Leases

Question 1

Lease

Answer 1

commercial contract

Question 2

Conditions

Answer 2

• pay rent when due under lease
• keep premises in good repair
• landlord entitled to enter premises at all reasonable times to view state of repair (if not, can service notice to repair)
• can re-enter premises if rent is owing for period of 21 days. Can also do if tenant has not performed or observers any terms of lease

Question 3

Insurance

Answer 3

landlord must insure building for full replacement and reinstatement insurance or indemnity to full insurable value on premises

Question 4

Guarantee

Answer 4

Guarantor guarantees performance of tenant’s obligations and indemnifies the landlord against claims

Question 5

Reinstatement

Answer 5

requirement of reinstatement at end of lease. What to do when leaving

Question 6

Expiry

Answer 6

Deed of Lease usually includes a right to renew but if tenant does not renew lease and continues to occupy the space after expiry of the tenancy, the lease becomes month to month

Question 7

rent review

Answer 7

document sets out a mechanism for current market rent reviews

Question 8

outgoings and gst

Answer 8

tenant is usually responsible for paying service charges for premises and a proportionate share of outgoings for building, as well as GST payable on the lease or the outgoings

Question 9

maintenance

Answer 9

the tenant is responsible for the care and maintenance of leased premises. Check the terms

Question 10

Mortgages

Answer 10

a loan to finance the purchase of real estate usually with specified terms and conditions relating to repayment including period, rates).

Borrower gives lender security in form of a charge registered against the title to the property as collateral for loan.

Just a credit contract.

Detailed on CT

Question 11

Mortgage and regulation

Answer 11

Govt

LVR - preferably 20-30%

Question 12

Table loans

Answer 12

have repayments that remain constant at level you choose. Pay more off principal as time goes on

Question 13

Reducing loans

Answer 13

repayments change each period. Interest reduce and principal remain k

Question 14

Interest only

Answer 14

Pay interest not principal.

Question 15

Transactional Loan

Answer 15

combines all bank accounts in one, reduce interest

Question 16

Floating rate

Answer 16

make lump sum payments or repay whole mortgage

Question 17

Fixed rate

Answer 17

provides agreed fixed periodic payments

Question 18

capped rate

Answer 18

gives you security of knowing what your max rate but if floating rate drops below capped rate, interest drops too

Question 19

combination or split rate

Answer 19

fixed rate but with option of lump sum repayments if you want to

Question 20

Mortgagee Sales

Answer 20

when borrowers don’t perform.

lenders have contractual right to sell secured property. Long legal process

Question 21

Mortgagee auctions

Answer 21

the agreement does not include many of the fine print clauses that are usually there. There are additional risks.

Pitfalls
- not getting vacant possession on settlement date (have to evict)

Question 22

Auctions

Answer 22

Covered under FTA 1986. Part 4A.

• can be auction for land
• for goods
• online auctions

Auction - process in which property of any kind is offered for sale by an auctioneer on behalf of a vendor.

needs registered auctioneer.
Auction process is as expected.

Buyer can’t attach conditions to auction purchase. Vendor shouldn’t really bid but they can if there is reserve price, hasn’t been met and it is clear it is a vendor bid.

There is a reserve price, auctioneer has ability over everything, can withdraw property, etc.

Auctioneers Act 2013

Question 23

Bidder

Answer 23

Needs to read and understand Auction Particulars and Conditions of Sale.

Can bid on a cash unconditional basis.

Can pay 10% deposit and sign contract.

Question 24

Agreement made for auction

Answer 24

Unconditional - can’t change mind.

Make payments to REA.

Balance is paid on settlement

Question 25

Terms in ASP

Answer 25

Purchaser has some onus –> have to pay for reconnection and buying chattels (approve of them).

Governed by REA and such

Question 26

Special provisions

Answer 26

Notice to participants (section 36).

• notices of terms must be readily available to view by all participants and such.
• has to include whether the sale is subject to a reserve price and whether vendor bids are permitted.