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5 July 2011 Removal of Sellers Belongings after Settlement

Q. What happens if the Seller has not removed all of their belongings from the property as at the time of settlement on the settlement date?

A. Any such items not removed prior to the actual time of settlement on the settlement date are considered to be abandoned and the Buyer may keep or dispose of those items as they see fit. The Seller must also indemnify the Buyer against any damages and expenses resulting from the Buyers actions in that regard.

TIP: The Seller should ensure that they remove all of their belongings including any Excluded Fixtures noted in the Reference Schedule of the Contract. They must also leave in the property any chattels listed as Included Chattels in the Reference Schedule of the Contract. The Seller must repair, at their expense, any damage done to the property in removing any excluded fixtures or belongings.

It would be prudent for a Buyer to contact their Solicitor before treating any property as abandoned or communicating their intention to the Seller that this property will be disposed of to ensure no dispute arises.

If the Seller is having difficult removing all of their belongings prior to the time of settlement on the settlement date they should get written confirmation from the Buyer to allow them to remove the property after settlement has occurred and to confirm that such items are not considered abandoned

 

21 June 2011 ALERT: Transfer duty rates and new $10,000 Building Boost

The Queensland Government have announced that from 1 August 2011, transfer duty rates will be adjusted. The most significant change is that there will no longer be a Home Concession available to Buyers purchasing property as their principal place of residence. The transfer duty reforms will be complemented by the introduction of a new six month $10,000 Queensland Building Boost Grant and the continuation of the $7,000 First Home Owners Grant.

Below is an overview of the changes made to the Concessions & Grants:

Queensland building boost grant

The $10,000 Queensland building boost grant (QBBG) is available to any person or corporation buying or building a new home to live in or to rent out for investment purposes. The QBBG will be available for homes less than $600,000 from 1 August 2011 to 31 January 2012.

Transfer duty home concession

The home concession for transfer duty will cease on 31 July 2011. The concession is currently available to people who are not first home buyers but purchase a home to live in as their principal place of residence,.

First home and first home vacant land transfer duty concession

The first home transfer duty concession and first home vacant land concession continue to apply. However, the concession rates will be revised in light of the removal of the home concession. In particular, the concession will reduce for values from $500,000 to $600,000 against duty at the standard rate. These changes commence from 1 August 2011.

Regional first home owner grant

The standard $7,000 first home owner grant will continue to apply. However, the regional first home owner grant will cease on 30 June 2011. This grant currently provides an additional $4,000 for the purchase of a new home in regional Queensland by a first home buyer.

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Calculation of transfer duty is complex and varies depending on your circumstances, please contact us if you would like to get an accurate figure on the transfer duty you may have to pay or to discuss if you are eligible for the Boost Grant or First Home Owners Grant.

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7 June 2011 - Default Interest

Q. Is a Seller limited to claiming interest at the “Default Interest Rate” when they are asked to extend for example the settlement date?

A. No. A Seller may agree to extend or not agree to extend on whatever terms they wish and then its a matter for the Buyer to elect whether to proceed with the request for the extension or not. The “Default Interest Rate” referred to in the Item Schedule of the Contract relates to late payments of money as referred to in Clause 9.6 of the Conditions of the Contract. That is, if a payment of money due under the Contract is not paid when due the Buyer must pay interest at settlement calculated at the Default Rate on a daily basis.

The Default Rate of interest may be one way the parties reach agreement on how much the Buyer pays the Seller to compensate them for any loss as a result of extending for example the settlement date but the Seller is not limited to claiming compensation at that rate.

 

16 May 2011 Valuations

Q. When does Stamp Office require a valuation report for a residential property transaction?

A. In most cases stamp duty is simply paid on the purchase price shown in a Contract for a residential property transaction. In some cases, for example, where the transfer is by way of a gift, the Stamps Office will not just accept the purchase price and they will require a valuation to be submitted.

Basically, a valuation will be required where:

• Both the Seller and Buyer are members of the same family
• Where the Seller and Buyer are corporations and are associated or related
• In transactions where there is no consideration
• Where the consideration cannot be ascertained.

For residential purposes, the Stamps Office generally accepts evidence of market value submitted by either a Registered Valuer or a Real Estate Agent who is competent to assess the value of the property and who is able to support their opinion by evidence of 3 comparable sales and who is independent of the transaction.

The valuation report must:

1. Clearly identify the property being valued by giving correct real property description and street address;
2. Give a short description of improvements on the property, if any;
3. List at least 3 recent comparable sales. If it is not possible to give at least 3 recent comparable sales because the residential property is located in an extremely remote area where sales are highyl infrequent, the Stamps Office will consider the evidence of market value submitted and determine whether further evidence is required.

The stamps office will, in most circumstances, accept evidence of value dated up to 3 months prior to the date the parties signed the transfer of the residential property.

 

10 May 2011 Multiple Offers to Buy

Q. Is a Seller entitled to accept any offer they choose out of a number of offers to buy a property or are they obliged to accept offers only in the order in which they are made?

A. The Seller in normal circumstances would be entitled to accept whichever offer they considered the best. Unless there has been a promise by the Seller or Sellers Agent that the Seller will sign a particular Contract then the Seller should be free to choose whichever offer they prefer.

TIP: The Seller or Seller’s agent should never indicate to a Buyer that the Buyers offer to purchase a property will or may be accepted. The Buyer should merely be advised to submit an offer and that the Seller will consider it and if the Seller considers it acceptable the Seller will decide whether or not to sign the Contract.

 

11 April 2011 Cooling Off Period

Q1. How does the Cooling Off Period apply to Contracts?

A. A cooling off period applies to all Contracts for the sale of residential property in Queensland, other than:

• A Contract formed on a “sale by auction" or;
• Where the Buyer has obtained a Lawyers Certificate waiving the Cooling Off Period.

Q2. How long is the Cooling Off Period?

A. The cooling off period is 5 business days commencing on the date the Buyer becomes bound by the Contract or if that is not a business day, the first business day after that day. The Buyer becomes bound by the Contract when the Buyer receives the Contract signed by both the Buyer and Seller.

Q3. How do you terminate a Contract in the cooling off period?

A. A Buyer may terminate the Contract at any time during the Cooling Off Period by giving a signed and dated notice to the Seller to that effect.

Q4. What happens to any deposit?

A. The Seller must refund the deposit after the Contract is terminated however a termination penalty can be deducted by the Seller from the deposit. The penalty is 0.25% of the Contract price.

Q5. Can the Cooling Off Period be altered?

A. The Cooling Off Period can be altered by the Buyer and Seller themselves. To shorten or waive the Cooling Off period a Buyer must obtain a Lawyers Certificate (Form 32a) from an independent lawyer.

 

4 April 2011 Contract Date

Q. What date should be inserted as the Contract Date in the item schedule of the Contract?

A. We recommend that the Contract date should be inserted as the date the Seller signs the Contract. You should note however that the Cooling Off Period in this case will not be 5 business days from the Contract Date but will be 5 business days from the date the Buyer receives the Contract signed by both parties.

Using the date the Seller signs the Contract as the date of the Contract could possibly lead to an argument that the Contract was not in fact formed on that date but rather on the date when the seller communicated acceptance of their offer to the Buyer. Nevertheless, for practical purposes we believe it is best for the Seller to sign and date the Contract upon signing. If any party does raise an issue about the date of the Contract the parties may need to decide amongst themselves what in fact the Contract date should be.

 

28 March 2011 - Home Insurance

Q. Once a Contract is signed by all parties is the property at the Buyers or Selers risk through to the settlement date?

A. The property is at the Buyers risk from 5pm on the first business day after the Contract date. This gives the Buyer sufficient time to arrange insurance over the property. The property remains at the Sellers risk until that time.

TIP: We recommend the Seller retains its insurance cover over the property through to settlement as a means of trying to avoid disputes should the Seller be responsible for any damage to the property at any time prior to settlement or in the case that the Buyer in fact fails to take out any property cover.

 

21 March 2011 - Essential Elements of a Contract

Q. What are the essential elements of a Contract for the sale of land?

A. Generally, the position is as set out below. This is a complex area and the summary below is only a brief overview of the position. A more detailed consideration may be needed in individual cases.

1. Generally, a Contract for the sale and purchase of land will exist when the parties have reached an agreement on the terms of the Contract. Usually this is by a process of offer and acceptance of the terms. Where a standard form of written Contract is signed it is apparent from the document that there has been an offer and acceptance and agreement is reached on its terms.

2. There needs to be “consideration” e.g the purchase price specified to be paid in exchange for the purchase of the property.

3. The terms of the Contract need to be certain e.g we suggest that you need to have at least the following elements:

    i. the names of the parties including who is the Seller and who is the Buyer;

    ii. the consideration e.g the purchase price in exchange for the delivery of the land;

    iii. the subject matter of the Contract e.g an accurate description of the property to be sold so that the property can be identified;

    iv. if time is of the essence of the Contract, the date for completion must be stated;

    v. any other essential terms of the Contract need to be inserted, such as whether the property is subject to an encumbrance.

4. the parties must have intended to be legally bound by the agreement.

5. Because the Contract is for the sale of land, the Contract or a memorandum of the Contract (containing the essential terms if the Contract) must be in writing.

6. the Contract must be signed by all parties or their authorised agents.

7. the parties must have “capacity” to enter into a Contract. Certain classes of people have limited capacities to sign a Contract such as minors and protected persons e.g mentally disables people or bankrupts.

NOTE: a Contract may be void for voidable for the following reasons:

• Misrepresentation
• Misleading or deceptive conduct
• Duress
• Undue influence
• Unconscionable conduct
• Illegality
• Unreasonable restraint of trade
• Mistake
  

2 March 2011 - Foreign Investment

Q. Which non-Australian purchasers do not need foreign investment approval to purchase residential real estate?

A. You are exempt if:

• You are an Australian Citizen living abroad;
• Your spouse is an Australian Citizen (not a permanent resident) and you are purchasing residential real estate in both names as joint tenants (not tenants in common);
• You are a New Zealand citizen and you are purchasing residential property;
• You hold a permanent resident visa and you are purchasing residential property;
• You are purchasing a new dwelling from a developer, where the developer has pre-approval to sell those dwellings to foreign persons;
• You are acquiring an interest in a time share scheme which does not permit you (and any of your associates) more than 4 weeks entitlement per year;
• You are purchasing certain residential real estate in an Integrated Tourism Resort (ITR);
• You are acquiring an interest in developed commercial property valued below $50 million generally; $5 million for heritage listed properties; or $1005 million for US Investors;
• You are acquiring an interest in developed commercial property where the property is to be used immediately and in its present state for industrial or non residential commercial purposes. The acquisition must be wholly incidental to the purchasers proposed or existing business activities;
• You are acquiring an interest by will or by operation of law (such as, a court order regarding the division of property in a divorce settlement, but not if both parties simply agree to transfer property without a courts intervention); or
• You are purchasing property from the Government (Commonwealth, State or Territory, or local)

Foreign persons should determine whether their proposed acquisition is exempt and if in doubt, seek legal advice.

 

21 February 2011 - Witnessing of Contract

Q. Does a Contract need to be witnessed?

A. No. The only purpose for a signature to a Contract being witnessed is that if there is a dispute as to whether or not a person has signed the Contract then the witness can provide appropriate evidence.

TIP: The Standard REIQ Contract requires each page of the Contract to be initialled and the Contract to be signed and witnessed and this is good practice to confirm what has been included in the Contract that the parties have signed. Also, any alterations to the Contract should be initialled by all parties and preferably by the witness. It is not essential however that the witness initial the amendment but is preferable. Any witness should be over the age of 18. The witness does not need any special qualifications.

 

15 February 2011 Obligation of Buyer to Tender Balance Purchase Monies at Settlement

Q. If the Seller is in breach of contract (eg. where the seller can not remove a mortgage or caveat over the title by the settlement date), can the Buyer claim damages for that breach without tendering the balance of the purchase price, to show they were ready, willing and able to complete the Contract?

A. Generally, if the Seller has advised that they definitely can not complete the sale, the Buyer may not be obliged to tender the balance purchase price at settlement but will need to show that at settlement they would be ready, willing and able to settle, to claim damages. But if the Seller has breached a non essential (minor) term of the Contract which doesn’t give the Buyer the immediate right to terminate the Contract at that time, the Buyer will need to tender the balance of the purchase price at settlement.

TIP: If the Seller is in breach of Contract it is wise for the Buyer to arrange settlement, calculate settlement figures, attend settlement and tender the balance purchase price or at least attempt to tender and show that this was done.

 

31 January 2011 - Who receives the original Contract?

Q. Which party should be given the originally signed Contract of Sale after it is signed, the Seller or the Buyer?

A. The usual practice is for the Buyer to be given the originally signed Contract.

Why? Under the Standard REIQ Contract the buyer must pay all Stamp Duty on the Contract. Under the Duties Act the original of a document is normally required to be stamped rather than a copy. Accordingly, the Buyer should be given the originally signed Contact.

Note – The duplicate copy of a Contract is not normally used for stamping although if the original contract has not been stamped the duplicate can be used for stamping purposes.

 

24 January 2011 Details regarding tenancies in the Reference Schedule of the REIQ Contract

Q. If there is a tenancy in place in respect to a property do you put details of the tenancy in the Reference Schedule in the Contract under the heading “Tenancies”?

A. Yes, if the property being sold is subject to the tenancy. If, however, the property being sold is not to be subject to a tenancy after the settlement date then the tenancy details are not included in the Contract. If nothing is stated in the Reference Schedule in the Contract under the heading “Tenancies” it will be presumed that the property is sold with vacant possession from the settlement date.

NOTE: It does not matter whether the tenancy is a periodic tenancy or fixed term tenancy. Details of the tenancy are only included in the Contract if the Contract is subject to a tenant i.e if after the settlement the parties have agreed that a tenant will remain in the property.

It is the Sellers obligation to make sure that if the Contract is not to be subject to a tenancy that the tenant vacates the property on or before the settlement date.

 

17 January 2011 - Completion Dates that fall on a non-business day

Q. If a completion date falls on a non-business day (eg. Sunday), is completion effected on the previous Friday or the following Monday?

A. When a condition (such as the building inspection date, finance date, completion date or any other date referred to in the Contract) falls due on a weekend or public holiday then the date is automatically extended to the next business day.

TIP: Wherever possible always check your calendar for a business day when completing the Contract. This way the Buyers and Sellers will not be confused as to when the condition is due.

 

10 January 2011 - Buyers Rights to Access Property being Purchased

Q. When is a Buyer entitled to access a property after the Contract is signed but before the settlement?

A. Under Clause 8.2 of the Standard REIQ Terms of a Contract a Buyer (and their consultants) may enter the property (after giving reasonable notice to the Sellers) as follows:

1. To read the water meter
2. To carry out building, pest and/or pool inspections
3. To value the property
4. Once to inspect the property prior to settlement

TIP: We recommend Buyers inspect the property prior to settlement on either the day before or preferably the day of settlement. We suggest Buyers contact their Real Estate Agent to make arrangements for inspections.

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