The dream of every Aussie is to own real property. Even at a tender age, many can’t wait to be proud property owners with several personal properties surrounding the yard.
Well, it’s great to dream big and achieve it. But, anyone who wants to succeed at real estate investment must know the demands of the best property lawyers governing the community where the transaction is expected to occur. Not only that, you must be involved in the practice of legal practitioners in the law society.
Meanwhile, property law is not limited to purchasing personal or real property. It also involves leasing, renting, and transferring intellectual, personal, or real property. We present the two shades of property law – commercial and residential.
Both property buyers and sellers need to understand the kinds of property law that applies to their activities, including its demands, applications, and restrictions. If that is established, it will be easier to work with property lawyers and other law relating practitioners when legal issues arise.
Understanding property law will also make it easier to defend your property rights when someone is trying to claim ownership of your property. For example, suppose you manage real property for commercial use. In that case, you will know how to handle your tenant and attend to environmental issues in relation to the demands of the local government law.
The knowledge of property law can also motivate you to pursue certificates in legal practice. It will also give you an idea of what to expect when dealing with binding contracts, issues on mortgages, and the interests of the members of society.
That’s an important reason we want to expose you to the differences between commercial and residential property laws.
What are the fundamental differences?
Of course, the primary difference between these kinds of property law is that commercial property law applies to every activity regarding selling and acquiring properties for business purposes. In contrast, residential property law only applies to securing the property as a personal shelter.
However, that’s not all of it. Many other factors differentiate commercial property law from residential property law. In most cases, the differences between the two kinds are characterized by the legal demands of real estate transactions
Here are some of the factors that make a difference between commercial and residential property law:
Financial implications are a significant concern in every given real estate transaction, and it matters in the entire property investment process, so now what is property law? As you might have also guessed, residential property transactions are usually cheaper than commercial ones.
The difference in cost also applies whether you are buying or renting real property. The cost involved in residential property remains constantly cheaper compared to commercial. That is why property lawyers will ask to know your intentions before setting the price for the property.
If you are applying for a mortgage for a business property, you will get it at a far higher cost than residential properties. Of course, the figure might not be the same from one area to another, but it will surely attract a higher price, especially if you are planning to get owner-occupier status for your building. Mind you, owner–occupier shows that you live on the property yourself.
Suppose you are conversant with the property law operating in your locality and the market value. In that case, you may know how to set the right price for a residential or commercial property. But, we will advise you to hire experienced property lawyers to help you with cost reduction strategies in every transaction.
2. Legal protection
Commercial and residential property laws differ in power, duties, principles, and application. Generally, property law offers more protection to residential properties than commercial ones. This significant protection exists because a court believes that business partners already have a binding contract with solid legal backing before going into business.
For example, if there’s a commercial property lease, the local government presumes that the parties involved intend to make a profit and are competent to handle business matters. Hence, they give more attention to residential properties. In other words, the government believes that the owner of the real property counted the benefits of the transaction and understood the requirements of property rights before agreeing with other persons in business.
Also, the government believes that tenants of a typical residential property are family members who can make the repercussions of disappointment in a lease difficult. So, there are many limitations in residential property law.
In the case of commercial properties, there are some restrictions on maximum lease terms and rent increases. There are also stricter rules on security deposit repayment for commercial leases.
Property law governing commercial properties differs from that of residential properties when it comes to foreclosure. For example, if you fail to meet your repayment obligations on a purchased property, the money lender or bank may have the legal rights to foreclose on the property.
Foreclosure is taking over a mortgaged property when the person under mortgage terms cannot keep up with mortgage payments.
The reason for foreclosure is for money lenders to use the property to get the money they are owed. Lenders may choose to sell the property or take any other means that can turn the property into cash.
Courts may appoint someone known as a receiver if it’s commercial property. This person is the one that will take over the business of a mortgagor that couldn’t pay and run it for a period to get money for the repayment of the mortgage.
Note that receivership is only applicable in the case of commercial properties. Families can face financial difficulties and lose the strength to continue mortgage repayment. In that case, You need to get close to your property lawyer, who can serve as a confidant and provide guidance and support to lift you out of the challenges and keep you back on track.
4. Property requirements
The standard requirements for commercial properties differ from that of residential properties. However, a few must-have facilities and contents are demanded by property law for residential properties.
Generally, property law demands that a residential property has a kitchen and at least a bathroom. In contrast, there are fewer demands for commercial properties. However, Australian property law has been getting stricter for commercial properties recently.
Commercial leases contain provisions that forbid tenants to live on the property. In the same way, Australian property law does not support occupants of residential properties carrying out business activities on the property.
5. Disclosure requirements
Disclosure requirements are less strict in commercial property law because courts believe that parties in a typical business arrangement have legally binding contracts and are competent.
If you are buying or leasing a residential property, you ought to know about the defects in the property before finalizing the transaction. Meanwhile, property law doesn’t protect the acquisition of commercial properties in Australia. So as a commercial buyer, you must inspect the property yourself before agreeing to pay.
The principles of use of commercial properties differ from the residential ones. As such, it is expected that property law would make different demands on the two types of property. Note that property law protects both commercial and residential properties. Therefore, legal practitioners must spell out the rules and help you abide without restrictions.