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Buying business in NSW

In New South Wales, the process of buying a business involves a number of steps and each steps requires careful consideration to ensure that the ownership of the business is successfully transferred. In this article, we will explain the number of steps involved in the process of buying a business.

Determine the value of estate


If the value of the estate is less than $50,000, then it is classified as a small estate. If you are the executor of a small estate, chances are you may not need to apply for a Grant of Probate to access the deceased’s assets. In this event, you shall contact the deceased’s bank or other financial institution to find out whether they require a Grant a Probate to release fund.
If you believe you do not need to apply for a Grant of Probate, before you proceed to distribute the deceased’s asset, you shall contact a solicitor or the Supreme Court Registry Probate Division on (02) 9230 8111 to confirm this.

Exchange of contract


The vendor (or the vendor’s lawyer) will provide you with a formal Contract of Sale. In New South Wales, usually a Standard Contract for the Sale of Business is used for the purchase of business. This contract contains extensive clauses that cover all legal requirement under Australian Law. However, depending on the special nature of different business, the contract may include special conditions in addition to the Standard Contract for Sale of Business.
At this stage, you may negotiate with the vendor if there is terms or conditions in the contract that you do not agree with. After all the negotiations and the contract terms have been settled, you and the vendor may proceed to the signing and the exchange of contracts. At the time of contract exchange, the vendor will usually require you to pay deposit (normally 10% of the agreed purchase price).

Pre-settlement


During this stage, you will be required to fulfil a range of obligations outlined in your contract of sale. These may include the obligations in the standard condition as well as those contained in the special condition. Some usually obligations are as follows:

  • Obtain finance (if required) to complete the purchase;
  • Getting the lessor’s consent to transfer the lease from the vendor to you; and
  • Procure the transfer the transfer of any other license, agreement if provided by the contract of sale.

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Settlement


At settlement you will be required pay the balance of the purchase price to the vendor and in exchange the vendor will pass you the ownership of the business. Upon settlement, you may also receive a range of document which pass the ownership rights to you such as the share transfer or share certificate (if the purchase is by way of share transfer).

Post settlement


After settlement of the purchase of business, you must take all necessary steps to ensure that any all license or agreement (if they are to be takeover from the vendor) has been appropriately transferred.

You will also be liable for the stamp duty and it shall be paid within 3 months from the date of exchange contract.

Application for a Grant of Probate

In NSW, if you are named as the executor in someone’s will, before you can start dealing with the deceased’s assets, you may need to apply for a Grant of Probate. In this article, we will explain the number of steps which will involve in the application for a Grant of Probate.

Determine the value of estate


If the value of the estate is less than $50,000, then it is classified as a small estate. If you are the executor of a small estate, chances are you may not need to apply for a Grant of Probate to access the deceased’s assets. In this event, you shall contact the deceased’s bank or other financial institution to find out whether they require a Grant a Probate to release fund.
If you believe you do not need to apply for a Grant of Probate, before you proceed to distribute the deceased’s asset, you shall contact a solicitor or the Supreme Court Registry Probate Division on (02) 9230 8111 to confirm this.

Grant of Probate


To make an application for a Grant of Probate, you must ensure that you are named as the executor in the Will and only if the original will is available and we set out below the number of steps involved in an application for a Grant of Probate:

  • Place a notice in a newspaper in the local area where the deceased lived or a Sydney daily newspaper if there is no local newspaper. This notice is called a Notice of Intended Application for Probate (or Form 9).
  • The purpose of this notice is to inform any person who has claims over the estate (eg, a person to whom the deceased owed money) to come forward and notify you so that they can be included in the probate application. Once the notice is published, you have to wait 14 days before to file the application for a Grant of Probate.
  • You must know the complete financial details of the estate. To do this, we suggest that you send letters to the deceased’s bank and other financial institution (including superannuation funds) of the deceased and inform them that the person has passed away. In your letter, you must include a certified copy of the death certificate, a certified copy of your identification and the Will.
  • The financial institution may inform you the funds available or if there is any amount owing, the debt that is required to be paid back. If there is any debt that needs to be paid immediately, you may ask the financial institution if it is willing to wait the debt or if not if it can be paid out of the estate (after probate is granted).
  • 14 days after the Notice of Intended Application was published in the newspaper you can apply for a Grant of Probate. To complete your application you must file the original plus two copies of the following:
    • Summons for Probate (Form 111 UCPR);
    • Draft grant (Form 112 UCPR)
    • Affidavit of executor (Form 97 SCR).
      In the affidavit, you must attach the following documents:
      • The original will;
      • The original Death Certificate;
      • The tear sheet (or clipping) from the newspaper of the Notice of Intended Application;
      • Inventory of assets (Form 96 SCR);
      • Certified copy of the executor’s driver licence or other form of identification; and
      • If the primary or joint executor is not willing or not able to act, a Form 94 SCR – renunciation of executor.
    • A stamped self-addressed envelope; and
    • Payment of the relevant court fee. (you may check the appropriate filing fee from the supreme court website). The fee can be paid by bank cheque, money order or credit/debit card in person).
  • If all your documents are in order, the grant will be made and be returned in the stamped self-addressed envelope that you provided. It usually take around 5 working days if the grant can be made. However, if the court finds any problems with the application and require any changes or further documentations, the court will send you a Probate Requisition Sheet that sets out the deficiencies. You will need to comply with the requisition before the court can make a decision to grant the probate.