Ever wanted to know the best way to secure a Loan to your children for purchase of their home?

Make sure that you have a formal Loan Agreement with conditions or a term for repayment and it is not just in writing and repayable on demand.

Have you ever wondered how long you can be chased for a debt or how long you have to recover your unpaid debts?

In most states in Australia, the limitation period for debts is for six (6) years, except in Northern Territory where it is for three (3) years. This means that the creditor can pursue the debt from six (6) years from the date of when:

1. The debt became due and payable; or
2. The last date a payment was made towards the debt; or
3. The date the debtor acknowledged in writing that they owed the debt.

It is imperative that you get the calculations correct, as failure to establish the limitation period, may mean that you will be unable to successfully recover your debt and the debt will become statute-barred.

A statue-barred debt is when the debt becomes older than the limitation period in your State or Territory (being six (6) years in all states in Australia, except in Northern Territory where it is three (3) years). Therefore, a creditor will no longer have legal right of recovery for a statue-barred debt. However, if the debtor acknowledges the debt in writing, or makes any payments towards the debt, then this resets the clock on the six (6) year limitation period.

References:

• Section 10 of the Limitation of Actions Act 1974 (QLD)
• Section 35(3) of the Limitation of Actions Act 1974 (QLD)
• Section 36 of the Limitation of Actions Act 1974 (QLD)

We recommend a formal Loan Deed and Mortgage registered on title to the property. That way, it is very clear the legal rights of enforcement should the child divorce or die and the property becomes part of a dispute. Call us today on 07 3839 7555 if you would like to discuss this further.

The economy has bounced far better than everyone expected and this has resulted in a surge in property buying. As the economy expands, the more frequent speculative option of buying “off-the-plan” has become . Instead of trawling through open homes to find the diamond in the rough, you might get in on the ground floor  by choosing your property from computer generated plans and images in a new  development. Whilst this can offer a great opportunity, there are some warnings that need be considered. Here are some of our top tips for off the plan purchases!

1. Builder: The builder (as distinct from the seller) will be the person responsible for the actual bricks and mortar work. Quality between builders can be as stark as black and white so you want to make sure that the builder you are signing up with has a good reputation. Check some of there previous builds. How is there rating on social media? You should give us a call to see if they have any pending litigation against them.
2. Display Unit: Not all developers use a display unit, but if they do, be sure to do a thorough inspection and take lots of photos! Get a sense of how the layout feels in real life as this is hard to gauge from architectural drawings. Note the size of the rooms, specifications and location of appliances. Even small things are important such as the way the toilet is facing in the bathroom. For small units, this can be critical!
3. Completion Date: The hardest thing to get used to when buying off the plan is the lead time between putting ink to paper and getting those beautiful new keys (or, more commonly, access codes). I have never met a more optimistic group than the developers of these projects. Take the estimated completion date and double it. “We are hoping for practical completion by March” – assume they mean by Christmas. This is not usually an issue, if you plan accordingly. But whatever you do, don’t give notice to your landlord just yet.
4. Sunset Date: This is the date under the contract that the project must be completed by (this can give you a time frame for completion from the anticipated completion date to the sunset date). But beware, most contracts contain a provision that allows for the sunset date extension which is at the seller’s discretion. In other states, there are statutory restrictions on the sellers right to terminate under a sunset clause.  In Queensland it is a maximum of 5 years 6 months. This will usually happen where a sunset date is reached and, under a booming property market, the price the Seller received for the contract some years ago is way under the current market value.  Although some protections exist in legislation the contract should be reviewed by a solicitor prior to signing to ensure you will not be stranded come sunset date!
5. Deposit: It is common that a deposit is paid to secure your interest in the property. We have seen deposits range anywhere from $1,000.00 to 10% of the purchase price. On a 4-million-dollar unit for example, that is a lot of cheddar. It is important, therefore, to ensure that the deposit remains in the Agent or Seller solicitor trust account, and not released to the Seller. Should the contract not proceed, you want the deposit to be readily available for refund.
6. Disclosure Statement: this is a requirement of the Seller and must contain their names and addresses, identify you as the buyer, identify the unit you are buying and put in writing their claims and promises about your prospective title. It will usually contain a draft strata plan showing the proposed location of your unit (your proposed lot), and its position relative to the rest of the building. It includes expected body corporate adminstration and sinking fund levies. This is useful to consider where you are for the purpose of access to other facilities in the building including any views that you might get and natural light into the building. It is also important to consider, if you have an included car park or storage facility, where your lot is relative to those features. This will not always be available at the time you sign the contract.
7. Finishes: The contract will contain a schedule of fixtures and finishes. A detailed schedule is important to manage your expectations as to the finished product. Comprehensive review of this document will help avoid arguments and disappointments on completion.
8. Changes: Contracts are drafted for the benefit of the Seller and usually allow a lot of changes (often without consultation with or fiscal reparations to the Buyer). These can be anything from alteration of the schedule of finishes, altering dimensions of the property, total number of units in the building and location of the lots, address of the property and location or creation of easements. In Queensland however, a change to the initial disclosure statement that will cause material prejudice (think significant disadvantage), you may have a right to terminate  provided you act within the time limits. (30 days after you receive notice of the change or before settlement).  
9. Defects: Defects need to be notfied  within specific time frames and the contract should provide for a procedure in this regard. Check the contract to ensure you have sufficient time to discover and raise issues (no less than 3 months ideally).
10. GST: whilst most contracts will quote the price inclusive of GST for residential units, it is important to make sure this is the end of the story. A review of the GST clause in the contract is essential as you do not want to end up with a 10% shortfall come settlement. 
11. Insurance: In Queensland, we have a statutory building regime that protects new homeowners from defects in building works, or failures to complete the build. However, it is important to note that the cover  will not cover multiple unit dwellings of more than 3 storeys. Body coporate insurance is madatory but searches will reveal the extent of the insurance policy. Teinterior of the ujnit and claims for public liability are up to you as the buyer so make sure you get insurance cover, including all appliances.
12. Construction: the agent will be a good source of updates during construction, so keep in touch with them throughout the process as they will have an idea if the build is on schedule. They have a vested interest in ensuring your matter reaches settlement!
13. By-Laws: Most contracts will contain a draft of the building rules (By-laws). Make sure you review these carefully and consider if they will suit your living arrangements, especially in regard to pets.
14. Stamp Duty: this is payable on top of the purchase price and usually represents a significant contribution to the Buyers costs. This will be due and payable 30 days after the contract becomes unconditional or on settlement whichever is sooner. Usually, off the plan contracts will not become unconditional until either registration of the plan and issue os titles and certification for occupation has occurred. Remember to check with your solicitor prior to signing.
15. Finance: This is an important (and often overlooked) consideration, especially when your contract may span several years. Whilst pre-approvals are a great indication of your ability to complete at the time of contracting, be warned – they have expiration dates. Most top tier financiers attach a 90-day acceptance period in which to go from formal approval to settlement. After this time, you run the risk of needing to reapply and your circumstances changing. Including a finance clause which is timed based on the registration or final certification date is the safest way to ensure you have the funds to complete or an out if necessary. 

If you are thinking of investing in an “off-the-plan” unit, contact Katherine of our office for a comprehensive review of the contract prior to singing. Email Katherine.Blood@Perspectivelaw.com Knowing your rights and obligations now, can go a long way to saving some headache and heartache in the future.

Picture this: it’s Saturday evening. You are waiting nervously next to your phone with a glass of wine to take the edge off; waiting anxiously, after seeing your dream home at an inspection that morning. Why so serious? You have submitted an intention to make an offer to the Seller and the next call you want is from the agent with your offer, on contract, ready to sign. But before you embark on the road towards the Australian dream, whether for the first time or the fifteenth, it is important to check the wording.  I aim to unpack three of the big clauses that will feature in the favoured contract used by Queensland Agents – The REIQ contract of Sale.

As a golden rule, I’ll start with the Finance Clause or, known in the legal world, as “Clause 3”. This is a heavy hitter. It can help all your dreams come true or could potentially be the subject of your worst nightmare. So what are the basics? In a nutshell, your contract will be subject to finance when all three components of the “finance” section in the contract reference schedule are completed. This is critical. I have seen the disastrous effects of an incomplete finance clause and you do not want to be on the pointy end of that knife. So that seems easy enough. Three blank spaces, three simply entries, right? Wrong! As a buyer (or agent for the buyer) completing this clause, you want to keep the clause general to ensure you don’t unintentionally hitch your wagon to the wrong horse. In the recent case of Hauff & Anor v Miller^[1] the contract specified ING as the financier (instead of the more popular entry of financier of “buyer’s choice”). The buyers instead, applied to Rock Building Society, on the presumption that this application would be more successful. When the finance approval had not been received within the time frame stipulated in the contract, the buyers commenced steps to terminate the contract. Without getting into the finer details, the key takeaway was that as the Buyers had not applied to ING as noted on the contract, the court considered that all reasonable steps were not taken, and therefore their termination was not lawful.

This leads us to the next point. Clause 3.1 provides that the contract is conditional on the buyer obtaining approval for finance on terms satisfactory to the buyer providing the Buyer takes all reasonable steps. The Finance clause has often been seen as an easy way to exit the Contract. Often, this is not legitimately used, to the success of the Buyer to terminate a contract. However, the test is two-fold as the cases establish. There must be a reasonable attempt. Firstly, use generic terminology in the reference schedule. We suggest for the amount “sufficient to complete” and  “buyers choice” for financier. Although your banker or finance broker says to allow two weeks for finance approval, this will more likely mean 3 weeks. My advice is to err on the side of caution and add the extra time. You can always satisfy your condition early if you need to. Do not delay in your application. Whilst you may not necessarily need to show you were “declined” for finance, you must show that you have acted reasonably (and in other contracts such as the ADL, you may need to show an actual decline letter). The subject to finance clause is wonderful, albeit essential if you do not have the funds required to complete the purchase. But as with most things in law, there is an ongoing requirement to act in good faith and always check the terms you have agreed to. Be sure and contact us before you sign the contract even though you like the virtual inspection. If you need any assistance regarding REIQ contracts, feel free to email me at Katherine.blood@perspectivelaw.com or call direct on 07 3317 4306.

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[1] Hauff & Anor v Miller [2013] QCA 48

Finally the Voluntary Assisted Dying Act (VAD) has come into force in Queensland after much debate and news coverage. But when does it start and what does it allow?

The commencement date for the legislation is important because it excuses medical practitioners from liability or criminal offence if they follow the procedures set out in the Act and regulations. The Act does not commence until January 2023 so there is a lot of time to see how this will work.

The principles that underpin this Act:

• Human life is of fundamental importance;
• Every person has inherent dignity and should be treated equally and with compassion and respect;
• A person’s autonomy, including autonomy in relation to end of life choices, should be respected;
• Every person approaching the end of life should be provided with high quality care and treatment, including palliative care, to minimise the person’s suffering and maximise the person’s quality of life;
• Access to voluntary assisted dying and other end of life choices should be available regardless of where a person lives in Queensland;
• A person should be supported in making informed decisions about end of life choices;
• A person who is vulnerable should be protected from coercion and exploitation; and
• A person’s freedom of thought, conscience, religion and belief and enjoyment of their culture should be respected.

It is important to note that the Powers of Attorney Act is not an Act that applies to the VAD Act, which means an attorney cannot give consent to assisted dying under this legislation as per section 159. This is also not a matter that is able to be decided under the Guardianship and Administration Act, if a person has a guardian appointed or the Public Trustee is acting where the person has lost capacity.

The way it will work is that a person who is affected by disease or illness can make a first request to a medical practitioner for voluntary assisted death, strictly under the terms of the Act. The major purpose is to ensure consent is properly obtained and that prohibited drugs are controlled as per the Medicines and Poisons Act 2019.

A death under this Act is not a “reportable death” under the Coroners Act 2003, meaning it is not to be investigated or requiring an autopsy. Grim stuff but someone has to make these decisions!

Section 155 states that “technical errors” or minor compliance issues will not affect the ability of a medical practitioner to assist with the process of dying of a person.

The “effectiveness” of the Act will be reviewed after 3 years by the relevant minister.

Probably one of the most important sections is:

149 Protection for health practitioners and ambulance officers:

1. This section applies if a protected person, in good faith, does not administer life sustaining treatment to another person in circumstances where:
   • the other person has not requested the administration of life sustaining treatment; and
   • the protected person believes on reasonable grounds that the other person is dying after self-administering or being administered a voluntary assisted dying substance in accordance with this Act.
2. No civil or criminal liability attaches to the protected person for not administering the life sustaining treatment.

So, good protection for front line health workers.

147 Protection for persons assisting access to voluntary assisted dying or present when substance administered.

Criminal liability does not attach to a person only because:

1. The person, in good faith, does an act or makes an omission that assists another person who the person believes on reasonable grounds is requesting access to or accessing voluntary assisted dying in accordance with this Act; or
2. The person is present when another person self-administers or is administered a voluntary assisted dying substance under this Act.

There are however various offences for giving prescribed medicines without obtaining proper authority, inducing consent, giving false or misleading information. This has a potential penalty of up to 7 years imprisonment.

The act provides for a review of decisions to QCAT regarding a person seeking access to voluntary assisted dying. This is to determine eligibility to apply including whether the person had the required capacity to seek consent or there was coercion or other intervening issue. The person must be an Australian resident for at least 3 years prior to the application and a Queensland resident for at least 12 months.

The procedure requires a First Request and First assessment by a qualified medical practitioner and then a follow up second request and final assessment before the process of voluntary assisted dying can occur.

Medical practitioners and qualified nurses can administer the prescribed medicines to assist the voluntary assisted dying process.

The key is a determination of capacity to make the final decision:

11 Decision-making capacity

A person has decision-making capacity in relation to voluntary assisted dying if the person is capable of:

1. Understanding the nature and effect of decisions about access to voluntary assisted dying;
2. Freely and voluntarily making decisions about access to voluntary assisted dying; and
3. Communicating decisions about access to voluntary assisted dying in some way.

The person is to be “suffering” meaning suffering, caused by a disease, illness or medical condition, includes a physical or mental suffering; and suffering caused by treatment provided for the disease, illness or medical condition.

10 Eligibility

A person is eligible for access to voluntary assisted dying if:

1. The person has been diagnosed with a disease, illness or medical condition that is advanced, progressive and will cause death; and is expected to cause death within 12 months; and is causing suffering that the person considers to be intolerable;
2. The person has decision-making capacity in relation to voluntary assisted dying;
3. The person is acting voluntarily and without coercion; and
4. The person is at least 18 years of age.

Under section 8, voluntary assisted dying is not taken to be suicide and this will have an impact on many life insurance policies.

Please call us today on 07 3839 7555 if you would like to know more about this Act.

From both the perspective of a potential Landlord or a tenant, an Agreement to Lease is often an important document that can highlight key points that are in agreement, prior to a Lease being prepared. If done correctly, it can reduce the points of negotiation or amendment that may be necessary after the Lease, as well as the costs involved. However, if not properly drafted, a tenant or a landlord may find themselves either:

1. unintentionally bound to a lease or lease terms; or
2. being unable to enforce the Agreement once the other party decides to not proceed.

When should there be an Agreement to Lease?

An Agreement to Lease is common for both commercial and retail shop leases as it allows the parties to agree on key terms prior to a Lease being drafted. It is especially common when there are remaining conditions, which prevents the immediate start of a Lease including:

• fit-outs or other works required by the Landlord or Tenant prior to commencement;
• an existing Lease yet to expire; or
• finalising the conditions required before a Lease can commence such as:
  • In a Retail Shop Lease – review of the Landlord’s disclosures;
  • Deposit requirements;
  • Bank Guarantee or cash bond; and
  • Evidence of insurances as agreed.

What is included in an Agreement to Lease?

While an Agreement to Lease serves as a precursor to a Lease to be executed (and registered if required), key elements should still be specified including:

• Parties’ details;
• Rent and review amount;
• Estimated Outgoings and the tenant’s required contribution;
• Term including any options for renewal.

If specific work or condition is required during the period between the signing of the Agreement to the Lease being formalised, then those conditions should also be specified within the Lease.

I have changed my mind since signing the Agreement to Lease – is it binding?

Whether an Agreement to Lease is binding on the parties will depend on if the agreement intends to bind the parties and if there are any conditions to be fulfilled beforehand.

Commonly, the Agreement to Lease will not be binding immediately on the parties but will instead be binding upon specified conditions being fulfilled. Examples of conditions, per the above paragraph, can include the tenant’s requirement to pay a deposit or the fit-outs being completed within a certain time frame.

In other cases, the Agreement may make it clear that no parties intend to be bound to the Agreement to Lease until the formalising and the signing of the Lease itself. In this case, the Agreement to Lease serves as a drafting tool for the Lease in the current points that are in agreement. Such Agreements may set out the rights of termination, including a right to terminate if a Lease is not formalised within a specified time frame.

Lastly, an agreement can intend for the parties to be immediately bound upon signing. In a Queensland case in Colvin v Lennard & O’Brien the prospective tenant withdrew from an agreement two days after signing an agreement to lease. The Court found that the agreement intended for the parties to be bound on the basis that the agreement:

• contained all key terms including the property, the parties, the lease period (including the commencement date), rent & outgoings; and

• contained signing clauses by both parties in the form of an execution page that was akin to an offer and acceptance.

While the agreement contained conditions to be fulfilled before the Landlord passed on the possession of the Premises, it had no conditions precedent for it to be binding.

As the landlord in the case was unable to find another tenant from July 2006 to January 2007, the tenant was ordered to pay the equivalent rent and outgoings plus interest totalling over $150,000 plus costs.

To avoid a similar catastrophe arising from an Agreement to a Lease, it is important to ensure that all key terms are highlighted and understood by seeking legal advice, especially as many agreements are prepared by one of the parties or a commercial agent that may be involved.

If you have any concerns before signing an Agreement to Lease and whether the agreement will be immediately binding on you, please do not hesitate to contact us at brisbane@perspectivelaw.com

23 August 2021 to 29 August 2021 is ‘Wills Week’ and a timely reminder to anyone who needs to update their estate plan. 

1. What documents are included in my estate plan?

Your estate plan includes more than just your Will.  It also includes:

• Enduring Power of Attorney – who is appointed to make decisions on your behalf in the event you become incapable to make those decisions;

• Advance Health Directive – who is appointed to make specific medical decision on your behalf;

• Death Benefit Nominations for your superannuation;

• Statement of Wishes;

• List of Specific Gifts;

• Digital Asset Register;

• Trust Deeds and Deeds of Variation;

• Business Succession documents.

2. When should I update my estate plan?

While we future-proof your estate plan as much as possible when drafting, circumstances change and it is important to review your estate plan every 3-5 years.  Your estate plan should also be reviewed when specific events occur, including the following:

1. If you have a significant change in your assets.

You may have left a specific gift (particularly real estate) of one asset to a beneficiary and you have since sold that asset.  You may have new companies or family trusts and need to deal with the gifting of shares or control of the trusts in your Will.

2. Significant change in your personal and family circumstances. 

There may be new children or grandchildren that you want to include.  You may need to update your enduring power of attorney so that your attorney can provide benefits for the needs of your new child.

A beneficiary may have passed away or no longer be part of the family through divorce.  One beneficiary’s needs might have changed meaning they need a greater share of the estate.

3. Change in your relationship, including marriage, divorce or separation. 

It is important to note that divorce can render certain clauses invalid.  Marriage can revoke part of a Will, unless your current husband/wife is your executor and beneficiary or unless your Will states that it was made in contemplation of your marriage.  This can lead to parts of your Will being valid and other parts subject to the rules of intestacy. 

Separation does not revoke your Will.  Parties need to wait 12 months from separation before they can file for divorce.  It is particularly important on separation to update your estate plan to ensure your former spouse does not remain your attorney, executor or beneficiary.

4. Changes to your attorney or executor. 

Acting as attorney or executor can be an onerous task.  It may be that your attorney or executor is no longer suitable for or willing to undertake the role.  Has your estate become more complex? Have the circumstances of your executor changed, such as health circumstances or a job with significant travel?

5. Lapsing nominations

Superannuation is treated differently from the rest of your estate.  You can specify how your death benefits are to be distributed on your death through ‘death benefit nominations’.  Depending on your superannuation fund, some nominations lapse every three years.  It is therefore essential to update your nominations regularly to ensure they remain in effect and do not expire.

3. Do I need to prepare a whole new Will?

Sometimes it may be necessary to complete a new Will which has the effect of revoking any previous Will you have made.  If the change is only minor you can execute a Codicil, which is a separate document that either adds extra clauses or changes existing clauses in your current Will.  It is important that you do not make any handwritten amendments to your Will which could invalidate the document.

A valid and up-to-date estate plan is an investment for your future.  It ensures that your wishes can be carried into effect and that your proposed beneficiaries are able to receive the distributions you have provided for them.  This also makes it easier for your attorneys and executors and can make the administration of your estate smooth and cost-effective.

We would be delighted to assist you updating your estate plan.  Please email Lauren Nolan at lauren.nolan@perspectivelaw.com if you have any questions.

Now a “Who’s Who” in the contract clause “zoo” would be incomplete without a quick coverage of the other big addition to most residential sale contracts. The “peas” to the finance conditions metaphorical “carrots” if you will. Of course, I am referring to the Building and Pest condition, or Clause 4. Similar to the Finance condition, the contract being subject to the results of Building and Pest inspections is dependent on the inspection dates being completed in the reference schedule. Clause 4.1 requires the buyer to obtain a written report from a building inspector (and pest inspector, although often they are in the same report) on terms satisfactory to the Buyer. The Buyer is required again to act reasonably, but subject to this requirement, may terminate the contract should the report be unsatisfactory. A few points to note on this. Unlike some other contract forms (read: the ADL sale contract) the REIQ sale contract does not require the provision of the report in order to activate any purported termination by the Buyer. However, it should be noted that if the seller actively requests the report, it is required to be provided to them.

The second noteworthy issue with the Building and Pest clause that deserves mention, and indeed, another point of difference between these two contracts is their approach to white ants. With ADL contracts, the risk of white ants is insufficient to terminate the contract. The REIQ version however is silent on this point, the suggestion being that a buyer acting reasonably, may be able to terminate on the same grounds. Another issue that often arises is the Building Approvals, or rather, the lack of building approvals. It is important to note that as a general rule, finding out that a property contains unapproved structures (for example, a shed without the appropriate council approvals) will not be grounds to terminate under the Building and Pest condition. Whilst I have seen some exception to this where a very diligent building inspector (already, you can see the rare terrain we are navigating here) has raised this in their building report, this is often not the case. Even raised under the report, grounds for termination as a result of the note is tenuous at best. The better option to avoid disappointment, and potentially costly litigation, would be to include a separate condition making the contract subject to an inspection of the council records (otherwise known as a “due diligence” clause).

Notwithstanding the above distinctions, it is clear that a recurrent thread bleeds through both the Finance and the Building and Pest clause, and that is the overarching requirement to act reasonably or in good faith. Neither of these clauses should be used as a veritable ‘wild card’ to escape your contractual obligations.

Finally, in the new age where Electronic Conveyancing or PEXA is fast becoming the platform of choice for effecting settlements (every solicitor’s dream), one cannot look past the clause that makes it all possible, Clause 11 or the Electronic Settlement Clause. As I promised brevity at the start (and am fast approaching a word length that really blows that promise out of the water) I will refer you to my learned colleague’s detailed article on PEXA that you can read on our Blog. But for now, I will say this. PEXA has a host of amazing benefits not the least of which include:

1. No need to sign paper documents including a Transfer;
2. Faster access to your funds,
3. Instantaneous (or veritably instantaneous) lodgment of documents;
4. Minimal paperwork;
5. No bank cheques (my personal favourite); and
6. All completed online (in a post-COVID world, a true blessing).

In an increasingly uncertain time, it is important to insert some stability in your life where you can. How can this be achieved you ask? First and foremost, ensuring you are using a contract that provides for Electronic Conveyancing platforms. In the REIQ sale contract, that is covered in Clause 11. However, as with everything in Law, this is not the end of the story. Clause 11 provides that reliance can only be activated, by agreement between all parties: that is, buyers, sellers and both banks, where required. This means that in order to take advantage of this great platform, you need to ensure agreement can be guaranteed. To achieve this end, I recommend including a special condition that mandates the operation of clause 11. Of course, this is only recommended where you know your solicitor and bank can comply with such a requirement.

The second point worth noting in relation to Clause 11 is the waiver at 11.5 which allows a party to withdraw from the Electronic Settlement with 5 Business days notice to the other party. Obviously, this can be incredibly inconvenient and costly, especially close to settlement. To avoid this last-minute change (and cost) I recommend including in your special condition, a clause to remove the application of this provision from the contract.

At Perspective Law, we understand the importance of contract review prior to signing. This will give you the opportunity to discuss anything that might be of concern at the property. The standard contract clauses are incredibly beneficial, especially to the buyer. But as I hope this article has shown, Law is a fickle mistress. What may work well for one situation, may not be suitable for you. Perspective Law takes a horses-for-courses approach. We tailor the solutions to suit your problems and approach each matter as if it where our own. If you need any assistance regarding REIQ contracts, feel free to email us at Katherine.blood@perspectivelaw.com.

You may have heard of the term “PEXA” hovering in recent news or in the Australian Financial Review, specifically as the PEXA Group Ltd went public in an IPO on 1 July 2021. So, what exactly is PEXA, how does it work, and why does it matter to you where you are looking to sign a contract to buy or sell a property?

The What…

The PEXA Group Ltd provides the service of the same name, which stands for Property Exchange Australia, and was developed to serve as an electronic platform for a property transaction in Australia.

The first transaction via PEXA was in November 2014 and while it took time for property lawyers and conveyancers to learn the new process,  in 2021 most firms and banks in Australia now use PEXA as the preferred method for property transactions.

In NSW, the usage of PEXA has been mandatory for all property transactions since 2019, and it is expected that the rest of Australia will grow more into e-settlements in the future.

The Why…

1. Convenience – transactions online have obvious conveniences over the traditional settlement requiring hand signed papers, cheques and postage. The parties are no longer required to meet in person on the settlement date to exchange documents and therefore the transaction is much less susceptible to delays for unexpected events (such as lockdowns or indoor restrictions in this current pandemic).

Electronic payments on the day of the settlement, also means that the settlement funds will clear faster, compared to depositing bank cheques which may take up to 3 business days to clear.

2. Accuracy – In PEXA, all parties are in one electronic platform, including the buyer, the seller, incoming and outgoing banks, where all parties can see visually the progress of the transaction and the next steps. In our experience, this availability of information and transaction status, decreases the risk of errors or miscommunication between parties and potential delays. All communications are through the platform, so messages through phone calls or emails do not get missed and parties are all given live information immediately.

3. Costs – while PEXA has fees associated with its service ($117.92 for Transfers as of 1 July 2021), in our view, this fee easily offsets the usual costs associated with traditional settlements including, fees for settlement agents, postage and administrative work, associated with preparing cheques and paper documents.

The How…

In states where PEXA is not mandatory (including Queensland), a property transaction can only occur via PEXA if all parties in association with the transaction agree to use and are registered to use PEXA (or has an agent that is registered). If your lawyer appointed for your property transaction is registered with PEXA, they will first confirm with you whether you are agreeable to proceed with an electronic transaction.

If having your property transaction proceed via PEXA is necessary because of a remote location of a party, you should request your lawyer or the  estate agent insert into the Contract,  a special condition requiring that PEXA must be used. This will ensure that all parties can only engage firms that can use the platform.

Perspective Law is one of the earliest users of PEXA in Queensland and we have highly experienced lawyers that will be able to assist you in your property transactions. If you would like to enquire about a potential property contract or have any questions about PEXA, please do not hesitate to contact our office on (07) 3839 7555.

If you have a valid will, you may assume that when you die your superannuation will automatically form part of the estate. However, this is not the case. Where you have not made a Binding Death Benefit Nomination, the superfund trustee has the power to decide who receives your retirement savings. This will be the case even where you have a self-managed superfund.

Unlike the executors of your will, the trustee is under no obligation to take your wishes into account, meaning your entitlements may not be distributed to your intended beneficiaries. For this reason, it is important that you nominate a beneficiary to ensure your superannuation is distributed in accordance with your wishes.

Requirements for a Valid Binding Death Benefit Nomination

When you create a Binding Death Benefit Nomination, you don’t have the power to nominate just anyone as a beneficiary. In order to be valid, you must only nominate someone who is considered your ‘dependant’. In the context of superannuation, a dependant can include your spouse or de facto partner, your children, any person who is financially dependent on you, a person with whom you have an interdependent relationship, or as is often preferable, your legal personal representative. Failure to comply with this requirement could render your nomination invalid.

Once you have determined who should receive your superannuation, you will need to ensure your nomination is signed in the presence of two witnesses over 18 years of age. These witnesses will be required to each complete and sign a witness declaration. It is common for people to assume that they can have their beneficiaries witness the nomination, but this is not the case. To preserve the validity of your nomination, it is essential that witnesses be entirely independent.

Importantly, a Binding Death Benefit Nomination will not become immediately valid after it is signed. It will only take effect once received by your superfund’s trustee. You must make your nomination in writing, clearly setting out the proportion of benefit to be paid to each person nominated. In most cases, your superfund will have a standard form where you can your nomination.

Provided your Binding Death Benefit Nomination satisfies these requirements, it will generally be binding for three years or until you change, update, or revoke it. The trustee will be bound to follow the instructions contained within your nomination even if your circumstances have changed. For example, if you have separated from your spouse or de facto partner but are not yet divorced, your ex-partner may still be entitled to the benefit. A divorce, however, will nullify your nomination. For this reason, it is essential that you regularly reassess your nomination to ensure the protection of your superannuation.

Taxation of Superannuation Death Benefits

It is important to make the distinction between the definitions of a ‘dependant’ within tax law and superannuation law. There are a number of similarities between the definition of dependency within these contexts. For example, your spouse or de facto partner, any children under 18 years old, and persons in an interdependency relationship are all considered dependants under both superannuation and tax law. However, while children over 18 years old will always be considered dependants in the context of superannuation, this is not necessarily the case for tax law.

Tax law provides that your dependants may pay a lower tax rate for superannuation death benefits compared to non-dependants. Many people presume that this means that nominating a legal personal representative as beneficiary will negatively impact dependants seeking taxation benefits. However, tax law adopts what is called the ‘look through’ approach.  In determining the amount of tax payable by your beneficiaries, the ‘look through’ approach considers whether the final recipient of your superannuation disbursement is a dependant according to tax law. Therefore, even where a legal personal representative is nominated as your sole beneficiary, your dependants will still be eligible to receive taxation benefits.

Perspective Law specialises in establishing clear and comprehensive estate plans individualised to the needs of our clients. If you are interested in nominating our firm as your legal personal representative or wish to ensure your assets and superannuation are adequately protected, please call Tony today on 3839 7555 or email Tony.Crilly@Perspectivelaw.com.

As we have come to expect, the federal Government has enacted further changes to self managed super funds. From 1 July 2021 self-managed super funds (SMSF) are able to have up to six members.  Previously a maximum of four members were allowed.  The majority of funds have either one or two members, usually established for the benefit of spouses.

The increase in members may suit larger families and can decrease the administrative costs of operating more than one SMSF.  However, there are certain matters to consider if you are intending on expanding your SMSF. 

1. SMSF Structure

Members are required to be represented at the trustee level, either by individual trustees or a corporate trustee. For funds with more than one member:

• Each member must be an individual trustee; or
• Each member must be a director of the corporate trustee.

It is important to note that State and Territory Legislation governs the number of trustees that a trust can have. The Legislation should be checked prior to making any change if you currently have individual trustees.  It is likely that a corporate trustee will be required and this is strongly recommended.

The company constitution may stipulate rules regarding meetings of directors and voting rights and these need to be carefully considered.  It is possible for the voting rights of members to be based on their member balance as opposed to each director having one vote.  This is critical when considering th emanagement of the super fund in the context of a death benefit to be paid to the estate of a member or a nominated dependent.

The increase in members can reduce efficiencies in decision making and the management of the fund if the members do not agree on investment or other matters for the fund.

2. Dispute resolution

Steps can be put in place to reduce the difficulties with decision making and to assist in dispute resolution.  This may include tailoring the deed or other documents, including:

• Providing members with exit rights that do not jeopardise investments;
• A co-ownership agreement to deal with assets that are difficult to divide;
• Modifying the constitution for the trustee company regarding decision-making, such as restricted issues, voting rights according to member balances or where a unanimous decision is required.

It is essential that advice be obtained to ensure that adding specific provisions to the trust deed does not cause the SMSF to cease being a regulated fund.

3. Investment

How superannuation is invested can be key.  Having additional members to the fund can provide additional investing power.  The intergenerational transfer of assets can also be tax-effective.

It is important that all members agree on the long-term goal for the fund.  Younger members may seek longer investments or have different interests.  They may be more prepared to invest with a higher risk level.  These differences can cause issues when investing.

4. Paying Benefits

The control of the SMSF after one member dies and the release of their death benefits needs to be carefully considered.  If the remaining trustees have control over the payment of death benefits then there is a risk that they could pay the benefits according to their own wishes.  

Ensuring you have a valid death benefit nomination in place is even more important in a fund with multiple members to ensure that your superannuation is paid in accordance with your wishes. Alternatively you can establish a reversionary pension depending on your dependents. 

It is possible to have your legal personal representative automatically become a director of the corporate trustee on your death.  You should review your trust deed to ensure it provides for this and that the process cannot be hindered by any remaining members of the fund.

5. Conclusion

If you are considering increasing the number of members in your SMSF you will need to review your current SMSF Trust Deed to see what it allows.  SMSFs with several members can provide greater opportunities for investment.  However, it is important that all members understand the purpose of the fund and are able to work well together.  Steps should be put in place to minimise disputes, particularly to cover members who wish to leave the fund. If we can assist you with your SMSF, including establishing the fund or updating the terms of your trust deed, please contact Tony Crilly at Tony.Crilly@Perspectivelaw.com.