Property Law - Business Leases - Tenants in Trouble
Date: July 04, 2009
Authors: LAC Lawyers
Tough economic times can bring grief to all of us, in varying degrees. It’s almost a cliché that we should be cautious in our business affairs. But by so doing we should be able to weather the storm. Caution is needed before entering into a lease. But what if the tenant finds itself in a situation which it had not seen coming?
Many tenants have found they are committed to a lease which has some years left to run. When they entered into the lease, things seemed fine. With a downturn in business however, they may be finding it difficult to meet the ongoing obligations under the lease, especially the rent and the outgoings. What to do, might well be the question which the tenant needs to have answered.
Leases can present particular difficulties by their very nature. A lease generally represents a contract giving a right to the tenant to (in most cases) exclusively occupy some land or a part of some land for a period of time. In return the tenant has to pay rent to the landlord. It is the obligation to make payments for a certain period of time which can cause difficulties.
During the period of the lease, circumstances can change. The tenant, in the case of a commercial tenancy, may find that business is down, through no fault of the tenant. In the case of a residential tenant, there might be a change in personal circumstances such as a move inter-state or abroad whereby the tenant no longer has a need to occupy the property and wants to relinquish it.
Commercial tenancies are more likely to be fraught with risk of greater loss, usually because the period of the lease is longer so there is a greater financial commitment. There are some special considerations to be taken into account with what are called ‘retail leases’, generally applicable to retail shops. There are also special factors relating to residential leases, strictly referred to in New South Wales as ‘residential tenancy agreements’ under the applicable legislation. However the issues are essentially the same in each case.
Faced with the dilemma of a lease with say, another three years to run, and with a commitment to pay rent which now seems untenable in the eyes of the tenant, what should the tenant do? There are several things the tenant should explore, in particular, the transferring of the lease to another person or company. This obviously requires a replacement tenant, someone who is prepared to take over the lease as it is. Alternatively, the tenant could approach the landlord with a view to seeing if the landlord will agree to a surrender of the lease, though this will also usually entail finding a replacement tenant, and the new lease is also likely to be on at least similar terms as the old lease.
Another alternative is for the tenant to try negotiating with the landlord for a reduction in the rent, however the landlord is probably unlikely to agree if there is an existing lease which the landlord believes is enforceable. A further alternative, though not attractive but which is quite often adopted by tenants, is to simply walk away, that is, vacate the premises whether with or without the landlord’s consent, leaving the landlord to find a replacement tenant. The landlord may then have a claim for the rent payable under the lease for the remainder of the lease period. Having said that, the landlord would be obliged to minimise their loss as much as possible.
In each case, the landlord is entitled to enforce the terms and conditions of the lease (assuming it is enforceable). In the first scenario, the transferring of the lease, the tenant will need to be assured there is a replacement tenant which is at least in a financial position whereby it is able to afford the rent and other financial obligations under the lease. However the lease itself may allow the landlord to insist that any prospective replacement tenant is intending to carry on the same kind of business as the departing tenant. If things have turned sour in the market in which the tenant operates, then it’s unlikely that someone else also in the same market is finding it much different.
In general, a landlord is entitled to require the tenant to comply with the terms of the lease (including the payment of the rent as set out in the lease) for the rest of the period of the lease. It is this ongoing obligation which has the potential for problems. Contrast this with an outright purchase of a property in freehold: with a purchase, the purchaser may have to outlay a considerable amount more than the tenant at the commencement but once the purchase transaction is completed, that is usually the end of the relationship between the parties. With a lease, the relationship may continue for years.
Therefore the utmost care should be taken right at the outset when someone is negotiating to rent a property. Whether you are contemplating leasing or have executed a lease call LAC Lawyers for an appointment on (02) 9904 6800 to obtain proper professional advice and assistance.
Tax Law - Large business entities(Part 1)
Date: January 17, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
The ATO does not treat large business entities with the same anonymity as other taxpayers, since there are relatively few of them and they contribute a disproportionate amount to revenues. This article deals with the special rules developed by the ATO to deal with, and engage with, large businesses.
Tax Law - Large business entities(Part 2)
Date: January 17, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
The ATO does not treat large business entities with the same anonymity as other taxpayers, since there are relatively few of them and they contribute a disproportionate amount to revenues. This article deals with the special rules developed by the ATO to deal with, and engage with, large businesses.
Tax Law - Large business entities(Part 3)
Date: January 17, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
The ATO does not treat large business entities with the same anonymity as other taxpayers, since there are relatively few of them and they contribute a disproportionate amount to revenues. This article deals with the special rules developed by the ATO to deal with, and engage with, large businesses.
Tax Law - Large business entities(Part 4)
Date: January 17, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
The ATO does not treat large business entities with the same anonymity as other taxpayers, since there are relatively few of them and they contribute a disproportionate amount to revenues. This article deals with the special rules developed by the ATO to deal with, and engage with, large businesses.
Tax Law - Demerger(Part 5) – Cost base calculation
Date: January 12, 2012
Author(s): Jonathan Lim B.A., LL.B. (Hons)
A complicated and often misunderstood area of tax law is the CGT and dividend tax relief available in respect of demergers. A demerger occurs when a group of entities (basically, companies or fixed trusts) divides itself into multiple entities or groups in a certain way. This part of the article goes into more detail about how the interest-holders of the head entity ought to adjust the cost bases of the interests in the demerged entity they end up holding.
Tax Law - Tax Debts - Personal Liabilities of Directors for Company Tax Debts
Date: October 24, 2011
Author(s): Jonathan Lim B.A., LL.B. (Hons)
In most situations where a company has a tax debt, the Commissioner of Taxation and the ATO will respect the “corporate veil” and not touch the assets or money of the individual directors or shareholders.
Business and Commercial Law - Agency Agreements
Date: April 13, 2011
Section 55 of the Property, Stock and Business Agents Act 2002 provides that a written agency agreement must be prepared for all services to be performed by an agent for a client (principal), unless the services relate only to livestock.
Business and Commercial Law - Partnerships - The traps and pitfalls
Date: January 07, 2011
Author(s): Scott Gray LPAB, Grad. Dip. Legal Practice
There are no strict legal requirements for the forming of a partnership other than when two or more persons carry on a business in common for profit, however given that this is a legal relationship it is advisable to create a written partnership agreement so that the terms of the relationship are clarified between the partners.
Commercial Law - Drafting Commercial Agreements
Date: November 01, 2010
Author(s): LAC Lawyers
Lawyers are often called upon to draft documents on behalf of clients when they wish to enter a business agreement with another person or entity for the furtherance of a common goal. From the client perspective; drafting a commercial agreement should not be complicated or involve consideration of legal issues.
Business and Commercial Law - Defences to Directors Penalty Notices
Date: October 08, 2010
Author(s): LAC Lawyers
When faced with liquidity problems, it is common for companies not to make the relevant payments to the Commissioner of Taxation in regards to their tax obligations under Income Tax Assessment Act 1936.
Business and Commercial Law - Liability of Directors in Trustee Company's
Date: October 08, 2010
Author(s): LAC Lawyers
You have been appointed as a Director of a Corporate Trustee pursuant to a Deed of Trust and you are now concerned about your function and role in the Corporate Trustee with respect to the liabilities of the Corporate Trustee and your liabilities to the Trust if there are insufficient assets to meet the Trust’s liabilities.
Business and Commercial Law - Restraint of Trade
Date: October 08, 2010
Author(s): LAC Lawyers
Key employees have always been the cornerstone of every successful business or enterprise and great difficulties are caused by the sudden loss or departure of key employees which in turn could harm the relationship between the business and its clients. Key employees have over the years enjoyed a close relationship with clients and losing them would have a detrimental effect on the management and reputation of the business.
Property Law - Dividing Fences
Date: October 08, 2010
Author(s): LAC Lawyers
If there is a dispute about the standard of fencing required, one neighbour must give the other a Fencing Notice. If agreement still cannot be reached, the neighbour can apply to a Local Court for an order for the proposed work to proceed.
Is it the beginning of the end for discretionary trusts and one-man companies - A change of view point
Date: September 01, 2010
Author(s): Michael Pickering B.A., LL.B. (Hons.), LL.M., M. A.
There are suggestions that Australian courts are now changing their approach to the interpretation of statutes with the effect that discretionary trusts are not as useful in avoiding statutory obligations. In other words, in the words of the Bob Dylan song “… the times, they are a-changin”!
Is it the beginning of the end for discretionary trusts and one-man companies - Centrelink, Bankruptcy and Taxation
Date: September 01, 2010
Author(s): Michael Pickering B.A., LL.B. (Hons.), LL.M., M. A.
Another example is Elliott v. The Secretary of the Department of Education, Employment and Workplace Relations decided in 2008 immediately before the High Court of Australia’s decision in Spry and was concerned with the means test for Centrelink pensions.
Is it the beginning of the end for discretionary trusts and one-man companies?
Date: September 01, 2010
Author(s): Michael Pickering B.A., LL.B. (Hons.), LL.M., M. A.
The traditional usefulness of discretionary trusts arises from the puzzling position they hold in the law. Property transferred to these entities is effectively ownerless until discretionary trustees determine to appoint the property to discretionary beneficiaries.
Reversal Of Effect Of Sons Of Gwalia Decision - Ending Of Equal Ranking Of Shareholder Claims With Claims Of Unsecured Creditors In Corporate Insolvency
Date: July 30, 2010
Author(s): Michael Pickering B.A., LL.B. (Hons.), LL.M., M. A.
The Corporations Act will be amended so as to reverse the decision of the High Court of Australia in Sons of Gwalia v. Margaretic. The Sons of Gwalia decision determined that, in a corporate insolvency, certain shareholder claims against a company rank equally with the claims of other unsecured creditors.
Property Law - Family Law - The concept of joint land ownership when family relationships break down.
Date: May 17, 2010
Author(s): Michael Pickering B.A., LL.B. (Hons.), LL.M., M. A.
Joint land owners hold land either as joint tenants or as tenants in common. Joint tenancy is far more common. Through this method of ownership, the interests of one spouse or partner are deemed by law to flow automatically to the surviving spouse or partner irrespective of whether the deceased spouse or partner has left a will or other testamentary document.
Conveyancing & Property Law - A Look At Conveyancing Behind The Scenes
Date: April 06, 2010
Author(s): Laurel Bradshaw Adv. Dip. Conv.
Did you know the LPMA handles over 3,500 dealings per day? and for the uninitiated a dealing is a transaction that involves land.
Intellectual Property - Trade Practices - The Law of Passing Off
Date: August 28, 2009
Author(s): LAC Lawyers
The principle behind the tort of “passing off” is that a person cannot represent their goods or services as those of another. The action for passing off protects business goodwill and reputation from wrongful appropriation.
Business Law - Personal Guarantees & Indemnity
Date: August 04, 2009
Author(s): LAC Lawyers
If you are a supplier of goods and operate your business on a credit system then it pays to protect your position in relation to your debtors. The following scenario depicts a common occurrence in the supplier/purchaser market leading to frustration and ultimately loss of moneys owning.
Debt Recovery - Personal Insolvency Agreements
Date: August 04, 2009
Author(s): LAC Lawyers
If you find that you are overwhelmed with debt and cannot pay all those debts as and when they are due but at the same time you do not want to be declared a bankrupt, you may still have the option of entering into a Personal Insolvency Agreement (“PIA”).
Employment Law - General Employee Entitlement & Redundancy Scheme (GEERS)
Date: June 05, 2009
Author(s): LAC Lawyers
If you have been made redundant or have lost your job because your employer has gone bust and you have not been paid your outstanding wages or entitlements, then you may be eligible for payment under GEERS.
Business & Commercial Law - Franchising Law - Franchising Code of Conduct
Date: May 29, 2009
Author(s): LAC Lawyers
Franchising in Australia is governed by the Franchising Code of Conduct (“FCC”). This piece of legislation was design to protect potential franchisees from unscrupulous franchisors and requires the franchisor to disclose certain information to the franchisee so as to...
Bankruptcy & Insolvency Law - What Can I Do If I Am Declared Bankrupt?
Date: April 29, 2009
Author(s): LAC Lawyers
The global economic crisis has no doubt affected millions of people and businesses world-wide. Australia is not immune and coupled with record high unemployment and talks of recession, it is not surprising that many people cannot pay their debts and the instance of bankruptcy proceedings being commenced by creditors has increased as a result.
Business Law - Business Structures - Companies
Date: April 22, 2009
Author(s): LAC Lawyers
A company is a form of business organisation made up of members or shareholders and managed by directors.
Business Law - Business Structures - Partnerships
Date: April 02, 2009
Author(s): LAC Lawyers
The term “Partnership” is defined in the Partnership Act 1892 (the “Act”) as the relationship that exists between persons carrying on business in common with a view of profit. From this...
Conveyancing & Property Law - Anecdotes from the Conveyancing Desk
Date: April 02, 2009
Author(s): LAC Lawyers
In the present difficult and challenging economic climate, the ‘Global Financial Crisis’, there are situations brought upon us by the prevailing circumstances and which would not normally exist when things are relatively stable
Conveyancing & Property Law - Even converted caravans qualify for the governments first home owners grant
Date: February 10, 2009
Author(s): Laurel Bradshaw Adv. Dip. Conv.
I included in last week’s property article about a young couple buying a home in country New South Wales a couple of years ago for under $50,000 and receiving the FHOG (first home owners grant). At the time I could not help but ruminate on whether a similar scenario could be replicated in the here and now.
Conveyancing & Property Law - What to make of interest rates, the first home owners grant, renting and housing affordability?
Date: January 28, 2009
Author(s): Laurel Bradshaw Adv. Dip. Conv.
What to make of the free flow of info coming to us by way of our favourite medium revolving around interest rates, the first home-purchasers government grant, rents in Sydney and housing affordability?
Property Law - Termination of Tenancy Agreements and Your Rights As A Tenant
Date: September 25, 2008
Author(s): LAC Lawyers
If your landlord wishes to end a tenancy agreement with you, your landlord is bound by the Residential Tenancies Act 1987 and the Residential Tenancies Regulation 2006.
Debt Recovery - The Common Stages
Date: September 24, 2008
Author(s): LAC Lawyers
At LAC Lawyers we are able to assist you with all debt recovery matters and advice you on the best method of enforcement to avoid unnecessary costs having regard to the circumstances of each matter.
Commercial Litigation: When is your lawyer not really your lawyer?
Date: May 19, 2008
Author(s): Michael Pickering B.A., LL.B. (Hons.), LL.M., M. A.
Over the last decade, there has been enormous growth in the appointment of in-house lawyers employed by corporations to provide a range of legal services from corporate covenants to debt collection to litigation support and advice. These lawyers are generally called in-house or general counsel.
Franchising - ACCC Increases Focus on Franchisor Obligations
Date: February 08, 2008
Author(s): Michael Pickering B.A., LL.B. (Hons.), LL.M., M. A.
New franchising regulations will commence on 1 March 2008. Franchisors will need to comply with the current franchising code up until 1 March 2008 and then comply with the amended code afterwards.
Partnership Agreements - Simple and Flexible Business Vehicles (Vic.)
Date: January 28, 2008
Author(s): Michael Pickering B.A., LL.B. (Hons.), LL.M., M. A.
The only real test is whether the parties were carrying on a business in common with a view of profit as defined in the Partnership Act. For taxation purposes it simply amounts to the joint receipt of income.
Franchise Agreements: Franchisee and Franchisor Responsibilities
Date: January 21, 2008
Author(s): Michael Pickering B.A., LL.B. (Hons.), LL.M., M. A.
Franchisees and franchisors should always seek legal advice before entering into franchise agreements. The question arises, however, as to whether a lawyer should act for both or only one party.
Insurance Law and Business Interruption Insurance
Date: December 05, 2007
Author(s): Frank Egan B.A., LL.B., A.C.L.A., F.T.I.A. (Notary)
People in business insure their premises, contents and stock against the material damage risks of fire, explosion and other perils, but have they given the same thought to the other problems which would arise following any of these events, the problems which manifest themselves when the fire engines have driven away.
Franchising - Code of Conduct Changes from 1st March 2008
Date: November 21, 2007
Author(s): LAC Lawyers
The Franchising Code of Conduct ("the Code") applies to a franchise agreement entered into, renewed or extended on or after 1st October 1998.
Property Law - Compulsory acquisition of land in Victoria by Government Departments, Victorian Statutory Authroities such as VICroads and by Municipal Councils
Date: November 20, 2007
Author(s): Michael Pickering B.A., LL.B. (Hons.), LL.M., M. A.
From time to time, Victorian State Government Departments, Victorian State Instrumentalities such as VicRoads, and Municipal Departments wish to obtain privately owned land for public purposes such as proposed road widening.
Business & Commercial Law - How To Improve Your Cash Flow and Statutory Demand
Date: October 05, 2007
Author(s): LAC Lawyers
Credit is an integral part of commerce, sometimes for the better and at other times for the worse. To improve your cash flow and to ensure that credit is being given to debtors who are credit worthy, a comprehensive credit application should be completed at the inception. From the information in the credit application referred to below you are likely to be in a better position to recover any debts.
Conveyancing and Property Law - Why Each Conveyance Is Not The Same
Date: September 27, 2007
Author(s): LAC Lawyers
The area of law known as conveyancing is as old and interesting as our legal system itself. In fact so much of our law has its origins in and connections with land and a person's rights associated with land ownership.
Singapore - Foreign Ownership and Purchasing Property
Date: July 05, 2007
Author(s): LAC Lawyers
Foreigners can own both freehold and leasehold property in Singapore. There is no restriction on foreign ownership of residential property according to tenure.
An Explanation of Some Areas of Risk for Director's
Date: June 24, 2007
Author(s): LAC Lawyers
If you (personally) breach the Act, both you and the organisation may be prosecuted. If convicted, both you and the organisation may have to pay significant penalties.
Business & Commercial Law - Director's Duties To The Company
Date: June 21, 2007
Author(s): LAC Lawyers
What to expect when you call LAC Lawyers
Date: December 13, 2006
Author(s): LAC Lawyers
LAC Lawyers is a full service firm dedicated to the provision of superior legal services in Australia. Our aim is to provide unrivalled client satisfaction coupled with high quality service and advice. When you call LAC Lawyers our friendly reception staff will spend time with you to identify the area of law your enquiry relates to then pass you on to one of our qualified solicitor's who can help you.
The Benefits of Hiring A Lawyer
Date: August 16, 2006
Author(s): LAC Lawyers
The old adage “you get what you pay for” is as true today as it has ever been.
Why stay with your lawyer
Date: August 01, 2006
Author(s): LAC Lawyers
The lawyer/client relationship is a personal one and there are many reasons which will dictate who you can and cannot work with. If you don’t like your lawyer, should you change? Ultimately, the relationship between a lawyer and client must be built on mutual trust.
How can I recover money to get defective building work fixed?
Date: September 27, 2005
Author(s): LAC Lawyers
Things are already going pretty badly for you. Instead of fulfilling your dreams, your building work has turned out to be a nightmare. So of course, you want to know if there’s some way you can get it fixed. In New South Wales, the Home Building Act sets out a dispute resolution procedure to get the builder to rectify any defective work. If the builder won’t co-operate, then you can make a claim to your home warranty insurer.
Employment Law, Contract Law - Is a person who has a services company entitled to relief under s 106 of the Industrial Relations Act (NSW)?
Date: September 26, 2005
Author(s): LAC Lawyers
Choosing a business structure - Which one is right for you?
Date: September 25, 2005
Author(s): LAC Lawyers
When starting out in business or changing the nature of your business you need to consider which method of operating the business is best for you.
Business and Commercial Law - Do’s and Don’ts for Small Businesses
Date: September 24, 2005
Author(s): LAC Lawyers
Starting a new business can be a daunting operation. A remarkably high percentage of small businesses fail within the first five years of operation. Sometimes that is because the business itself is not sound. However, on other occasions the problem lies in a lack of planning or an ignorance of the many legal requirements that must be met by the small business operator.