NSW Swimming Pool Laws - Just a Temporary Part Only Reprieve

A continued shortage of inspectors has caused the NSW government to again postpone the requirement for property owners to obtain compliance certificates for their swimming pools. One reported description of botched compliance and registration campaign is that it's been a "dog's breakfast"! 

 

Why is this important to you?  From a more selfish incentive, there will come a time, in the not too distant future, a property owner with a pool without a valid compliance certificate won’t be able to offer to sell, sell, sell or lease their property! Oh, plus fines will apply for non compliance.

 

The more altruistic public policy purpose, of course is to enforce pool safety and save lives.

 

The extended timetable is that the pool compliance certificates are mandatory from 29 April 2016. It''s not far away, really.  I've been informed by one inspector, that based on what he's seen so far, he couldn't see the shortage of inspectors being overcome by next April.  The lesson is, arrange to get your swimming pool compliance certificate soon before the inevitable last minute rush in 2016.  

 

Pool registration, on the other hand, is already mandatory - it's easily done here.

 

Why register? Well, it is the law after all!  Also, recently I had some clients selling properties where negotiations and or contracts exchanges were at least delayed because they didn't have swimming pool certificates readily available; all worked out in the end but not before stressing on losing buyers offering good prices.

Got a a pool? Don’t allow it to turn your property into a white elephant!

Q: What’s a white elephant?

A: a possession which its owner can’t dispose of and whose

     cost, particularly that of maintenance, is out of proportion

     to its usefulness.

 

In my previous post on this topic last year, I summarised changes to NSW swimming pool laws that added new obligations on property owners with swimming pools.

 

There are 2 parts: the requirement to register swimming pools; and the requirement to obtain a valid compliance certificate.

 

The registration part is relatively simple in that it can be done online. As for obtaining the compliance certificate, the original deadline of 29 April 2014 was earlier this year changed to 29 April 2015. If you’re a property owner with pool, for various reasons, that date will be approaching faster than you think.

 

From 29 April 2015, all properties with a swimming pool (or spa pool) that’s to be sold or rented to tenants must have a valid compliance certificate or occupation certificate.

 

There is the cost of compliance, of course, but even for the more diligent pool owners the bigger problem is the reported shortage of both available council inspectors and private certifiers.

 

Anecdotal feedback from my clients is consistent with media reports, such as the article I just referred to. It can months, some report up to 6 months, to start and finish the process of obtaining compliance certificate!

 

Why should you care? As it presently stands, aside from the risk of fines, from 29 April 2015, a property owner with a pool without a valid compliance certificate won’t be able to:

• lease their property; or
• to sell, or offer to sell, their property.

If you intend to sell or lease in 2015, don’t let your pool turn your property into a white elephant! Think about applying for your compliance now.

Put and call options in a booming residential property market

The Sydney property market, especially the residential property market, is booming.  How long this will last, I have no idea, but I know it won’t last indefinitely.

I’ve noticed some increasing trends as a result.  One, that’s the topic of this article, is proposed option agreements.

Options agreements are agreements between a property owner and a buyer to enter a contract for the sale of land on a future date if one of the parties (sometimes either) to the agreement wish it.

An increasing trend I’ve seen many of my clients experience, is developers approaching residential landowners, where the land may be attractive for development, proposing to buy the land, sometimes for prices that seems quite flattering to the landowner, but often with certain conditions.

Usually, the residential landowner is inexperienced in these types of approaches and negotiations.

Developers often prefer options to buy land because it suits them.  They can use it to defer paying stamp duty on a speculative property purchase, or to avoid the purchase altogether.  As there is a delay, sometimes months, in a developer to prepare, lodge and eventually obtain development consent, if a property purchase isn’t delayed the developer sees the money spent acquiring the property so early in the process as dead money, or expensive money.  The developer is paying interest on loans and other property ownership expenses during this delay.

An option agreement allows the developer buyer to hold off buying the property until months later and, if it can’t get development consent, to avoid having to buy the property at all.

So, what is an option agreement?  There are usually two types:

Call Options

The party holding the call option is the potential buyer of the land.  A call option over land is the right of a buyer requiring a seller to sell their land to the buyer for a price at an agreed future date.

Put Options

A put option over land is the right of a seller to require a buyer to buy the seller’s land, again at the agreed price.

Sometimes both put and call options are combined in the one agreement, called a put and call option agreement.  Therefore, for example, if the buyer does not to exercise their call option, the seller can exercise the put option to force the buyer to buy the land.

Typically in option agreements:

• the buyer pays the seller a fee, often called an option fee, for the right to exercise the option by some future date, and preventing the seller from selling the property in the meantime to anyone else
• while there are no hard and fast rules, options fees are often equivalent to 1% of the agreed sale price of the land if the option were to proceed to a contract for the sale of land – I’ve see many agreements where the fee is much higher - if the option is exercised, normally the option fee is treated as being a part prepayment of the price
• the option fee is immediately released to the seller, non refundable to the buyer even if the option is not exercised
• parties must exercise their option rights within a time limit.

The examples above are not the only ways an option agreement operates, but it does give a sound general idea of how they work.

Seller Beware!

A landowner may consider there are benefits, including:

• the delay in selling may be suitable, knowing there’s a buyer committed to buy by a certain date
• the option fee immediately belongs to the seller, regardless if the sale occurs
• less stress in the selling process as there’s already a (somewhat) committed buyer and the price is known

Downsides to consider include:

• the seller is locked in!
• until the buyer exercises their option, if there’s no put option available to the seller, the seller can’t make plans, for example to move, to buy another property before the buyer is committed to complete the purchase
• the seller can’t agree to sell to a subsequent buyer who makes a more attractive and/or higher offer
• the market may change dramatically and suddenly – by far one of the worst possible outcomes.  If property prices were to fall, the buyer/developer may never exercise their option, so when the option period expires, the seller may have not only lost an opportunity to sell for a good price in a previously buoyant market, but the property’s value may have also significantly reduced

So, what to do?
My advice, particularly for a seller, is simply to ensure you really understand what option agreements are – they’re not all the same.

 

Know the advantages, disadvantages, as well as the possible consequences.  Realise it may not even suit your circumstances.

 

By far the best advice I can offer if you’re a seller approached by a buyer, a buyer’s agent, or a real estate agent, talking about options or delayed settlements, is don’t agree to anything, and certainly don’t sign anything, before you consult your own solicitor who will advise you and help you protect your interests.

Do-it-yourself car brake service could be less risky than a homemade will!

When I was still studying, when I had more free time and less life responsibilities, or said another way... “back in the day....” I had no aspirations to becoming a mechanic or a passionate car tinkerer.  I did enjoy repairing and mechanically maintaining my cars though.  I had the books, the manuals and many of the tools. 

 

Sure, saving money was a big motivating factor for a student, but so was the sense of achievement from doing it yourself.

 

Engine tuning, changing the oil and various filters, repairing or replacing worn parts, bodywork repairs, it was what many young blokes did.  I changed the head gasket on a Mini, but it took me more than 3 days though!  I mean, I had to keep referring to the manual, then source a torque wrench, interpret the manual again, buy another new gasket after damaging the first one I bought, and so it went.

 

One day, the brake pads needed replacing.  Referred to the manual again, followed the instructions - it took me what seemed forever, but it was the bleeding the brakes that stumped me!  I just couldn’t get the brake pedal to firm up.  I asked friends for help, we checked the manual, followed it to the letter, but the soft pedal persisted.

 

I wanted to save money, but I wasn’t about to gamble on such a fundamental safety risk.  The mechanic was retained, paid, and all was fixed professionally – firm brake pedal again and the confidence that it had been done right.

 

When it comes to home made wills, will kits and the like, when I last looked prices ranged from around $30 up to around $70.  I’ve read the instructions included in most.  Some are just 2 pages, others are in a comprehensive in booklet form.  The instructions are quite good and accurate.

 

Generally its appears to be an inexpensive way to get yourself a will.  But is it?

 

In my career as a solicitor, I guess I’ve personally helped clients in deceased estate matters where there was a DIY, or home made, will perhaps a couple of dozen times, maybe more.  In all of those cases – note I say all - there was a problem.  Some small, many were significant.  In the worst one, the will maker inadvertently gave a huge part of his modestly valuable estate to a religious organisation where it was clear it was never his intention.

 

In all cases, it caused additional stress and various degrees of additional expense.  Family disagreements resulted in many others.

 

I know my figures are just anecdotal, but it surely raises a serious issue.

 

From a cynic’s perspective, DIY and home made wills can be great for lawyers!  Given their high problem rate, it results in even more work and fees for lawyers retained to try to untangle the mess.

I began writing this almost a week ago.  It was timely that the Don't risk a DIY will article was published this week in the Sydney morning Herald.  Rather than have me reiterate how DIY wills can be more problematic, have a read of the article.  It’s quite succinct and to the point.

 

Bleeding the brakes just didn’t work for me, no matter how many times I read and followed the manual’s instructions.  Finally, the need to get a mechanic became obvious, I couldn’t get that brake pedal to work properly and, though totally mechanically unqualified, I knew there was a huge risk if that job wasn’t done properly. 

 

Unlike brake pedals that don’t work properly, a DIY will even after following instructions, problems in it are not so obvious to the unqualified and in my experience, far too often the problem only becomes apparent when it’s too late. 

 

Whether making your first or your next will, to protect and distribute your assets you’ve worked hard to build up, forget the DIY risks, and instead see the best person who is qualified and best able to help you, your solicitor.

Latest franchising review likely to lead to more improvements

Last month the Australian Government publicly released a report detailing the independent review into the franchising sector in Australia.  The background that led to the commissioning of the report, and links to the report itself, can be found here.

 

The report makes 18 recommendations.  The aim being to recommend ways of simplifying and improving the clarity of regulations governing franchising.

 

So, what does the report recommend?  Some recommendations are:

• amending the Code so franchisors when informing a franchisee of its decision to renew or enter a new franchise agreement, the franchisor must also provide a disclosure document at the same time
• modifying parties’ obligations to act in good faith (this also includes during negotiations as well as during the term of the agreement).
• additional and tighter controls on marketing funds, including such funds be held in trust (many franchise agreements require franchisees to make regular financial contributions, additional to other franchise fees, to a central marketing fund controlled by the franchisor that’s meant to be applied for that purpose)
• the Code be amended to require franchisors to provide prospective franchisees with a short summary of the key risks and matters they should be aware of when going into franchising (generally, would seem to be a good idea, providing it doesn’t result in generic and convoluted overly technical disclaimers that is likely to discourage prospects from reading these, rather than to take the time to aware of and consider the usual business risks so an informed decision is made)
• amending the Code so franchisors are prohibited from imposing unreasonable significant unforeseen capital expenditure on franchisees (I’ve seen this happen far too often over the years, even cases where a prospect was “assured” there was no foreseen capital expenditure required, only to be hit with such requirement within weeks, or less, of entering a franchisee agreement)
• amending the Code so that franchisors are prohibited, in the absence of a court order, from making franchisees being responsible for certain legal costs in a dispute resolution process and, interestingly, requiring franchisees to conduct their court case outside the jurisdiction, or State, in which the franchisee’s business operates.
• amending the Code regarding the transfer, renewal or end of a franchise agreement so that a franchisee must provide all information reasonably required by the franchisor when making the request for consent to transfer/sell or renew, but franchisors will not be deemed to have consented until 6 weeks after receiving all such information to enable it to properly evaluate the request (without more clarification I’m unsure here; this could enable a franchisor , intentionally or not, to delay or frustrate a franchisee’s request using the excuse the franchisee hasn’t yet provided all the required info).

The Franchising Code of Conduct and Australian franchising has been reviewed several times since the Code first came into existence in 1998.  Overall, it appears to have resulted in a highly regulated framework in the Australian business format franchising system relative to comparable other counties.

Then again, it’s probably fair to say too, that it’s likely why we have a world leading regulatory but successful and balanced framework for such.  If you’re interested in reading more about previous comments I’ve made on this subject, click here.

 

Meanwhile, let’s see what recommendations from this latest review will be implemented by this or the next Australian government.

Swimming pool NSW law changes - attention property owners

Recent changes to NSW swimming pool laws impose new  added obligations on property owners with swimming pools.

 

Property owners must, before 29 October 2013, register swimming pools on their property with their local council and obtain certification, or face a fine.  If this applies to you, you can register, now, online on the NSW Swimming Pool Register, here.

 

Will you be selling your property, with a pool?  You will... one day.  Note the following new requirement.

 

From 29 April 2014, contracts for the sale of land on which there’s a swimming pool, must have attached to them:

1.  A copy of either: a valid certificate of compliance; or an occupation certificate less than 3 years old authorising the use of the swimming pool; and
2. Evidence that the swimming pool is registered – this will be a new additional compulsory prescribed document.  While this is a topic for another article, if a compulsory prescribed document is not attached to a contract at the time it’s entered, the buyer has additional rights to get out of the contract, even if the buyer’s cooling-off period has expired.

Is your property an investment property and you’re not selling?  From 29 April 2014, you won’t be able to lease it without first providing a valid compliance certificate.

  

A major reason for the tightening up of swimming pool laws, of course, is to further combat children drownings and near drownings.

There's still a little time but if you're a pool owner, don't be complacent.

No funds? Don’t buy. Simple.

You know how that saying goes... “I’ve said it once, I’ve said it a thousand times...”

 

Buying and selling real estate is serious.  It’s seriously legal stuff.  It’s one area where contract law issues can cause big problems for ordinary folk.  Not unlike when one hears of businesses having a legal fight over breaches of contract.

 

In simple terms, if two parties validly enter a contract and one party breaks the contract, that party is liable to the innocent party for the loss the innocent party suffers as a result.

 

Like most lawyers, when acting for a property buyer, one the first questions I ask is whether they have the funds, either cash or an unconditional loan approval, to pay for it.  If they don’t, either don’t buy, or at least don’t commit to the contract before funds are secured.

 

It’s not uncommon for buyers intending to finance, at least in part, their property purchase from the proceeds from their sale.

 

The premise is, always ensure you have binding sale contract with your buyer (eg. where your buyer’s cooling-off rights have expired) before you’re committed to your purchase.  Otherwise, if you commit buy in the expectation your sale is about to happen and it doesn’t, you could be left with a financial disaster on your hands.

 

Sounds logical, doesn’t it.  Yet it happens far too often reported in this high profile case involving actor Toni Collette and her husband.  Their breach is reported to have cost them $800,000.  They reneged on their purchase contract when they couldn’t sell their own home.  The seller suffered huge loss when they couldn’t re-sell their property for the amount Collette had originally contracted to buy it

The numbers in that case were big.  Even so, even when we’re talking of more typical average Sydney outer suburban home prices, a $10,000, $20,000 or $50,000 liability can cause financial pain.

As the reporter states:

“...get your finances approved before you buy, and if you’re selling and buying in the same market have a contingency plan.”

There’s often much pressure when trying to get the timing right when dealing with simultaneous sale and purchases.  More reason, I say, to ensure you have your solicitor on board to help you though these minefields.

Is your franchised business falling behind? You CAN fight back!

Business format franchising in Australia has proven to be a reliable pathway for many, especially those with little or no experience in running a business, to own and successfully run their own small business.

 

Australia has a world leading regulatory framework, policed by the ACCC.  Unscrupulous and unprincipled franchisors do get caught and prosecuted by the ACCC - I’ve written about some such cases from time to time in this blog.

 

Most successful small businesses are such because of hard work.  Running a reputable franchise system business doesn’t guarantee success, however, but it does reduce the chance of failure.



Even in a successful franchised business, sometimes things go astray, or aren’t working as well as they should.  If this sounds like you, here’s a Sydney Morning Herald article by David Wilson with some useful tips that may be just what you need to help you.  Together with help from your willing franchisor, your accountant and your solicitor, you still can get back your mojo!

Are you a landlord? Does your rental property have a pool? Double check its safety!

A news story yesterday reported on the rescue by their father of his 2 toddlers from a Sydney suburban backyard swimming pool.  Thankfully, that family averted a near tragedy.

 

News reports also stated that the home was a rental property and, importantly, that the pool’s gate lock was faulty, and section of the pool’s fencing was loose.

 

It’s a timely reminder for all home-owners to effect and maintain their pool safety equipment and to always supervise children playing in or near water. 

 

Property owners too have a legal responsibility, and owe a legal duty to their tenants to eliminate defects in their premises.  See the post I wrote almost a year ago for more on this very topic.

 

Have a happy, and safe, holiday!

Is Santa real?

A question that to me seems to be asked more often each year.  A common theme accompanying that question is whether it’s fair to “lie” to our kids.

 

Our two youngest were so genuinely excited after receiving their personally addressed letters from Santa a few days ago.  Their excitement and reaction differed little to how our two older ones reacted when they were a similar age, whether sure they saw Rudolph and the sleigh in the early hours’ night sky, or the reindeer hoof prints leading to the house.  The older two made sure they did nothing to spoil the younger siblings’ wonder.

 

I don’t believe the same childhood experience of the two older children, or myself has had any detrimental effect on our upbringing, nor has it taken away our Christian identity or the true recognition of Christmas as celebrating the day of Jesus’ birth and all that symbolises for many.

 

Santa is probably a valid and powerful symbol inspiring the generosity of spirit that is also Christmas; that generosity is real and transcends all ages, and dare I say, all belief systems

 

If one believes in that generosity of spirit, then it’s not drawing such a long bow to also say that in that case, Santa is indeed “real”, and encouraging that is not “lie”.

 

Merry Christmas everyone!