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.

Associate Lease Agreement, Salary Sacrifice, Salary Packaging

Associate Leases: A Guide for Employers and Employees

You have probably heard of salary packaging or salary sacrifice, a flexible remuneration scheme where employees agree to forgo part of their salary (thus the term salary sacrifice) in exchange for certain non-cash benefits. An associate lease is one of the ways through which employers can provide their employees with car benefits under a salary packaging agreement. With an associate lease in place an employee can reduce their taxable income in exchange for a motor vehicle.

What is an Associate Lease?

An Associate Lease is a lease rental arrangement whereby an Associate of the employee (eg partner, spouse) owns the motor vehicle and leases it to the employer. The motor vehicle is then provided to the employee on a fully maintained basis.
Once the lease is in place, the motor vehicle is recognised as an Employer provided motor vehicle for both the purposes of the Income Tax Assessment Act and the Fringe Benefits Assessment Act.

The Benefits of Associate Leases

The Associate leases arrangement provides two key benefits :
i) Lease payments are paid as income to the associate who would generally be in a lower tax bracket than the employee.
ii) Additionally all of the running and maintenance costs are paid for and claimed as a deductable expense by the employer.
iii) Employee forgoes income in exchange for car benefits thereby reducing tax liability 

An associate lease is thus a salary sacrifice arrangement that is very similar to a novated lease agreement. However, in an associate lease, the employee's associate is the owner and thus the lessor of the vehicle provided by the employer to the employee whereas, in a novated lease, a finance company is the lessor.

However convoluted it may seem on the surface, an associate lease is simply an arrangement in which the employee through his associate leases the employer his or her existing car so that the employer can provide him or her with car fringe benefits, which he or she pays for by sacrificing part of his or her future salary.

Under an Associate Lease Agreement, the associate is liable to pay taxes on the lease payments received. However, if the associate in the agreement happens to be someone who has no or quite low income (e.g. adult child attending university), then income tax savings can still be considerable. After all, the marginal tax rate would still be lower than the rate that the employee would have to pay had the amount been on his or her assessable income. The depreciation allowance for the first year also leads to further reduction in the associate's assessable income.

For More Please Visit the RP Emery website

Property Settlement When A De Facto Relationship Has Broken Down.

How to do Property Settlement When A De Facto Relationship Has Broken Down.

Before the right to create Financial Agreements (FAs) was extended to same-sex and de 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.

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. For More Please Visit www.financialagreements.com.au

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