The soaring price of real estate makes getting into the property market hard. The possibility of pooling resources with friends and family to achieve this is appealing.
The question is…How?
The answer could be to become ‘tenants in common’.
Tenants in common is a type of joint ownership of property. This type of co ownership is most suited to investment type properties where each ‘tenant in common’ is able to deal with their interest individually. It is vital to all involved that the purchase is documented and regulated by a tenants in common or co-ownership agreement which can outline every aspect of the purchase.
There can be as many individuals as you like holding a share of the title to a single piece of real estate. The shares in this type of agreement do not have to be equal meaning you can have multiple ‘owners’ with varying shares in the property. These shares are generally decided at the time of purchase, but can be altered at any time, provide all parties agree to the change.
Each shareholder is able to leave their share of ownership in their will to anyone they choose and the other tenants in common have no legal claim to it. Each tenant in common has the right to deal with their share of the property separate from the others. The share of a tenant in common is known as an “undivided” share.
An initial outlay or ‘capital’ is needed and then an amont (stated in the agreement) is paid into a ‘revolving’ fund on a pre determined schedule (ie, weekly, fortnightly,monthly). This fund covers all expenses incurred by the property and if these exceed available funds then each party must put in extra money.
What if I want to sell my share?
After an amount of time set out in the agreement, a party can sell their shares. They can be sold to anyone but must be offered to the other parties in the agreement first (known as the ‘first right of refusal’). If the sale is accepted then the selling party will be responsible for the cost of valuation and all of the other costs incurred.
These are the basics of becoming ‘tenants in common’. The finer details are all covered in your ‘tenants in common’ agreement.
It is a viable and sound way to enter the property market without having to find all the money yourself. Just do it right at the beginning and you can be on the property market ladder sooner than you might think.As long as you have made a ‘tenants in common’ agreement and all parties have signed and agreed then there can be no arguments in the future.
Before the right to create Financial Agreements (FAs) was extended to same-sex andde facto relationships, when such a relationship had broken down, both parties would have had to prepare themselves for some long-winded and tedious litigation through the Supreme Court. Thank goodness, this has now all been changed with the introduction of section 90UD of the Family Law Act 1975 which specifically entitles people in de facto relationships to agree upon what they consider to be a fair distribution of property and financial resources once the relationship has broken down.
Effectively, this now places de facto agreements in the same category as is already enjoyed by married couples. It means that same-sex relationships are apportioned with similar rights to heterosexual couples and this will be viewed as a welcome move by many gay rights groups that have been concerned and campaigning over these issues.
How Would You Go About Creating A FA In These Circumstances?
If a de facto, or same-sex relationship has broken down irretrievably, s.90UD of the 1975 Act sets out that the following procedures would need to be followed in order for a court to recognise and apply a financial agreement. These are as follows:
They would need to ensure that both parties seek professional and qualified legal advice. This is imperative and it should help to ensure that each party’s unique situation is evaluated and legally commented upon. If gross unfairness can be identified within the agreement as it stands, the legal advisor will point this out to the relevant partner and they will then only go ahead and sign once they know exactly what they are agreeing to and/or possibly compromising.
A certificate must be obtained from the applicable legal professional which will attest to the fact that this requirement has been satisfied. It would then need to be added as an ‘annex’ to the main written legal document which will make up the FA.
The FA will need to specify the extent of any relevant spousal maintenance to be provided. It will need to be signed by both people and a copy will be retained by each.
Provided all of the steps have been taken above, the court should not scrutinise the FA to ensure that it is just and equitable. The court would only tend to set a FA aside if there were fundamental flaws with the documents (e.g. the FA had been created in a fraudulent manner).
It is also important to note that a person can only enter into a FA if they are not already party to such an agreement with another person.
Swifter Resolution At The End Of A Relationship
This type of post nuptial agreement should help to ensure that any financial matters are dealt with far more smoothly than they may otherwise be. Granted, some time would be required on both sides to conceive the financial agreement, but once a settlement is agreed upon, the FA will provide a far quicker resolution to the question of who gets what.
Of course, to a large extent, at the end of any relationship and at a time when communication between both parties may not be as amicable as it once was, a lot will depend on how quickly an agreement can be settled. Nevertheless, it would probably end up being more prudent and cost effective for the parties to resolve the property and financial implications in this way.
Whatever actions the members of a de facto relationship elect to take when things have broken down, the fact remains that Australian law now provides them with these choices. Gone are the days where there was only very limited avenues that could be pursued in order to resolve such issues. Such de facto agreements now exist to realise a swifter resolution to the distribution of property and financial resources.
How to secure your assets before or during a relationship, or marriage.
What is a Financial Agreement?
A Financial agreement(FA)is a written agreement, which complies with the Family Law Act 1975 (“the act”). A Financial Agreement (FA) can be entered into at any stage of a serious relationship, and even now includes same sex relationships.
Whilst the main effect of the agreements is to prevent either party making an application to the Family Court for the division of property, The aim of introducing Financial Agreements is to encourage couples to agree about how their assets and property should be distributed in the event of, or following, ‘separation'. This can be very reassuring if you have already been through the breakdown of a relationship before and it’s much easier to talk about such things while you are still planning to live happily ever after.
Financial Agreements follow the lifecycle of a relationship and can be entered into at different stages:
The popularity of Financial Agreements shows men and women are taking more financial and legal precautions against a relationship breakdown. Most see it as a form of insurance -- a legally binding safety net which they hope to never need.
Many people who are entering into a serious relationship for the second time and already have assets, or kids, like the security of a pre-nuptial or pre defacto agreement. If you didn’t get round to making one, or if circumstances have changed, couples who are already married or living together can also make a financial agreement. You may even be divorced and find yourself in a situation where you need the certainty of outcome that a Financial Agreement can provide.
Your FA can deal with children, maintenance, property of the parties, among other things or you may choose to deal with only one of these issues.
Remember FA are intended to be used at any time during the life cycle of a relationship.
The Agreement will lessen the chance of needing to go to court but you can never eliminate access to the Court, regardless of how your agreement is worded. If one party hides an important fact the other party can always go back to court and it is up to the court to decide whether to intervene and overturn the agreement.
One might think that a Financial Agreement needs to be fair to both parties, however this is not necessarily the case. Should your agreement come before a court, the courts will not dismiss or set an agreement aside simply because it favours one party over the other. This is because section 90G of the Family Law Act requires both parties receive independent legal advice before they sign the agreement. This process ensures that both parties understand the advantages and disadvantages, financially or otherwise, of signing the agreement and it prevents either party going to court with the excuse that they didn't know what they were signing at the time.
Sitting down with your partner to work out what your agreement needs to achieve, before you both run of to the lawyers, will save you considerable time, money and anxiety.
It used to be that a couple could decide to just live together for awhile without having to worry too much about what would happen to their stuff when the relationship ended. You could just divide it all up at the end and go on your merry way.
Not any more.
Recent changes to Australian legislation have switched the regulation of relationships from the individual states to the Commonwealth. This means that defacto relationships, both hetero and same sex now rest under the protective umbrella of the Family Court of Australia.
The Family Court views personal relationship differently. It -
” rates non-financial home making contributions more highly than the states,
” has broader powers to make property orders or issue injunctions against third parties, including creditors and family companies which are in the legal control of one partner but not the other
” has policies and “toolboxes” that include a broad study of future needs as well as past considerations in making property adjustments
This means that de facto couples who satisfy basic criteria - such as being in the relationship for at least two years - will be treated in the Family Court in the same way as a married couple following the rule “what’s yours is mine and what’s mine is yours”.
If you end a de facto relationship that has gone on for longer than 2 years, either partner has the legal right to lay claim to any of the assets of the other partner just as if you were married.
You can protect your assets by using a Binding Financial Agreement (BFA). The term Binding Financial Agreement or BFA is given to an agreement made between two people living together whether they intend to marry or not, are married or not, or plan to separate or divorce. That is, a BFA can be made during a relationship or after it has broken down.
Binding Financial Agreements allow you to enter into agreements about how you will distribute your property or financial resources or maintain each other in the event that your relationship breaks down. It will generally bind the Court and keep the matters in the agreement and out of litigation.
A BFA is not just an exclusive financial risk-management tool for Hollywood celebrities. Increasing numbers of less famous couples are opting for written agreements to protect the financial assets each partner brings to the relationship. They see it as a form of insurance — a legally binding safety net that they hope they will never need.
Whether you are going into business or want to rent a property to tenants, you are going to have to enter a lease agreement. Commercial lease agreements are necessary whenever you intend to rent a property for commercial use, or when you want to fill your commercial space with paying tenants. No matter which side of the equation you are on, there are qualities to commercial property rental agreements you will need to know before you enter one. Even if you are just looking for a simple lease of some office space or buying a property to lease it as commercial property, be ready before you take that step. Here is what you need to know:
WHAT IS A COMMERCIAL PROPERTY LEASE? Just like any other lease, be it for a car, flat or home, commercial property leases allow landlords and tenants to enter an agreement where the tenant can use the space and pay the landlord rent for that privilege. The difference is commercial properties are for business purposes. No matter if it is a dentist’s office, a factory or a store, if you want to use a space for commerce purposes, you’ll have to enter a commercial lease.
WHEN CAN I USE A COMMERCIAL LEASE? If you want to rent a property out for commercial purposes, or if you want to rent such a space, you’ll need a commercial lease. Because commercial endeavours usually see much higher traffic (customers, deliveries, employees.) These leases are to regulate the property and the special conditions that arise in commercial spaces. Commercial leases are distinctly different from residential leases, and you need to be aware of this.
WHAT MAKES A COMMERCIAL LEASE DIFFERENT FROM A RESIDENTIAL LEASE? Commercial properties are intended to be used as business spaces. No matter if it’s a convenience store, a tailor shop or a factory, all of them place special demands on the owner and the tenant.Commercial leasestypically have special clauses stating what activities can go on, who is permitted on the site, safety and security concerns, privacy rights and landlord access rights, as well as other business-specific clauses. Even office space leases will typically have many such clauses and conditions.
WHAT NEEDS TO BE STATED IN THE LEASE? There is a lot that needs to go into any lease for a commercial property. Since it will hold a business, Commercial Leases often last for many years at a time. They also need to explicitly state the terms of liability, renewal, assignment rights and other issues. Commercial leases are typically much longer than residential leases, and their individual clauses are designed to meet the needs of the businesses that plan to operate on the property.
Business may be complicated. If you want to rent office space or store-front space, you need to be sure your lease gives you enough latitude so you can run your business your way. But also enough security to make sure you can’t be kicked out at will. If you are a landowner, you want to make sure you protect your property and not compromise its value by renting to a party that will cause you problems. Either way, knowing how to make a complete Commercial Property Lease is essential.
Sometimes in business, it may become necessary to work closely with another person or organisation. When a specific project or task requires that two or more people or organisations team up to work together, yet they do not want to enter a permanent partnership, this is the time for a joint venture. Often confused with a partnership, joint ventures are typically formed through a formal agreement between two or more parties. The parties agree to work together towards a common goal, with all parties contributing time, effort, resources or skills. A Joint Venture Agreement is the formal written agreement that forms the basis of the partnership. If you are considering forming a joint venture, this is what you need to know:
WHAT IS A JOINT VENTURE? Similar to a full partnership, joint ventures are often formed on a project basis. If separate entities wish to work together, they will often draw up a Joint Venture Agreement to formalise the terms of the collaboration. Since they do not wish to form a permanent partnership, the joint venture agreement enables them to work together while not being joined in a more permanent business structure.
WHAT IS THE DIFFERENCE BETWEEN A JOINT VENTURE AND A FULL PARTNERSHIP? Joint ventures are usually employed when two or more parties want to work together on a temporary or minor basis. The project on which they collaborate can be anything, but it is usually not the major part of their business. Joint ventures are usually side-project, extensions or other minor collaborations between otherwise independent parties.
HOW MANY PEOPLE CAN BE IN A JOINT VENTURE? Though there is no technical limit to how many parties can be part of a Joint Venture Agreement, generally the agreement exists between any party who is willing to participate. Some projects need multiple people or organisations, each with a separate or minor role. Such projects are ideal for the Joint Venture Agreement.
WHAT DO I NEED TO INCLUDE IN THE AGREEMENT?Joint Venture Agreements must be able to provide a solid foundation for a multiparty project. Depending on the nature of the work involved, these agreements can be simple affairs or complex. No matter how intricate the project, the Joint Venture Agreement must state the nature of the business involved, the identity of all the parties, the length of the project, dividing profits and many other such statements. A properly formed agreement will allow all parties to understand exactly what their obligations are during and after the project, as well as the rewards for their participation.
When you need to work closely with another person or organisation, yet you know the project only requires a limited investment of time or resources, you’ll want to draft an appropriate Joint Venture Agreement. Even the simplest project can run into unanticipated events, and a properly drafted agreement will allow the parties to handle the problem without causing conflict between them. Even if you are best friends with the other person, a Joint Venture Agreement will allow you to work together much more easily because everyone will be certain what their duty to the other parties are.
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