Heads of Agreement Checklist

Heads of Agreement

Checklist

• The Heads of Agreement should be dated and validly executed by both parties
  
  
• There should be an explicit statement that the Heads of Agreement is meant to be binding
  
  
• If an essential term is absent or uncertain, the agreement will be void for uncertainty or construed as incomplete, ie. the parties should have agreed the terms that are regarded as essential, for example:
  
  - In a simple Heads of Agreement to lease a building the following matters must have been agreed and should be accurately identified - the parties, the premises, the term of the lease, the rent or other consideration payable, review dates and rights of renewal
  
  
• In the above case there was express reference in the Heads of Agreement to matters "not agreed". The Court determined that the matters marked not agreed had such substantial financial implications for both parties that they were marked not agreed as an indication of their importance and were therefore essential terms.
  
  
• There should be a provision for agreement on outstanding issues to be reached by resort to an expert or an arbitrator or by another mechanism (in the above case, the Court determined that the matters not agreed were "of a kind which could not be expected to be settled for the parties by a Court or other third party" ie. the Court was unable to fill the remaining blank spaces.
  
  
• You should ensure that all documents that are referred to as "attached" to the Heads of Agreement are attached, and that the parties have initialled all amendments and the foot of each page.
  
  
• If there is a particular form of agreement to be entered into at a later date (for example, the Auckland District Law Society Lease), then this should be attached or clearly identified in the Heads of Agreement to avoid uncertainty.
  
  
• The Heads of Agreement should be clearly drafted in plain English and accurately reflect the intention of the parties with all the essential terms and conditions incorporated.

What is Fair Wear and Tear

Are you being too tough on your tenants?

The basic definition for fair wear and tear is:

‘damage that occurs during normal use or something that happens due to aging’.

As a tenant wrapped up in day-to-day life little bumps and dints, some light scratches and a smattering of smudges are usually things which cannot be avoided. A complete list of employment contracts can be found here: Residential Tenancy Agreements.

BUT, what if you are the proud owners of an investment property and your tenants are leaving their mark on your asset? Just HOW much do you let them get away with?

Deciding on what is fair is a huge challenge that property managers have to face every time a tenant leaves a property.

The problem lies in the fact that the term 'fair wear and tear' is not specifically defined in the Tenancy Act or the Tenancy Agreement, so it is open to individual interpretation. Some landlords can be very hard on tenants and while they expect the premises to be perfect, it is important to be fair to the renters.

Things like wearing carpet, slight smudges on the walls, chipped tiles, holes in fly screens, marks on curtains and carpets, insects in light fittings or dusty window and door tracks can happen in a normal day, and, they can happen to anyone. Other important factors that should be considered are the number of tenants, the time of tenancy and the age of fixtures and fittings prior to their tenancy.

It is important to think about the normal signs that appear when a property has been lived in for a period of time. Allowances must be made for this when it comes time for the property inspection and checking off on the original ‘condition report’.

So why is comparing the ‘condition report’ to the current state of the property so important?

The purpose of the final inspection is to compare the current state of the property to the initial condition report completed by the tenants at the beginning of their stay. The legislation states that the tenant must leave the property in the same condition as when they entered, and any substantial damages will then have to be paid from their rental bond after they have vacated the premises.

Just a bit of simple common sense and understanding from both sides can prevent any disputes;

As a tenant you should take care of the property and try and leave it as you entered it or you may be liable for the costs involved for repairs. You may also lose the large ‘rental bond’ which you paid at the beginning of your stay.

As a landlord then understanding that little things happen when living in a property is important and allowances MUST be made, you must take into consideration the fair wear and tear factor. Of course if there are obvious signs of avoidable damage to the property then you should not have to pay for this yourself.

With this understanding the relationship between tenant and landlord can and should be a good one.

http://www.rpemery.com.au

COMMERCIAL SUBLEASE AGREEMENT

What a commercial leaseholder needs to do to Sub-Lease a Commercial property.

Here are some very important things you will need to know before entering into a Commercial Sublease Agreement.

WHAT IS A COMMERCIAL SUBLEASE? 

WHEN CAN I USE A COMMERCIAL SUBLEASE? 

WHAT’S THE DIFFERENCE BETWEEN SUBLETTING AND ASSIGNING A LEASE? 

HOW DO I ENTER INTO A COMMERCIAL SUBLEASE? 

WHAT NEEDS TO BE STATED IN THE SUBLEASE AGREEMENT?

CAN I SUBLET PARTS OF THE PREMISES?

For the answers to these questions please visit the RP Emery website

Agency Agreements

What is an Agency Agreement?

An Agency Agreement is a legal contract between “the agent” and “the principal” whereby a fiduciary relationship is created that defines the duties and authority of the agents.

The Principal grants the Agent the right to create legal relationships with third parties and to work on behalf of the principal and under his control. Therefore the principal agrees to be bound by the agents' actions. For example; if the agent negotiates an agreement with one of the principals customers, the principal agrees to honour the agreement as if the principal had himself made the agreement.

With a sales agency the Agent’s role is to find, negotiate and close sales on behalf of the principal. It’s important to understand the agent only has the authority to negotiate and enter arrangements on the principals behalf, to the extent allowed by the terms of the agency agreement. For instance; this may mean that a principal reserves the right to approve or decline all sales negotiated by the agent, before a binding contract is entered.

In most cases the sales agent will be rewarded for his/her efforts based upon performance. This means a well structured agency agreement will provide a win win situation for both parties. The agent usually assumes all of his or her operating costs so its important to remember this when negotiating your agreement.

As a general rule an agent will not be required to hold stock of the principals products, it’s the principals responsibility to ensure he has the resources to deliver the product or service to the customer. Once the product or service is delivered the commission Agent is then entitled to payment from the principal.

Agency agreements also provide flexibility for the parties whereby the Agent may be granted an exclusive or non exclusive territory sometimes called a sole agency. This means the principal is able to ensure if need be all agents acting under his control get a fair share of the market available.

Remember, when negotiating your agency agreement both the agent and the principal will have a legal duty. In particular, the agent is placed in a position where a high-level of responsibility and trust is imposed. This is known as a “fiduciary relationship” and certain obligations are placed on the agent regardless of any contractual responsibilities. The primary responsibility of the agent is to act honestly and in the best interest of the principal.

Agency agreements can be written, verbal or implied by the conduct of the parties involved. The Law and the Tax office may look at the actions of those involved in deciding if an agency can be inferred. If the parties have acted in a way that reasonably infers the agent is representing the principal with the knowledge and approval of the Principal then an agency arrangement is presumed.

Whatever the situation, it is always better to enter any agreement in writing. A written agreement clarifies the terms, conditions and duties of the parties involved and will provides strong legal protection in the event of a misunderstanding.

 

Click Here for Agency Agreement Template

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