KNOWLEDGE CENTRE

6 Key Changes to the REIQ Residential Contracts | Enterprise Legal

On 20 January 2022, the Real Estate Institute of Queensland (REIQ) released new versions of the Contract for Houses and Residential Land (17th edition) and the Contract for Residential Lots in a Community Titles Scheme (13th edition).

The latest editions contain many amendments, but Enterprise Legal considers the following six changes to be the most significant:

 

Pool Safety

Both Contracts now allow for a Seller to provide a No Pool Compliance Certificate to the Buyer prior to the Contract being signed and in doing so, there is no other requirement from the Seller in relation to the pool on the land. The Buyer will no longer have a termination right if the pool is not compliant at Settlement.

If however, the Seller does not disclose that there is not a Pool Compliance Certificate, prior to entering into the Contract, then the Seller will be required to obtain one prior to Settlement, at the Seller’s cost. If they fail to do so, the Buyer will have a right to terminate.

 

Smoke Alarms

From 1 January 2022, dwellings and residential units offered for sale must have smoke alarms installed that comply with the current requirements – these requirements have been getting ‘phased in’ for a number of years now. The new versions of the Contracts specify that should a Seller fail to comply with these requirements prior to Settlement, the Buyer will be entitled to a deduction at Settlement equal to 0.15% of the Purchase Price. Sellers and real estate agents should be aware of this and consider whether it is more appropriate to include a Special Condition fixing this deduction at an amount that has bearing on the actual cost of making the residence compliant. 

 

New Seller Warranty

The new contract editions require Sellers to warrant, as at the Contract Date, they have not received any communication from an authority that may lead to the issue of a show cause notice, enforcement notice or notice to do work. This requirement is a lot broader than previous, which only required a Seller to make a disclosure if an actual notice had been issued. In reality, authorities such as Councils and service providers usually correspond with owners prior to issuing formal notices and this new requirement put the onus on Sellers to disclose any such correspondence. 

 

New Termination Rights

Buyers now have a termination right is there is infrastructure that is unrelated to the delivery of services to the property that passes through the property and such service is not protected by a registered easement, BMS or statutory authority.

Buyers will also have a termination right if any service to the property passes through another property and such service is not protected by a registered easement, BMS or statutory authority.

This means that it is very important for Sellers to complete a ‘Dial Before You Dig’ or similar search prior to entering into the Contract, so that they are aware of the location of all services which may need to be disclosed. 

 

Settlement Extensions

This new concept allows either party to unilaterally extend Settlement by up to 5 Business Days after the Scheduled Settlement Date specified in the Contract.

This mechanism only applies to Settlement and does not apply to other conditions like the Finance or Building and Pest Condition. 

 

Default Place for Settlement

The standard condition has been amended so that is a Seller does not advise the specific location for Settlement (e.g the specific law firm) at least 2 Business Days before the Settlement Date, Settlement will be required to take place at the Titles Office closest to where the land is located. Again, given the erroneous results this condition could result in, we recommend including a Special Condition to amend it.

 

Summary

There has been some significant changes made in the latest REIQ Contract updates for residential dwellings and units and it is important that parties understand what these mean and include appropriate Special Conditions to amend the Special Condition if required. 

Firm Director, Peta Gray and Lead Conveyancer, Adrianna Williamson recently presented a Webinar regarding these changes and recommendations for dealing with those changes. 

 

If you would like to receive a copy of the Webinar recording, or have any further questions about the changes and what that could mean for you, please contact our conveyancing team

☎️ | (07) 4646 2621
✉️ | 

Our team has also made a range of Special Conditions, including the ones referred to in this article, available on our website for your use. 


Defamation in a Digital Age | Enterprise Legal

“Words are free. It’s how you use them that may cost you.”

The monetization of digital social platforms like Facebook, Twitter, TripAdvisor, True Local or other referrer platforms, means that a few ill-chosen online comments can now have global reach and permanent consequences. 

Opinions and views (informed or ludicrous) are freely published, and such words can significantly harm a person – be it reputational or financial. This is easiest to see in the growing industry of ‘influencers’, where the individual’s reputation is intricately linked to their financial worth. 

In Queensland, if you are on the receiving end of false and damaging statements (known as Publications), you may have the right to commence proceedings for defamation even if the publication was physically made outside of Queensland.

 

Defamation

Defamation occurs when a false statement is published which harms your reputation. Defamation on social media has become a regular occurrence and a growing problem, resulting in recent legislative changes.

On 1 July 2021, the Defamation (Model Provisions) and Other Legislative Amendment Act 2021 (Qld) came into force and amended the Defamation Act 2005 (Qld). One of the most significant changes is the introduction of section 10A which requires that an individual has no cause of action for defamation unless the individual proves that the publication has caused, or is likely to cause, serious harm to the reputation of the individual.

For ‘excluded corporations’, which are businesses with 9 or less staff, it must prove the publication has caused, or is likely to cause, serious harm to the reputation of the business, and serious financial loss.

The new result is that minor or trivial reputational harm alleged to be caused by a defamatory publication will no longer give rise to a cause of action in defamation.

It is possible to extend a finding of defamation beyond the original publisher. This means that if another person shares or tags the original post, or adds comments to the post, or even ‘likes’ it or responds with an emoji (such as an angry or laughing face), each action can constitute a separate publication and can see each person liable for defamation.

 

Time Limits

In Queensland there is a limitation period of 12 months from the date of publication and any court action must be commenced within those 12 months, otherwise the claim is statute barred.

 

10 or More Staff

Businesses with 10 or more staff cannot file a claim for defamation and are required to make a claim for ‘injurious falsehood’.

 

To be successful in an injurious falsehood claim:

  1. actual measurable financial loss attributable to the publications, is required; and
  2. the motive of malice to harm your businesses’ reputation by the publishing party, must be proved.

 

Don't Panic

If you or your business has been the target of defamatory comments, we recommend that you make a printed copy of the publication and make a note of the date and time of the online post. You may also wish to do a search of several platforms to see if the comments were limited to one online platform or several and monitor these for several days.

You can reach out directly to the host of the platform for assistance, but generally limited assistance will be provided.

The Defence of Contextual Truth is a complete defence to a claim of defamation, so ensure that you undertake appropriate investigations as to the accuracy or falsity of the Publications as soon as you become aware of the publication. Keep notes regarding your investigative process and conclusions. You may also need to speak with your financial advisor to assess sustained financial losses.

If the post is not removed within several days, please contact us promptly to obtain legal advice as the sooner you act, the better the available outcomes. 

If there is sufficient harm warranting progressing the matter, then a Concerns Notice under section 12B of the Act will need to be issued before any court proceedings can commence. This is a new requirement of the recent amendments.

As at the date of this article, section 35 of the Act limits damages for non-economic loss to a maximum of $250,000.00 which is to be awarded only in the most serious of cases. Exemplary or punitive damages cannot be awarded but any awarded damages are to bear a rational relationship to the harm caused.

 

Do you need professional advice in relation to defamation? Enterprise Legal can work collaboratively with your financial and marketing advisors to assist to limit the damage caused whilst also ensuring your legal rights and interests are protected. Contact EL's Principal Legal Advisor - Disputes, Kirsten Woolston to discuss your options:

☎️ | (07) 4646 2621
✉️ | Submit an Online Request


Enterprise Legal | Business Structures 101: Companies v Trusts v Sole Traders

Let’s be honest – legal entities and business structures can sound like a pretty dry and complicated topic. We can’t really sugar coat that, but we can tell you that if it’s not something that is addressed and set up to suit your business, you could be missing out on some very important advantages, and exposing your business and your assets to more risk than is necessary. Stick with us on this topic – it can be the difference between a business that thrives and a business that struggles.

 

Do You Even Know What Entity You Have?

As a threshold issue, if you don’t know exactly what your current entity structure is, then that’s ok (it’s not easy, and it’s not necessarily a ‘water cooler’ kind of topic), but this article is definitely for you and you should contact our expert Business Law Team so that we can help you identify it.

 

Common Entity Types 

This three most common entity structures we encounter at EL are:

 

1. Sole Trader/Individual: 

This is effectively the ‘starting point’ for many businesses. A sole trader is a single person who is carrying on a business under an ABN. An individual is of course capable of suing and being sued. In order to change the business structure, a sole trader must ‘transfer’ the business to another entity, which can be costly and will require payment of transfer duty based on the value of the transfer.

Income Distribution: all income of the business is distributed to the individual, which is to be declared in conjunction with any other income that individual earns. This is typically not an issue in the initial phase of a business while profit is building, but can be problematic if the individual is already paying a high rate of tax, as all profit earned by the business is also taxed at that rate.

Risk Profile: all assets owned by the individual can be at risk in any claim against the business. For example, if a customer/client or employee of the business sues the business and is successful, the individual may be required to sell other personal assets in order to pay out the claim, or risk declaring bankruptcy if the value of those assets are not enough to pay the claim.

 

2. Company:

A company is a separate legal entity to the people/persons that control it. The company is capable of suing and being sued. The controlling persons can be easily changed from time to time, which allows flexibility for business owners wanting to sell or bring other business partners on board.

Income Distribution: companies have additional flexibility when it comes to distribution of income, as it is ultimately distributed to the ‘shareholders’, which could be the individuals who control the company, another entity controlled by those individuals (for example another company or trust), or another entity controlled by a third party (for example an investor who has contributed funds to the business but does not assist in the day-to-day running of it). However this flexibility is somewhat limited, as the income must be distributed in accordance with the percentage of shares held by the shareholders.

Risk Profile: the company can be sued, and all assets held by the company are at risk in any claim against the business. If the company does not hold enough assets to pay the claim, the company may be required to wind up. Except in limited circumstances, typically the assets of the individuals who control the company are safe from any claim, so at worst the business will fold, but the individuals will maintain any other personally-held assets.

 

3. Trust:

A trust is again a separate legal entity to those persons/entities who control it. The trust is capable of suing and being sued, and the controlling persons can also be easily changed from time to time by amending the trustee.

Income Distribution: trusts also have greater flexibility to distribute income, as it is distributed to the ‘beneficiaries’ of the trust, which can be individuals, companies, other trusts etc. A trust can be set up as a ‘discretionary’ trust, which allows the trustee flexibility to distribute income to the beneficiaries in any proportion that they determine.

Risk Profile: the risk profile of trusts is similar to that of companies, in that a trust can sue and be sued, and all assets held by the trust are at risk in any claim against the business. If the trust does not hold enough assets to pay the claim, the trust may be required to wind up, but similar to companies the assets of the trustees and beneficiaries are safe from any claim. In this situation, the business would fold but the individuals will maintain any personally-held assets.

 

There are of course other entities that you might encounter (such as partnership, unit trusts, etc), but they are largely either ‘outdated’ or only used in very specific circumstances. That does change from time to time based on things such as legislation and market preferences, but for now the three structures we have mentioned above are the most common.

 

Accounting Benefits v Legal Risk 

In any decision around appropriate entity structures, often the accounting and legal advice are the same, which makes a decision easy. However, sometimes that advice can be conflicting, and you might find that trading in a certain entity will give you the greatest tax and accounting advantages, but will expose you to greater legal risk.

The classic example of this is a start-up business – in that example, while income is on the lower end because the business is starting out and growing, you’re often better starting off as a sole trader and minimising your accounting and set-up costs. The trade-off here is that you carry additional risk because your personal assets are exposed in the event of any claim. Depending on the type of business you operate and the personal assets you hold, you might be happy to accept that risk in favour of gaining some tax and accounting advantages.

At Enterprise Legal, we understand the competing accounting and legal benefits and risks, and we like to work with your accountant to discuss the best structure for you, both now and in the future. This way, you are armed with the knowledge from both sides and can make an informed decision.

 

How Enterprise Legal Can Help

At Enterprise Legal, we offer a free Business Health Check, in which we arrange a time to meet with you in-person or by phone/Zoom to assess your business needs. In addition to assessing other legal needs, this includes an in-depth analysis of your existing entity structure, and a discussion with you around other options, and the steps involved to change your structure.

We work with your accountant and other financial advisors to give you all the information, and discuss the best way to move forward. We can even create your new entity, amend your existing structure, or draft supporting entity documents to support your entity structure (such as company constitutions, association rules, shareholder’s agreements etc). 

 

If you have any concerns or questions about your existing entity structure for your business, contact our expert Business Law team today: 

☎️ | (07) 4646 2672
✉️ | Submit an Online Request

 

Disclaimer: because we are #lawyers, we have to say that the advice in this article is generic in nature and not intended to apply to everyone’s personal circumstances. Please contact our EL Business Team, as well as your accountant, for customised advice regarding your business structuring.


Director Identification Number Scheme | Enterprise Legal

What It Is

On 1 November 2021, the Australian Business Registry Services (ABRS) introduced a requirement for directors of relevant companies to obtain a Director Identification Number (Director ID).

A Director ID is a unique, fifteen-digit identifier given to a director of a company who has completed an application and verified their identify with the ABRS.

A director must personally apply for their own Director ID (and it is is free to apply) and will only ever have one Director ID, regardless of how many companies or similar entities they are a director of.

 

Who It Applies To

Any person who is currently appointed as a director or alternate director of a company, registered Australian body, registered foreign company or Aboriginal and Torres Strait Islander corporation must apply for a Director ID.

You can apply for a Director ID even if you are not currently a director, and it will stay with you for life and can be used if you do ever become a director.

 

When You Need It

The below table provided by the ABRS succinctly sets out the timeframes for application for a Director ID:

Director ID Scheme – ABRS Timeframes

 

How To Apply 

All Directors must make their own applications – unlike other arrangements for company documents your accountant or registered tax agent is not permitted to do this for you.

In order to apply for your Director ID, you will need to go to the ABRS Website and follow the process to download the myGovID app (this is different to myGov). The direct link is Apply for your director ID | Australian Business Registry Services (ABRS).

As part of the application process, you will need to complete a verification of identity, so before you apply you should gather the following information/documents:

  1. your tax file number (TFN);
  2. your residential address as held by the ATO; and
  3. information from two (2) documents to verify your identity – the relevant documents that ABRS suggest are:
    1. bank account details;
    2. an ATO notice of assessment;
    3. superannuation account details;
    4. a dividend statement;
    5. a Centrelink payment summary; or
    6. a PAYG payment summary.

If you are unable to apply online, you can apply by phone or by paper form, but you will still need the above information / documentation.

 

How Enterprise Legal Can Help

Although we are unable to complete the application for you, we are available to assist you with any questions or concerns you have regarding the Director ID, including whether it applies to you, when you need to make an application by, and any questions about how the application works or the best application method for you.

 

Contact Enterprise Legal's expert Business Law team today:

☎️ | (07) 4646 2621
✉️ | Submit an Online Request