Handy Hints on Buying A Home
Lease –vs- Licence
In certain circumstances when buying a property, you may also be required to enter into additional contractual documents such as a lease or Licence to gain possession of the property prior to settlement.
Those with the right to deal and transact in relation to the occupying interest of a property have the power to enter into a contractual arrangement with another party to bind both parties the terms of the agreement.
The terms will be dictated by the individual circumstances surrounding the land and unique needs of the parties.
Certain essential factors need to be taken into consideration when entering into a Lease or Licence. When deciding which agreement is the most suitable option, one needs to know the differences between the two documents.
- is a transfer of right to enjoyment (exclusive possession) of that property by the lessor the lessee, made for a certain term in consideration of a fee subject to the terms set out in the lease agreement.
- grants exclusive possession for a fixed period (term).
- creates an interest in the land which can be transferred to the lessee for the period of the lease.
- can be transferred (assigned) to another party and if registered on the title is binding on a new owner of the land.
- is not revocable (other than subject to any conditions set out in the lease (e.g. a redevelopment clause).
- is the granting of a permission to use the land in consideration of a fee subject to the conditions set out in the licence
- does not grant exclusive possession.
- does not create or transfer an interest in the land.
- is not transferable
- is revocable
- As you can see, the balance of risks and responsibility is varied and the right documents for the specific circumstances need to be drafted by an experienced lawyer who can tailor the agreement to meet all parties concerned.
If you would like to know more about bespoke documents to meet your unique and specific needs, please contact KREISSON to discuss.
Under most Contracts for the Sale and Purchase of Real Property will require settlement cheques be Bank Cheques. It is also most commonly used to pay amounts of Stamp Duty exceeding $600.00.
Cheques in Australia are dealt with under the Cheques Act 1986 (Cth). With increased reliance on electronic forms of banking, the use of cheques has decreased in recent years, so is the knowledge of how to use them. Less than 5% of all non-cash payments are attributable to cheques.
A Bank Cheque is a paper promise issued by a bank and drawn on the bank providing it. It is widely accepted as a means of payment and is a safer alternative to carrying large amounts of cash. Bank cheques can be replaced if they are lost, stolen or destroyed. Fees will apply for replacement or repurchasing.
There are 5 things you need to check on a Bank Cheque to see if it is valid. They are:
- Date – To enable a cheque to be acceptable for depositing into your account, it must not be more than six (6) months old, or post-dated (tomorrow or later). Otherwise it will be known as a “stale” cheque and can be refused by the receiving bank.
- Payee – Spelling must be correct. If you are making a cheque out to a financial institution, anyone with an account with the bank can deposit it into their own account.
- Amount – both numbers and words are to correspond with amount required. Any discrepancy or error may lead to the payment being dishonoured. Make sure the spelling is correct.
- Bank Cheque – If requested to be a Bank Cheque when the payment is for settlement, they need to clearly state the words: Bank Cheque on the face of the cheque. This is drawn against a Bank’s funds, which is often treated as cash because it is drawn upon a bank account and funds are withdrawn immediately. This is why a bank cheque is considered guaranteed funds.
- Signed – All cheques must be signed and if payable for a sum over $1,000.00 they must be signed by a person, not digitally signed.
Banks can still dishonour a bank cheque that has been fraudulently and materially altered. You should deposit cheques promptly after settlement to minimise any fraudulent activity.
Most contracts allow for one final inspection of the property within the final week leading up to settlement. This is important, whether vacant possession is being provided or not, as the responsibility of any outstanding repairs will be passed to the incoming Lessor on settlement.
If the property is being provided with vacant possession, you need to ensure:
- Inclusions – Check the front page of the Contract. It lists the inclusions that should remain in the property. Anything not affixed to the property or listed as an inclusion that is standing on its own weight should be removed. Make sure the agent has keys to open all locks. Ensure the prize plants are still in the garden
- Condition – Under the terms of the contract of sale, the vendor must deliver the property to the buyer at settlement in the same condition it was in on the day of exchange of contracts, except for fair wear and tear.
If anything is damaged since the pest & building inspection prior to exchange, take photos and send them through to your solicitor as we they retain money on settlement to have them repaired.
- Vacant Possession – The property has been sold vacant. This means nothing but inclusions and fixtures. It is frequently the case that a vendor leaves junk or debris hidden in the property. Open cupboards and draws and especially check the garage and sub-space areas for junk.
- Plumbing – Check the toilets flush and the taps work. If you had a building inspection done prior to exchange, the building inspector should have checked all was in working order. Test the hot water is actually hot. Look under the sinks to check for leaks.
- Electrical – Take your phone charger and make sure all the sockets work. Switch on all lights and the range hood. Test the exhaust fans and smoke alarms.
Make sure you have your property fully insured as at the date of possession or settlement. The risk passes to you and you do not want any gap in insurance. Even if it is an investment property, a thorough final inspection will highlight any potential future repairs that your tenants may require and once the matter has settled, the burden lies with you.
This communication is sent by Kreisson Legal Pty Limited (ACN 113 986 824). This communication has been prepared for the general information of clients and professional associates of Kreisson Legal. You should not rely on the contents. It is not legal advice and should not be regarded as a substitute for legal advice. The contents may contain copyright.