HELD LAWYERS

Est.1991

Property & Commercial Law

Law Matters

January 2013 Newsletter

Welcome
We hope you have returned to work fresh and invigorated from a great summer break!
Welcome back to our firms monthly newsletter, Law Matters.
Each bulletin touches on a broad range of topics in an easy to read, practical way. We aim to
give you a brief, but better understanding of current issues as they arise, and food for thought!
We are happy to visit you in 2013 and provide staff or client briefings about a range of topics
or matters of interest to you. Please feel free to contact us in that regard.
We hope to see you soon in person.
Adam Held
Principal

Off-the-plan contracts of sale developers

must use best endeavours to register plans
of subdivision
A recent decision of the Victorian Court of Appeal appears
to make it compulsory for developers, required to use
best endeavours to register the Plan of Subdivision, to
enter into Section 173 Agreements with local Councils in
all circumstances where the Council is prepared to enter
into such an agreement (Joseph Street Pty Ltd v. Tan &
Ors. [2012] VSCA 113).
The Section 173 Agreement process appears to provide
the vendor with a shortcut to registration of the Plan, as
a certificate of compliance may be issued by the local
Council well in advance of completion of all construction
and infrastructure works. Unless it is willing to do so, a
purchaser will want to ensure that it does not become
liable for carrying out and completing the developers
infrastructure works under the Agreement, and may well

both become a party to the agreement and require the

developer to provide a bank guarantee for those works.
Of course a purchaser will not wish to settle on registration
of the Plan alone, and should require both registration
of the Plan and issue of a certificate of occupancy as a
precondition to settlement.

Leases - insurable risks

Living in a country of droughts and flooding rains
as we do, issues of insurance should never be far from
our minds. This is even more so when differences in
cover arise from one insurance policy to the next.
Clause 6.2 of the current (November 2012 Revision)
Law Institute of Victoria Lease of Real Estate requires the
landlord to take out and maintain policies of insurance for
any specified risks (for which the tenant is to re-imburse
the premiums). Item 11 of the Lease Schedule contains
a standard list of risks which the insurance policies

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must cover, including flood, storm and tempest and internal

flood water.
Whilst the list should be amended for individual
circumstances, often it is left unchanged.
Insurance requirements should be raised with landlords
and consideration given to the list of insurable risks when
a lease is prepared whether the LIV standard form lease
with the Item 11 list, or a bespoke form of lease. Landlords
should consult their insurance broker to confirm that their
policy covers the specified risks. In the case of the Item
11 list, this should be amended to exclude any risks the
landlord is unwilling, or unable, to insure against.
(sources: My Country by Dorothea MacKellar; LPLC
Bulletin, Issue 50)

Off-the-plan contracts of sale deposit bonds

& bank guarantees in lieu of cash deposits
A deposit bond is an unconditional performance bond,
where the bond issuer is liable to pay, upon demand, a sum
of money to the person in whose favour the bond has been
issued. Where the issuer is a bank, it is known as a bank
guarantee.
Deposit bonds are increasingly popular in Victoria,
particularly for off-the-plan purchasers. However, General
Condition 11.1 of the current Contract of Sale of Real
Estate provides for payment of the deposit into an account.
Deposit bonds are not mentioned. A special condition
would be required where full/part payment of the deposit
by a deposit bond is contemplated.
Section 9AA of the Sale of Land Act 1962 (Vic) deals
with the stakeholder provisions for deposits involving the
sale of a lot (whether registered or not). The contract must
provide for the deposit to be paid to a legal practitioner,
conveyance or licensed real estate agent. If the Vendor
fails to comply, Section 9AE provides a purchaser of an
off-the-plan lot with an absolute right to rescind at any time
before registration of the plan.

Recent case law (Everest Project Developments Pty

Ltd v. Mendoza (2009) VConvR 54-755) indicates that
a deposit bond (which in that case the contract provided
could be called upon prior to registration of the plan) may
in certain circumstances not comply with Section 9AA,
and that a purchaser can rescind under Section 9AE.
Vendors should therefore consider carefully the wording of
special conditions relating to deposit bonds in the case of
off-the-plan sales contracts.
(source, in part: LIJ December 2012 article by David P
Lloyd)

Referrals
Should you require non-legal assistance with various
matters, we are happy to provide you with contact details for
a range of service providers, including financial institutions,
accountants, real estate agents, brokers, etc.

Areas of practice
Property Law including conveyancing and leasing
Commercial and Business Law
Banking and Finance Law including mortgages and
guarantees
Wills and Estates Law
Intellectual and Industrial Property Law
Litigation
If you would like further details or assistance or to
discuss information contained in this publication or
generally, please do not hesitate to contact us. For
copies of this and other publications, visit our website
at www.heldlawyers.com.

Disclaimer
This publication is intended to provide a general outline. It is not intended to be a complete or definitive statement of the law on the subject matter covered.
Further professional advice should be sought before any action is taken in relation to the matters described in this publication.
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