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29 August 2014

Mentor

Question 1

My client wants to protect her children from a step parent claiming interest in the estate and my client owns the property jointly with her partner. Is the creation of a right of occupation appropriate when the beneficiary of the right owns 50% of the property anyway? I assume it is, just wanted to check. I am working with the right of occupation precedent from Smokeball. (New South Wales)

Answer

The surviving co-owner as, owner of half, cannot have a right of occupation of the whole of the property. Therefore it is necessary to create the right of occupation in relation to the half share of the testator. This will ensure that the partner is allowed to remain in the property until such time as the right of occupation comes to an end. If the property is held as joint tenants, the survivor gets the whole property and it does not form part of the estate of the deceased.

Question 2

What obligations does an owner builder have to a purchaser once a property has sold? Although settlement took place almost 12 months ago, the purchasers have now provided a list of defects (both structural and non-structural) they are seeking to have rectified by the owner builder. The Occupancy Permit issued on 30/09/2011 required that insurance and a condition report were in place at the time of the sale. None of the defects listed by purchasers were included in the report. I understand insurance only covers deceased, disappeared or insolvent owner builders. (Victoria)

Answer

The following extract (and case) from 1001 Conveyancing VIC shows that an owner-builder remains liable to a subsequent owner for any defective workmanship not included in the condition report:

Consequences of breach
Breach of s 137B gives the purchaser the right to avoid the contract, but breach of s 137E only leads to a monetary penalty, not the right to avoid. A purchaser from an owner-builder may be able to sue for loss and damage flowing from faulty workmanship and breach of the statutory warranties.
Jordan v Vuletic (Domestic Building) [2007] VCAT 575 - $68,000 damages
A passive owner-builder (such as a spouse) may not be liable to a subsequent owner for defective work performed by the active owner-builder.
Neil Gibson v John Edwin Eastgate & Anor [2008] NSWCA 81

Question 3

A stamped trust deed (discretionary family trust) was lost. All copies of the stamped deed could not be found. The trust deed had not been amended since the date of execution. The trustee is still the same entity. The settlor is still alive. The settlor's company prepared the deed and can locate an unsigned copy of the lost deed. If the trustee wants to reinstate the trust deed without the need to go to court, would a deed of confirmation together with a statutory declaration be an appropriate approach? Would this be likely to result in a resettlement? (Victoria)
Answer

Mentor cannot anticipate how the SRO may deal with this issue but a suggested course of action is:

Re-engross the copy trust deed with added recitals that the original stamped deed has been lost and this trust deed embodies the terms of the trust as at the date hereof. Have it executed. Present it to the SRO for stamping as a copy with a statutory declaration as to the loss of the original. It would be prudent to include on the statutory declaration a statement to the effect that the deed is not a declaration of trust but rather a deed embodying the terms of an existing trust, the original of which has been mislaid. It would also be prudent to discuss this course of action with the SRO before proceeding.

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