QLD

Selling your business is an important decision.  It is important you have all the information you need when you decide to sell.  Below are some things you might consider as part of your pre-sale preparation:

1.   Method of Sale

There are two main methods of sale. First is the sale of the business assets themselves (most common), which often (but not always) uses a standard form REIQ Business Sale Contract.  Second is the sale of the seller’s interest in its entity, for example, the sale of the seller’s shares in its company or the sale of the seller’s units in a unit trust.

2.   Due Diligence (Seller – looking at the Buyer)

As the seller, you may assess the likelihood of a prospective buyer obtaining finance to purchase your business.  It might also be wise to consider whether you need to seek out a buyer with a certain level of financial standing and with experience in running a similar business, as your landlord may have certain requirements that the buyer (as a new tenant) must meet. 

3.   Confidentiality Agreement/NDA (Non-Disclosure Agreement)

A prospective buyer may request sensitive/confidential information about your business, so you may wish to review this information with your solicitor and/or accountant before giving a buyer access.  It is often a good idea to have the prospective buyer sign an agreement to better protect your confidential information.

4.   Structure of the Deal

Is the deal plus stock (with a stocktake) or inclusive of any stock (a.k.a. ‘walk in walk out’)?  Have you considered the GST status and is it capable of being a sale of “Going Concern”?  You should seek professional legal and accounting advice, but to oversimplify, to be a “Going Concern” both parties must be GST registered (or required to be), and you as the seller must supply all of the things necessary for the continued operation of the enterprise/business.

5.   Your Lease

Consider whether there are any outstanding ‘make good’ or ‘refurbishment’ provisions.  Is the ‘Term’ of your Lease current (or are you now, for example, a periodic month-to-month tenant)?  Is there an unexercised option (that perhaps should be exercised)?  Should the lease be registered on the title?  Having a pre-sale lease ‘check-up’ is a great idea, as lease issues can really affect the sale process and ultimate outcome.

6.   Plant and Equipment

What condition is your plant and equipment in?  You may need special conditions in the Contract to account for this.  Is the plant and equipment ‘unencumbered’ (fully owned by you)?  Consider whether any loan/finance needs to be paid out or whether the buyer is willing (and able) to assume liability and step into your shoes.

7.   Intellectual Property

Consider the goodwill assets of your business and intellectual property (for example, registered business names, domain names, phone numbers, trade marks, patents, etc).  A useful first step is to ensure that any registrations have not lapsed/expired.

8.   Due Diligence (Buyer – looking at the Seller)

Consider what the Buyer will want to look at. They may wish to see financial records (for example, a Profit & Loss Statement and Balance Sheet [typically the past 24-36 months]), budgets and business plans, details of your accounting and other systems (for example, Xero, MYOB, CRM software, automation software, etc).  Other information which may be useful might include utility accounts, supplier/customer details and insurance particulars.  If you have been trading relying on any verbal/‘handshake’ agreements, it might be a good idea to reduce those to writing and consider whether the buyer will be able to continue to benefit from those arrangements (or not).

9.   Employee Entitlements

What is currently owing to your employees?  Up-to-date information will need to be available so entitlements may be adjusted at settlement (if adjustment is agreed upon).  What documentation is currently in place with employees?  This includes employment contracts, policies, etc.

10.   Restraint of Trade

A buyer paying for ‘goodwill’ will often want the seller restrained from opening up a new business in competition to the buyer, for a period of time after the sale.  An example of this might be a 25-kilometre radius (area restraint) for three years (time restraint).  As a seller, consider what you are willing to offer.  If you offer a more generous restraint, will it increase the ‘goodwill’ the buyer will pay for and therefore the overall price of your business?  Do you need any ‘carve outs’ for activities you intend to continue after the sale completes which should not breach the restraint?

Got more questions on selling (or buying) a business?  Feel free to contact us on (07) 49 278 374 or email us at teamfox@foxlaw.com.au!

Choosing a Conveyancing Solicitor in QLD

Conveyancing is the process of transferring the legal title of a property from one person/entity to another.  Commonly, this process is experienced when buying or selling a home.

Many think the process is simple/straightforward/easy.  It can, however, be pretty involved with so many moving parts.  Having a great solicitor (and supporting conveyancing team) to guide you through the many steps can make all the difference!  This guidance takes a lot (if not all) of the stress out of any challenges/difficulties which may pop up along the way.  It really can help turn any frown up-side-down! J   

Below are 5 key considerations when choosing the 'right' conveyancing solicitor for you:

1. Level of Service and Reputation

Gauge how friendly and helpful they're likely to be.  The first phone call (or email exchange) will often tell you quite a lot.  Seek out the advice of family/friends/trusted advisors etc.  Visit their website.  Check out available testimonials and/or internet/social media reviews (but form your own opinions and take these reviews with a grain of salt).

2. Personality
The conveyancing process can involve a lot of personal interaction, so choose someone you feel you have a good connection/rapport with.  Ideally, seek out someone with technical knowledge and expertise, but someone who also has other positive traits you appreciate in other human beings.  Lawyers are humans after all!   

3. Reliability
Being able to contact and speak with your solicitor (and the supporting conveyancing team) throughout your conveyance is very important.  Technology now allows for the convenience of messaging and emails, but if a problem needs to be dealt with, you will likely appreciate the ability to speak directly over the phone and/or meet up face-to-face.

4. Focus on, and experience in, Property Law
Even though solicitors are qualified to practise across many areas of law, commonly they choose to focus on a small number of areas.  Choosing a solicitor who has a specific focus on property law will mean you are getting the best advice every step of the way and dealing with someone who stays ‘sharp’ by spending ongoing time ‘in the trenches’. 

5. Cost
Ask your solicitor how they charge.  See if they offer a fixed-fee.  If they do, ask for a quote up-front.  Don’t be afraid to ask these questions and be sure to find out what the quote includes.  Make sure you are aware of any additional costs, such as stamp duty, registration fees and search costs.  When comparing quotes, ensure you’re comparing apples with apples!

We’re always happy to chat!  Call (07) 49 278 374 or email TEAMFOX at teamfox@foxlaw.com.au !!!

What is a Power of Attorney?

A Power of Attorney is a document which you sign where you authorise someone else to take care of your affairs and do things on your behalf.  Your attorney effectively steps into your shoes and can make decisions and sign documents on your behalf.  Decisions your attorney makes are legally binding.

How is a Power of Attorney different to a Will?

A Power of Attorney is only valid while a person is alive and is of no use upon your death or incapacity.  After you die, your Will takes over.

What is an Enduring Power of Attorney?

There are two types of Powers of Attorney.  One is a general power of attorney (as discussed above) and the other is an “enduring” one.  A general power of attorney cannot be used after you lose capacity.  On the other hand, an enduring power of attorney keeps working even if you lose your capacity to make decisions.  A good example (or perhaps not so good) is if you had a car accident and ended up in a coma. If you had an enduring power of attorney, your attorneys could continue to sign documents and make decisions on your behalf while you couldn’t.  You might appoint someone under a general power of attorney if you are off on an overseas trip and would like to have someone to sign documents for you while you are away.

Can I appoint more than one attorney?

Yes, you can have more than one attorney make decisions on your behalf.  You can even choose how you would like your attorneys to reach their decisions.  If you have two attorneys, you can say that you want them to make joint decisions and both sign documents together or you can say that you want them to be able to make decisions on their own (either of them separately).  If you have three, you can even require a majority decision.

What happens if my attorney abuses the power that I give them?

You can revoke or cancel the power of attorney document while you still have capacity to make decisions.  If you have lost your capacity, then you can no longer revoke the document yourself.  A person who notices the abuse of power would need to contact a government agency called the Office of the Public Guardian (OPG) for assistance/advice, along with seeking legal advice from a solicitor (where appropriate).

OPG Website: http://www.publicguardian.qld.gov.au/

General and Enduring Powers of Attorney (various forms) are available here: https://publications.qld.gov.au/dataset/power-of-attorney-and-advance-health-directive