Property

Enduring powers of attorney explained

A lot of people have heard of a Power of Attorney; however, most do not fully appreciate the extent of its power, the benefits it can deliver or the types of Powers of Attorney that exist.​

In this article we examine why appointing a Power of Attorney is often recommended by lawyers and explain the difference between a General Power of Attorney and an Enduring Power of Attorney. The information relates to South Australian law and is not a substitute for legal advice. For advice tailored to your specific circumstances, please consult an experienced legal professional.

Power of Attorney – overview

A Power of Attorney is a useful legal document used to allow someone to handle your financial and legal affairs in a variety of circumstances. It is often used if you are planning to go overseas, taking an extended holiday, suffer from poor health, have an accident or reach a stage in your life when you need greater assistance managing your financial affairs.​

Powers of Attorney in South Australia deal with financial and legal decision‑making only, not personal, lifestyle or medical decisions. Separate documents, such as an Advance Care Directive and guardianship arrangements cover personal, lifestyle or medical decisions.

Selecting a person to act in your place

The appointment of your Attorney enables that person (or people) to act in your place and do certain things you would normally do yourself, such as signing documents, paying bills and banking. The person you choose has the right to stand in your shoes and make decisions regarding your financial and legal affairs.​

Given the power of such an appointment, it is critical that you select the right person to act in that capacity. The person does not have to be a lawyer. It is important for the person to know you well and for you to trust them. It is often a trusted family member, but whoever it is must be over 18 years and have the ability to manage financial matters responsibly.

The difference between a General and an Enduring Power of Attorney

Not all Powers of Attorney are the same.​

A General Power of Attorney is a legal document that gives the Attorney the authority to act on certain financial and legal matters on behalf of the person who appoints them. This power lasts only for as long as the person who appoints them has legal capacity. The general power ceases to operate if the person that has made the Power of Attorney loses capacity to make decisions. A General Power of Attorney is often used as a tool of convenience. For example, a person might appoint a General Power of Attorney to look after their financial and legal affairs in Australia while they travel overseas.

An Enduring Power of Attorney is similar, except that the power continues, or “endures”, in the event the donor (the person making the power) later loses legal capacity, provided the document is made in the correct enduring form.

In South Australia, an Enduring Power of Attorney must be made in the prescribed form and properly witnessed by an authorised witness (for example, a legal practitioner or Justice of the Peace), who should be satisfied that you understand the nature and effect of the document before you sign it.

It is important to be aware that an Enduring Power of Attorney becomes void when you die. At that point, control of your estate passes to your executor or, if there is no will, to an administrator appointed by the court.

When does the Attorney’s power begin?

You may nominate when your Attorney’s power is to begin. If you do not name a date or an occasion, it generally begins immediately once the document has been properly signed and witnessed.

Alternatively, you can specify that an Enduring Power of Attorney is only to take effect if you later lose legal capacity, for example after a doctor confirms that you can no longer manage your financial affairs and make financial decisions.

It is important to note that even if you give your Attorney power immediately, you may also continue to make decisions yourself while you are able to do so. By providing a Power of Attorney you do not restrict or give up the right to make financial decisions as you do today, unless and until a tribunal or court orders otherwise.

You may revoke a General or Enduring Power of Attorney at any time while you still have legal capacity, by signing a revocation document and notifying your attorney and relevant institutions (such as banks) of the revocation.

What happens if you lose capacity without having a Power of Attorney?

The probability that someone can lose capacity is often not considered. However, if you become legally incapacitated and are unable to manage your financial affairs and no longer understand the effect of an Enduring Power of Attorney, it will be too late to have a lawyer prepare one.

No one has an automatic general right to manage your assets if you lose capacity, even a husband or wife, beyond what they can do in their own name or under existing joint arrangements. This can have a significant effect on financial decision‑making with respect to your bank accounts, home, shares or other jointly owned assets or liabilities.

To have decisions made in these circumstances usually involves an application to the South Australian Civil and Administrative Tribunal (SACAT) for an administration order.

The applicant, usually a family member, would apply to become your financial administrator. This is subject to that person being considered a suitable (“fit and proper”) person to manage your affairs. If no suitable person is available, or in some cases even where there is a willing family member, SACAT may instead appoint the Public Trustee or another appropriate administrator to manage your affairs.

If the Public Trustee is appointed, your spouse or other family members may need to consult with a government agency to deal with your ongoing financial affairs until your death, and fees may be charged for this service.

SACAT or an administrator appointed by SACAT can, in some circumstances, vary or revoke an existing Enduring Power of Attorney if that is in your best interests.​

Summary

Today Powers of Attorney are often used as a precautionary step by sensible adults, not just a stop‑gap measure for an overseas trip. Professionals such as accountants, financial planners and lawyers often recommend that their clients of all ages and walks of life make a Power of Attorney to ensure their assets are not effectively locked up if they lose legal capacity and to minimise stress on their loved ones.

This is general information only and you should obtain professional advice relevant to your circumstances. If you or someone you know wants more information or needs help or advice, please contact us on (08) 8155 5322 or email [email protected].

Common mistakes to avoid when buying property

Buying or selling a home is one of the biggest financial decisions you’ll ever make. While it’s an exciting time, the legal side of the process, known as conveyancing, can be complex and full of potential pitfalls. A simple mistake can lead to costly delays or even a collapsed deal.

Knowing what to look out for is the best way to ensure your property transaction goes smoothly. Here are some common conveyancing mistakes people make and some practical tips on how to avoid them.

1. Not Getting Your Finance Sorted Early

This is a mistake that can derail a purchase before it even begins. Many buyers get caught up in the excitement of finding their dream home and make an offer without having a solid loan pre-approval in place.

• The Problem: Your offer might be accepted, but if your finance falls through later, you could lose your initial deposit and face penalties for breaching the contract. In some cases, a contract becomes unconditional as soon as it’s signed, especially in an auction setting where there is no cooling-off period. If you can’t secure the funds, you’re in a very difficult position.

• How to Avoid It: Before you start seriously looking for a property, speak with a mortgage broker or your bank to get a formal loan pre-approval. This gives you a clear budget and allows you to make offers with confidence. If necessary, talk to your conveyancer or lawyer about adding a “subject to finance” condition in the contract.

2. Skipping the Due Diligence

The phrase “let the buyer beware” is a core principle when it comes to buying property. This means it’s your responsibility to be satisfied with the property before you buy it. Skipping crucial checks to save a little money can be a very expensive mistake in the long run.

• The Problem: You might buy a home only to discover serious hidden issues, like a major termite infestation, a cracked foundation, or illegal building works that need to be torn down. These issues can be incredibly costly to fix and can significantly reduce the property’s value.

• How to Avoid It: Checking zoning regulations and building compliance, verifying property boundaries, and arranging professional building and pest inspections all form part of the due diligence process. For apartments, townhouses, or units, a strata report is essential to uncover any issues with the body corporate, such as large debts or upcoming special levies for major repairs. Your conveyancer or property lawyer will also conduct essential searches, such as checking the title for easements, covenants, unpaid rates, or undisclosed interests from government authorities.

3. Misunderstanding the Contract of Sale

A standard contract of sale is a comprehensive legal document, often filled with complex terms and special conditions. Many people sign it without fully understanding what they’re agreeing to.

• The Problem: You could be locked into a contract that has conditions you don’t agree with or that puts you at a disadvantage.

• How to Avoid It: Never sign a contract of sale without a professional review. The role of your conveyancer or lawyer is to read every clause and explain your obligations in plain language. They will identify potential risks and can sometimes negotiate with the seller’s representative to have unfair clauses removed or amended before you sign.

4. Leaving Things to the Last Minute

Conveyancing has strict deadlines and a specific sequence of events. Delays in one area can cause a domino effect, pushing back settlement and potentially costing you money.

• The Problem: Failing to sign a document or pay the deposit on time can jeopardise your purchase. Similarly, if you don’t coordinate with your bank, you could miss the settlement date, resulting in costly penalty fees or, in more severe cases, contract termination and consequential legal action.

• How to Avoid It: Stay organised from the get-go. As soon as you have a signed contract, provide all necessary documents to your conveyancer and lender promptly. Keep an open line of communication with all parties involved and respond to requests for information as quickly as possible.

5. DIY Conveyancing

DIY conveyancing has become even more complex with the advent of electronic conveyancing, which is effectively a closed system where only accredited entities can participate. Doing your own conveyancing is not a decision to be taken lightly. The process is full of legal complexities and risks that can be difficult for someone without legal training to navigate.

• The Problem: You could miss a critical search, fail to identify a problematic clause in the contract, or make a technical mistake on a legal document.

• How to Avoid It: Engage a reputable licensed conveyancer or a property solicitor. Their fees are a small price to pay for the peace of mind that comes from having an expert on your side who is insured and has a deep understanding of the legal requirements for property transactions.

Key Takeaways

• Sort out your finances first. Get pre-approval before you start shopping.
• Do your research. A building and pest report is a non-negotiable step.
• Get expert advice. Don’t sign a contract until a professional has reviewed it.
• Stay on top of deadlines. Timely communication and organisation are key.
• Don’t DIY. A qualified conveyancer or property solicitor is a vital part of your team.

By being proactive and seeking professional guidance, you can navigate the conveyancing process with confidence and avoid these common and often costly mistakes.

This is general information only and you should obtain professional advice relevant to your circumstances. If you or someone you know wants more information or needs help or advice, please contact us on (08) 8155 5322 or email [email protected].

What is an ‘Interest’ in Property?

When discussing property law, the concept of an ‘interest’ is significant. An interest in property refers to a legal stake or other right that an individual or entity holds in a particular piece of real estate.

This article explores the definition of property interests, common types, and the profound impact they can have on property owners and prospective buyers. Additionally, we distinguish between legal and equitable interests, shedding light on their distinctive characteristics. The information is general only, and we recommend seeking professional advice relevant to your circumstances.

Definition of an Interest in Property

At its core, an interest in property refers to a legally recognised claim or right associated with a specific piece of real estate. These interests can take various forms, each conferring a set of rights and obligations upon the party holding them. Understanding these nuances is crucial for both property owners and potential purchasers, as they directly influence the utilisation, transfer, and enjoyment of the property.

Common Types of Interests

The most common types of interest in property are freehold, leasehold, easements, covenants, and mortgages.

Freehold Interest

This is the most comprehensive and absolute form of property ownership. A freehold interest grants the holder full ownership rights, allowing them to use, sell, or lease the property without constraints (subject to planning, environmental and other relevant laws). The property can be passed on to heirs, providing perpetual ownership.

Leasehold Interest

In contrast to freehold, a leasehold interest grants the holder the right to use the property for a specified period, in exchange for complying with terms and conditions and payment to the property owner, often through a lease agreement. While those with a leasehold possess certain rights during the lease term, ultimate ownership reverts to the landlord after its expiration.

Easements

Easements confer specific rights to a third party, allowing them access or use of another person’s property or part of it. Common examples include utility easements, granting access for maintenance or installation of utility lines. Easements typically run with the land and can affect the land’s value, use and future development. They should be fully investigated during a property transaction.

Covenants

Property covenants are legally binding restrictions or agreements that dictate how a property may be used. They are often imposed by developers to maintain certain standards within a community and to protect the land’s value.

Mortgages

A mortgage is a financial interest in a property held by a lender until a loan is fully repaid. A mortgage document and/or associated loan agreement will set out the rights of each party to the mortgage. The property serves as collateral for the loan, and failure to repay the loan may result in foreclosure where the property is repossessed and sold to repay the mortgage.

Impact on Property Owners and Prospective Purchasers

Understanding the nature of property interests is paramount for both existing property owners and those contemplating a purchase.

For property owners, recognising existing interests is crucial to avoid disputes and ensure the lawful enjoyment of their property. Leasehold arrangements, easements, or covenants may impact how an owner uses and maintains their property.

Identifying property interests is perhaps more critical for those who are acquiring a property. Before buying a property, it is essential to conduct thorough due diligence to identify existing interests. This involves reviewing title deeds, survey reports, and any pertinent legal documents. Failing to do so may lead to unexpected limitations or disputes after the purchase.

Legal Interests vs. Equitable Interests

A critical distinction in the realm of property interests lies in their classification as either legal or equitable.

Legal interests are formally recognised and enforceable by law. They are typically registered with the relevant government authority, providing a clear and public record of the interest. Examples include freehold ownership and registered mortgages.

Equitable interests, while still legally valid, may not be immediately apparent from public records. These interests arise from agreements, trusts, or other equitable doctrines. An example is a beneficial interest in a property held by someone other than the legal owner.

It is crucial to understand the distinction between legal and equitable interests when assessing the true scope of property rights. While legal interests are readily identifiable through official records, equitable interests may require a more in-depth examination of the property’s history and associated agreements. Unfortunately, a buyer may acquire a property without discovering an equitable interest and may then need to go to court to try and protect their right to the property. However, this risk can be mitigated by engaging proper legal support and performing due diligence prior to a property purchase.

Conclusion

The various types of property interests, ranging from freehold ownership to easements and covenants, each carry distinct implications for the use and enjoyment of a property. Recognising the impact of these interests, conducting thorough due diligence, and distinguishing between legal and equitable interests are essential steps in navigating the complexities of property ownership and transactions. Seeking legal advice is often necessary to confirm property interests at each stage of real estate ownership.

If you or someone you know wants more information or needs help or advice, please contact us on (08) 8155 5322 or email [email protected].

Buying a Property? Don’t Skip the Pre-Settlement Inspection

Purchasing a property is a significant undertaking. One crucial step in the process that should not be overlooked is the pre-settlement inspection. This involves the buyer inspecting the property just prior to completing the purchase. In this article, we explore the importance of pre-settlement inspections, when and how to conduct them, buyers’ rights, what to look for, and how to deal with any issues that arise during the inspection. This is general information only and you should obtain professional advice relevant to your circumstances.

Aim of Pre-Settlement Inspections

The aim of a pre-settlement inspection is to allow you, as the buyer, to assure yourself that the property is in the same condition as it was when you agreed to buy it. The inspection enables you to identify any defects or damage that may have occurred since your initial inspections. It is also an opportunity to ensure that the vendor has repaired or attended to anything agreed to be done prior to completion.

During the pre-settlement inspection, you can also confirm that all fixtures and fittings included in the sale are present and in good condition. This might include, for instance, appliances, light fittings, and other items that were part of the deal.

Obviously, the pre-settlement inspection is an important safety net, otherwise you may not find out until after settlement that there has been significant and unexpected damage to the property. Accordingly, buyers should understand their rights to a pre-settlement inspection, and ensure that the inspection goes ahead.  

How to Arrange a Pre-Settlement Inspection

The pre-settlement inspection typically occurs shortly before settlement (for example, the day before or morning of settlement), ensuring that any issues discovered can be addressed in time to allow settlement to occur on schedule. The contract of sale may specify a time frame in which the buyer can make the inspection.

The selling agent will usually arrange for access to the property to enable the inspection. For private sales, the seller will be responsible for ensuring access to the property as required under the contract. Although, as the buyer you have a right to enter the premises to conduct this inspection, it is a good practice to schedule a time that works for both parties, allowing enough time for a thorough examination of the property.

What to Look Out For

During your pre-settlement inspection, there are certain things that you should particularly note. First, you should assess the overall condition of the property, ensuring that it is in a clean and well-maintained state (if that was the condition at your previous viewings).

Next, you can look for any damage that may have arisen since your last inspection. This could include looking for issues such as damage to walls, ceilings, or floors. You should also check that utilities such as hot water and gas function properly.

You can refer to the contract at the time of the inspection to confirm that all agreed-upon fixtures and fittings are in place and functioning as expected. It is also recommended that you verify the condition and operation of any included appliances.

Dealing with Problems

Minor issues that arise during the pre-settlement inspection can usually be addressed by the agent and seller. For instance, you may negotiate for repairs or a price adjustment to address minor concerns. At this stage, just days before settlement, both parties are so committed to the sale that a fair compromise is usually quickly agreed.

In contrast, major issues can pose more significant challenges. In the event of substantial problems, such as missing inclusions or significant damage, you may not be able to settle on the date previously agreed. Major issues may require extensive repairs prior to settlement or make the property no longer suitable.

It is essential to communicate openly with the seller and your legal representative to navigate major issues effectively. In some cases, a decision may need to be reached about delaying settlement or considering your legal options.

Conclusion

The pre-settlement inspection is a crucial step in the property-buying process that should not be overlooked. It serves as the final check to ensure that the property’s condition aligns with the terms of the contract.

Understanding your rights as a buyer, knowing when and how to conduct the inspection, and being thorough in your assessment will provide peace of mind and the opportunity to address any issues before settlement. Whether dealing with minor or major problems, open communication with the seller and your legal representative is key to finding a suitable resolution.

If you or someone you know wants more information or needs help or advice, please contact us on (08) 8155 5322 or email [email protected].

Buying a property at auction  – Things you need to know BEFORE the auction day

Buying a property can be an intimidating process, especially at an auction where you are competing with other buyers and there is no cooling-off period.  

Many properties are sold at auction, particularly in a rising market, so it is important for buyers to understand the processes involved so they can bid confidently on the auction day.  

Options to renew in commercial leases – don’t get caught out!

An option clause is a term in a commercial lease that allows a tenant to renew their lease at the end of the original lease period, if they meet certain conditions.  

Landlords are not obliged to offer a renewal option. However, it is often in the interests of both parties if they are interested in a long-term commercial relationship. 

Buying Land to Build Your Dream Home – Top Tips

Building their own home is a dream for many people, but it can be a more intimidating prospect than simply buying an existing house. One of the first and most challenging steps is to find the right plot of land. Unfortunately, this task does not end when you find vacant land (a difficult enough task in many Australian locations). Before buying the parcel of land, it is crucial to understand the relative ease or difficulty involved in building on this land, as this can have a significant impact on the cost of the build. 

What does a public liability claim mean?

A public liability claim is a potential entitlement to compensation for injuries or harm suffered in a range of circumstances due to the negligence of another person or entity.