HELD LAWYERS

Est.1991

Property & Commercial Law

Law Matters

October 2013 Newsletter

Welcome
In this months bulletin, we get back to some basics: services information in a Vendors Statement;
sale of a small business vendors key risk checklist.
If there are topics you would like us to look into, please let us know.
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 before the end of 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 (again) soon in person.
Adam Held
Principal

Are those
connected?

services

connected

or

not

Section 32(2)(ea) of the Sale of Land Act 1962 (Vic)

sets out the information that must be provided about
services in a Vendors Section 32 Statement:
(ea) a list of the following services, indicating in respect

of each whether the service is connected to the

land and, in the case of any service connected, the

name of the authority supplying the service;
Often that information is wrong. Some of the errors
include:

failing to name the authority for gas, electricity

and telephone. Including relevant authority, local
Provider or purchasers choice for the service
provider is not acceptable.

referring to the service as available. The service

must be described as connected or not
connected. Too often, the misleading
description available is used resulting in confusion
for the purchaser. Different practitioners have
different views on what available means. Whether
or not a service is available is not required to be
disclosed in the section 32 statement and to avoid

confusion should not be. In our September 2013

Newsletter, we advised that the Law Institute of

Victoria / REIV standard form Vendors

Section 32 Statement was updated in August

2013. Item 5 deals with services. In this latest

edition, the word available has been deleted

so that you must select either connected or not
connected.

referring to sewerage as connected when a septic

tank is in use. Many clients think that

because they have a full functioning toilet they

have sewerage connected even though they in

fact know about the septic tank. There are many

septic tanks in rural areas and even some in

suburban areas.
Local councils are responsible for issuing permits for the
installation and/or upgrade of a septic tank. The health
department at the local council will usually be able to
advise over the phone whether or not there is a septic
tank on the vendors land.
Services are connected where they are provided by an
authority and operating, e.g. the electricity is connected
and it is working on the day of sale. It does not matter
that the vendor will terminate their account with the

Malvern Office

Carlton Office

Postal Address

Contact Details

Level 1, 180-182
Glenferrie Rd
MalvernVIC3144
(corner Winter St)
Melway59C8

113 Cardigan St
CarltonVIC3053
Melway2BF10

P.O. Box 467

Malvern VIC 3144
W: www.heldlawyers.com

T: 03 9509 0710
M: 0407 548 632
F: 03 9500 0805
E: info@heldlawyers.com

service provider by settlement date, and the purchaser has

to have the service reconnected.

Where the service is not working on the day of sale, but a

purchaser is able to pay a fee to the authority for it to work,
then the service is not connected.

it is the seller who must satisfy the landlord about any

assignment of lease requirements and obtain the
landlords consent.

if there is doubt that the sale will qualify as the supply

of a going concern, treat the sale as taxable.

(source: LPLC Bulletin Issue 60, September 2013)

Business sale of business vendors key risks

checklist

always use a GST exclusive claw back clause in the

contract as a safety net.

timing issues when separate vendors are selling both

freehold and business to a single purchaser or for a
single vendor selling both freehold and business to
separate purchasers.
the parties have agreed in writing that the supply is of
a going concern.
ABN search to ensure that the purchaser is registered
for GST prior to settlement.
need to give to the purchaser details of employee
entitlements together with employment records.

In our July and August 2012 Newsletters we overviewed

sales of business and information gathering by the seller.
Some key risks for a seller to consider include:

failure to give the purchaser a Section 52 Statement

may allow the purchaser to avoid the contract.
business operating report in the Section 52 Statement
must be prepared by an accountant and must be
accurate.
sellers accountant must prepare the business
operating report for the Section 52 Statement and
either the accountant or the seller must provide the
business operating report for inclusion in the Section
52 Statement.
confirmation that all schedules are accurate.
issues associated with early possession.
providing vendor finance. If the seller still wants to
proceed on vendor terms, consideration should be
given to: various forms of security and the attendant risks.
ensuring that the title to chattels does not pass in
a terms contract until final payment is made and
registering the vendors security interest in the
Personal Property Securities Register.
the need to include a power of attorney in a
vendor terms contract in the event that the
purchaser defaults and the vendor needs to take
possession and obtain a liquor licence.

where the seller is assigning a retail lease, providing

disclosure statement in schedule 4 of the Retail
Leases Regulations 2013 (Vic). It should be
provided before requesting a landlords consent.
any guarantees given in connection with the business.
guarantees given to suppliers sellers should check
with suppliers to confirm the position.
proceeding by way of an indemnity and the possible
consequences of taking this course.
guarantees to be obtained from directors where the
purchaser is a company.
settling without executed releases from guarantees,
accepting indemnities or even providing additional
guarantees to third parties.

pay careful attention to: schedules are they accurate, particularly in

relation to plant and equipment, intellectual
property and financial data?
Definitions - particularly employee entitlements.
Who is responsible for long service leave, annual
leave, sick leave and termination payments?
the default mechanism and the consequences if
default occurs.

formula: particularly retention amount. The

formula should be tested to ensure it works
mathematically.
(source: LPLC Key Risk checklist small business - Vendor,
October 2013)

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 commentary and general information only. It should not be relied upon as legal advice. 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. Persons listed may not be admitted in all jurisdictions.
Liability limited by a scheme approved under Professional Standards Legislation

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