What is Fractional Ownership

FRACTIONAL OWNERSHIP AGREEMENT

How you can ‘co-own’ and draft an appropriate fractional ownership agreement.

The dream of buying your own airplane, sailboat, powerboat or expensive item is something many people share. All to often, however, these properties are either too expensive for a single person to buy, or potential buyers believe they will get more use out of the properties if they come together and purchase them as a team. Whether you and your friends wish to purchase a boat and agree upon the times when you can use it, or you want your own aircraft and want to spread out the expenses of operation, suitable agreements can be reached to make this possible. If fractional ownership of a boat or aircraft is something you wish to pursue, you’ll first have to draft the appropriate document. Here is what you need to know:

 WHAT IS A FRACTIONAL OWNERSHIP AGREEMENT?

A Fractional Ownership Agreement is simply a written statement describing the terms under which your boat or aircraft will be purchased and used. The agreement states what the responsibilities and privilages of the various co-owners will be. Whether it’s a time-share type agreement for a boat or a list of times when a group of co-owners have the right to use a crop-dusting aircraft, these agreements are written so each fractional owner will be clear what they can and cannot do.

 HOW MANY PEOPLE CAN ENTER INTO A FRACTIONAL OWNERSHIP AGREEMENT?

As many as agree to do so. Co-Ownership of a boat or airplane can include multiple parties. It’s quite common for groups of families or small business to agree to share rights to these properties, and apportion the share of costs or expenses appropriately. Of course, there will be practical limitations to any use, but as long as everyone agrees to the terms, the fractional ownership agreements can include as many people as you wish.

 WHAT ABOUT REPAIRS AND MAINTENANCE?

The co-owners can decide amongst themselves who is responsible for repairs and maintenance. Whether one person supervises all required maintenance and submits a bill to the rest, or if each co-owner agrees to take turns, however the parties wish to allocate responsibility to any area of the ownership details is up to them.

 WHAT DO I NEED TO INCLUDE IN MY FRACTIONAL OWNERSHIP AGREEMENT?

Most often, Fractional Ownership Agreements will include conditions that cover all contingencies. The method of funding, cost allocation, transfer of ownership interest and terms of use are all needed to make the agreement complete. These documents should be clear and concise, yet expansive enough to include all information required to make it clear to all parties involved what their responsibilities and privilages are.

The choice to enter into a Fractional Ownership Agreement for a boat, aircraft or other expensive item is a common decision many people make when they wish to purchase these kinds of properties. The most important function of these documents is to make it clear to each owner or potential co-owner what they can and cannot do with their share of the property. A well drafted Fractional Ownership Agreement will allow for everyone to enjoy their new purchase, while a poorly drafter document, or even worse, no agreement at all, will lead to endless problems.

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CO-OWNERSHIP AGREEMENT

Getting a Divorce? This will save you a lot of money!

Binding Financial Agreement after Dissolution of Marriage: Divorce

When getting a divorce there are two processes to consider – one is simply dissolving the marriage itself and the other is dividing the property, spousal maintenance and child support issues.

A ‘Certificate of Divorce’, which contains the dates of the decree nisi and the decree absolute marks the formal end of the marriage.

Getting the divorce.

In Australia it is quite simple to get a divorce – it can be done on-line at http://www.divorce.gov.au/ . This site has information and resources to help you learn about the divorce process and lodge your application for divorce whether it be on-line or offline

Property Settlement / Maintenance and Child Support Issues

Divorced couples who wish to finalise all matters of a financial nature in dispute between them, including spousal maintenance, require some form of legal documentation.

As long as the coupe are communicative and willing to resolve their issues they can be addressed in one of two ways. The couple can make an agreement with ‘consent orders’ being made by a family law court or they can enter into a financial agreement.

A consent order is a written agreement approved by a court. A consent order can cover parenting arrangements for children (a ‘parenting order’) as well as financial arrangements such as transfer and sale of property and spousal maintenance. The court must be satisfied that the orders are properly drafted and that the terms of the agreement are “just and equitable”, before it will approve them.

Provided for under the Family Law Act 1975, Section 90D refers to Financial Agreements after the dissolution of marriage or divorce. Like other Financial Agreements, section 90D focuses on the division of financial resources of both parties and maintenance of either party after the couple has divorced.

The difference between a Financial Agreement and Consent Orders is you do not need to lodge your financial agreement with the Court for approval, and it is not subject to review by the Court.

If no agreement can be reached then an application for property orders must be submitted to either the Family Court of the Federal Magistrates Court.

An application must usually be made within 12 months of your divorce becoming final. The decision is then made through a court hearing.

Financial agreements 90D (Divorce Agreement) negate the need for the couple to enter court proceedings, reducing the risk of extended litigation and providing certainty of outcome.

Reaching an amicable property settlement agreement quickly about debts, assets and property offers the divorcing couple many advantages;

* you get to make your own choices

* you significantly reduce the financial and emotional costs of taking the matter to court

* you can ensure more open communication with your former partner increasing the likelihood of improved conflict resolution in the future

* your ongoing relationship as parents, if you have children, is likely be more harmonious and

* you are able to move forward and make a new life for you more quickly without the strain of ongoing tension and disputes.

A Financial Agreement allows you to decide how to divide joint financial resources out side the court system between yourselves, reducing your legal costs and the stresses associated with protracted litigation.

For just $129.95 This Financial Agreement template provides the framework for a compliant property settlement contract that will save you hundreds and possibly thousands of dollars.

Sitting down with your ex now to work out a ‘property settlement agreement’ and what your agreement needs to achieve, before consulting your legal adviser, will save you considerable time, money and anxiety. Taking the time to work things out between you will also minimise the risk of having a lawyer draft a one-sided agreement that fails to reflect the needs of either party.

Each party must receive independant legal advice.

Once you have drafted your Agreement the law requires that each party must receive independent legal advice and the agreement must contain a certificate from a lawyer stating that each party has received said advice. This ensure that neither party can argue that they were not aware of the impact of the document they were signing.

Making a financial agreement under section 90D is a logical alternative to court action and offers a reliable exit strategy, which lets you relax and get on with your life.

How and Where to Sell or Buy a business

Sale of Business Help

Here is the information you will need to sell your business. We have sourced the most cost effective methods and best practices to help you on your way.

A legal Sale of Business Contract

How to successfully sell

Here are a few things you must keep in mind when you are selling your business:• Operating Costs: You should regularly review your operating costs but especially so when preparing your business for sale. Like they say “a penny saved is a penny earned” and in business reducing your operating costs is just as important as making sales. Your aim should be to reduce costs without affecting the efficiency of your business

• Profit Trends:  Your buyer will be looking at profit trends to see stable and steady growth of the business in the years leading up to a sale. At some stage you will need to disclose to the potential buyer your financial details showing the business performance. It’s imperative that you enter a confidentiality agreement prior to disclosing any sensitive business information.

• Tax: Ensure that all your tax obligations are up to date.

• Valuation Expectations: You must have realistic valuation expectations. Valuation is important but do not let it get in the way of securing the sale – if you have a serious buyer and you don’t quite meet eye to eye over the purchase price, negotiate. Sometimes it pays to remember the adage that “a bird in the hand is worth two in the bush.”

• Timing:  It is better to sell your business on historical trends and results – they are a proven track record that you can point to and they will provide a strong negotiation platform. If you forecast growth of 20% for the coming year and can point to 20% annual growth for the last two to three years, then your forecast will have more credibility.

Finding a Potential Buyer
When selling the most important thing is finding a buyer – not just any buyer but someone who is willing and ready to pay for it.
A serious buyer will be more interested in a business that is well prepared and presented for sale. There is nothing more certain to put off a buyer than being presented with a buying proposition that looks ’shabby’, has little or no records or information available to assist them to arrange the purchase.

Your ideal buyer should be one:

• presents the least hassles after the sale
• offers you the best price for your business
• who does not compete for your ongoing business if you are retaining interests in the business area.

Since there is a chance that you might have to work for him during the transitional stage after the sale, it is important that you get along with the buyer.
Strengths
It is important that you identify strong reasons that can be easily substantiated as to why your business would make a good buy. If you fail to identify the reasons, it is unlikely that you will be successful in finding a buyer for your business.

Financials
You must first determine if your business is healthy and financially sound. If not, your buyer might not offer you the price you want and will try to buy the business at a distressed price.

Planning
You should start planning the sale well in advance so that you have time to groom the business and make it as attractive as possible to potential buyers. It is advisable to get a preliminary valuation before you offer it for sale.

Timing
It is important that you sell your business at the right time. This can have a significant impact on the price you get for your business.
The general state of the economy is a key factor. The state of the industry your business is in also plays an important role. Buyers would be more willing to buy your business when their own business is doing well. The interest rates and lending practices of banks are also important. You should aim to sell when profits increasing and look likely to grow further. Tax consequences and any forthcoming changes to tax rules also play a role in determining the right time to sell your business.

Making your business attractive for the buyer

A poorly performing business might not have many takers. Selling it can be difficult or impossible. Before investing time and energy in trying to sell your business, you must determine if you really have something to sell. There are things which can make your business saleable:

• Profit history – All buyers will definitely want to see if the business has been making money. The business should make enough money to generously reward the owner’s day-to-day efforts. Most buyers will be seeking a business that has a consistent record of profitability.

• Good location – A good location makes your business more saleable especially if the location is essential to the success of the business—for example, a car rental business located near an Airport.

• Good condition of premises and equipment. Buyers will want to visit and inspect your business premises before they make any commitment. A run down premises is likely to be an eye sore and surely make your business less attractive to the buyer. Inventories and other goods should be kept in the appropriate places. All office equipment and machinery must be in working condition.

• A well stocked inventory of goods

• A loyal group of customers or clients. For any business, the existence of good ongoing relationships with customers and suppliers is very important. It can be a compelling reason why a buyer will choose your business over others.

• Lucrative long-term contracts with customers or clients

• Trade secrets, copyrights, patents, or trademarks that are hard or impossible to replicate

• Solve Legal Problems – No potential buyer will want to face the strong possibility of significant lawsuits by unhappy customers or disgruntled employees.

• Collection of Accounts Receivable – If you want to sell your business including your accounts receivable, you’ll need to show that they are almost certainly collectable.

• Accounts – Your accounts should be clear, current, and consistent, clearly outlining income, costs, and cash flow.

• Business Plan for the Future – A well written business plan that looks ahead for the next three or five years goes a long way in making your business attractive to buyers. Your business plan should be credible, convincing and help the buyer envision future growth and profits.

• Location security – Sometimes, the very fact that the buyer can operate the business from its existing location can play an important role in making your business attractive to the buyer. So if your business is operating on a leased property, it would be wise to lock in the lease. If your lease is about to expire, it will be a big disadvantage.

• Complete Disclosure – It would be in your interest to disclose all aspects of your business including the negatives to the buyer. The buyer will conduct a due diligence before purchasing your business. Should you conceal any aspect of your business and the buyer unearths them during the due diligence, it could put you in a embarrassing situation and the buyer can even walk out of the negotiation and in some cases sue you.

• Honest Business Practices – Any business with a notorious reputation is likely to turn buyers away.

• Provide a Clear Picture of How You Get Compensated – As the owner of the business, you may receive a salary, a bonus, fringe benefits— or all these things. Inform buyers about these forms of compensation and also all non-cash perks, such as business-related travel and entertainment or a car purchased by the business.

• Have a Believable Explanation of Why You’re Selling – No business man will walk away from a profitable business. Buyers will want to know the reason for the sale.

There’s one aspect of the deal that you must structure with great care: the security deposit, also called advance or token amount. If the buyer does not ultimately pay the entire sale amount, you can sue the buyer. But if the buyer can’t pay, winning a judgment against that person probably won’t do you any good. If the buyer goes into bankruptcy, you won’t even be allowed to sue. The security deposit you receive is your assurance you will be able to get at least something in such cases. You need to be careful, and very tough, when negotiating the security deposit.

Never bring your ego in the sale. Every buyer will be looking at the weaknesses in the business. Don’t take it personally. They have to do so to protect themselves. If you want the negotiations to begin, you must let go of your personal feelings. The faster you let go of your personal feelings, the sooner the real negotiations can begin and you can get the best deal. The best deal for your business may not necessarily be the best deal for you. Separate the two and you stand a very good chance of success.

Key Negotiation Issues

• Structure of the sale - Will you be selling your entire business or just its assets?
• Assets being transferred – Will you keep some assets that are currently part of the business?
• Payment terms – Will the buyer pay full cash upfront or make payment in installments?
• Seller protection – What rights will you have if the buyer fails to make the required payment?
• Seller warranties – What, if any, warranties will you make about the condition of the business or its assets?
• Buyer warranties – Other than the security deposit, will the buyer be making any other warranties?
• Liabilities – How will the debts, liabilities and pending / threatened litigation be handled? Will it be taken over by the Buyer or will you deal with them?
• Future connection to the business – Does the buyer want you to remain involved in the business even after sale? If so on what terms – compensation, period, number of hours, responsibilities.
• Non-compete – Restrictions, if any on your future business activity.

Tenants in common – a way to buy property as a joint ownership.

Tenants in common

The soaring price of real estate makes getting into the property market hard. The possibility of pooling resources with friends and family to achieve this is appealing.

The question is…How?

The answer could be to become ‘tenants in common’.

Tenants in common is a type of joint ownership of property. This type of co ownership is most suited to investment type properties where each ‘tenant in common’ is able to deal with their interest individually. It is vital to all involved that the purchase is documented and regulated by a tenants in common or co-ownership agreement which can outline every aspect of the purchase.

There can be as many individuals as you like holding a share of the title to a single piece of real estate. The shares in this type of agreement do not have to be equal meaning you can have multiple ‘owners’ with varying shares in the property. These shares are generally decided at the time of purchase, but can be altered at any time, provide all parties agree to the change.

Each shareholder is able to leave their share of ownership in their will to anyone they choose and the other tenants in common have no legal claim to it. Each tenant in common has the right to deal with their share of the property separate from the others. The share of a tenant in common is known as an “undivided” share.

An initial outlay or ‘capital’ is needed and then an amont (stated in the agreement) is paid into a ‘revolving’ fund on a pre determined schedule (ie, weekly, fortnightly,monthly). This fund covers all expenses incurred by the property and if these exceed available funds then each party must put in extra money.

What if I want to sell my share?

After an amount of time set out in the agreement, a party can sell their shares. They can be sold to anyone but must be offered to the other parties in the agreement first (known as the ‘first right of refusal’). If the sale is accepted then the selling party will be responsible for the cost of valuation and all of the other costs incurred.

These are the basics of becoming ‘tenants in common’. The finer details are all covered in your ‘tenants in common’ agreement.

It is a viable and sound way to enter the property market without having to find all the money yourself. Just do it right at the beginning and you can be on the property market ladder sooner than you might think.As long as you have made a ‘tenants in common’ agreement and all parties have signed and agreed then there can be no arguments in the future.

Independent Legal Advice

Agreement Review Service

Changes to the Family Law Act section 90g requires each party to the agreement MUST receive independent legal advice as to the advantages and disadvantages of entering into the Agreement.

Before your financial agreement becomes legally binding it must contain

1. A statement in the body of the agreement by the parties to the effect that they have received legal advice independent of each other and

2. A certificate from the legal adviser that the advice has been provided.

This prevents either party from arguing that, when signing the agreement, they did not understand what they were signing or the consequences thereof.

We have negotiated a reduced rate for our customers with several independent, nationally licensed lawyers who can provide the required advice by telephone and e-mail.

An average amount for getting your own lawyer could be anywhere from $1500 EACH to several thousands depending on what is involved in drawing up the agreement.

Take advantage of our Agreement Review Service now. Only $330 per partner. Click here.

What does this mean for you?

Our Agreement review service assists you to complete your financial agreement properly, meeting the requirements of the Act, with a minimum of fuss and expense.

Of course you are also free to seek your own legal advice with a solicitor of your choice.

The steps involved are fairly simple.

1. Purchase and download the financial agreement kit.

2. Draft your own agreement, referencing the manual and sample agreements supplied.

3. When both parties are happy that the agreement achieves their aims, e-mail your draft for distribution to our panel of lawyers.

4. The first party will be contacted by e-mail and telephone to set up a convenient time to examine your agreement, make any adjustments necessary and ensure the document is compliant with the requirements of the Act.

5. The completed draft will be sent to a second independent qualified Australian lawyer who reviews the agreement and makes contact with the second party.

6. When all parties are happy the certificates of legal advice are issued by each qualified Australian lawyer and e-mailed to the clients. Originals will be sent by regular mail.

7. Clients are then free to sign the agreement in front of a witness – one party keeps the original and the other keeps a copy.

Collaborating with your spouse to reach and draft your own agreement is a fresh approach to resolving issues that may arise when a relationship ends. Reaching agreement in a non-combative atmosphere minimises costs, empowers the parties and reduces stress.

Our Lawyers understand that both parties have spent considerable time negotiating a mutually acceptable agreement and they simply need the added security and guidance of good legal advice.

The basic financial agreement review service starts from just $330 per partner. If your situation is particularly complicated additional costs may be involved.