Knowing the right questions to ask is more important that knowing the answers.  That applies, in particular, when you are in negotiations with a financier.  Andrew Mirams will explain today and give you the questions to ask.

Over the years I have seen many people think about getting rich, proclaiming affirmations, visualizing, meditating and going to conferences yet they don’t get rich.  That’s because there is one thing they don’t do.  Michael Yardney tells us what it is.

Getting an edge in your negotiations is what I discuss with 2 top negotiators – Nhan Nguyen and Mark Armstrong – in the show.

In a 2 part series, we feature some sound legal advice from Rob Balanda about time is of the essence, gazumping and dutch auctions.   In the first part he talks about the quaint and hazardous clause in some contracts that can catch you out as a buyer if you are not on the ball. In the second part he talks about why in some parts of Australia it is legal to gazump yet in others it isn’t.   He also explains what it is to be gazumped.

 
Transcripts:
What is 'time is of the essence'? - Rob Balanda Part 1
Kevin:  When we talk to investors in different parts of Australia, it’s always interesting to note the different types of systems of buying property, and I’m going to talk to Rob Balanda about that right now. Rob, of course, is our expert. He’s from MBA Lawyers on the Gold Coast.

I guess you probably see both Queensland and New South Wales. Well, you see contracts from all around Australia, I guess.

Rob:  Yes, we do. It’s a very vibrant part of the world here.

Kevin:  Let’s firstly talk about “time is of the essence,” where it applies and what it really means.

Rob:  Time of the essence is a unique system. It’s an integral part of a conveyancing system that operates only in the two big resource states in Australia. It operates in Western Australia and in Queensland. As you know, from time to time, there’s a fair bit of action in both of those states, Kevin.

Kevin:  Yes, but it has nothing to do with resources, has it? It has more to do with the way the laws were set up in those states.

Rob:  That’s right. They were set up by those parliaments 100 or 150 years ago, and we’re all stuck with them now in this modern age.

But as an investor, especially as this market is recovering or at least an emerging recovering market, and recovering in a lot of places around the country, you need to understand what this time of the essence system is and what the fundamental difference is between the two big resource states, the legal system, the contract system from start to end, how it operates versus how it works in the big, eastern seaboard states, Victoria and New South Wales.

Otherwise, Kevin, you will come to grief; it’s just a matter of time. You’ll be Dutch auctioned, you’ll be gazumped, you’ll be terminated because you didn’t comply with payment of monies by a definite date.

We probably should start with what underpins the system in the big eastern seaboard states, this concept of time of the essence. It’s a sudden-death concept. What it means is in Western Australia and in Queensland, if you sign up to buy a property and you agree to pay, say, a balance deposit by, say, tomorrow or settle in 30 days, and that is tomorrow or 30 days, that date is set in concrete.

Nine times out of ten, if you have a reasonable reason not to be able to meet that deadline, sellers will give you an extension, but investors need to understand they do not have to and they can terminate you at the knees, keep your deposit – you lose the property and lose your deposit.

When doing business in Queensland and WA, investors need to understand that very clearly and they need to be asking their conveyancer and solicitor, “Tell me; is it time of the essence here? What does that mean? What are the big dates? Why are they so important? Will you follow them up? Will I follow them up?”