Contracts

I’m a first home buyer purchasing unregistered land. What should I consider?

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The purchase of unregistered land by First Home Buyers is still one of the most common transactions I see come across my desk. Despite this, there is so much First Home Buyers don’t know about buying unregistered land. This is a must read for First Home Buyers looking to buy unregistered land.

First Home Buyers – it’s time to stop the confusion and get informed.

Transfer Duty (formerly called Stamp Duty)

Purchase price $350,000 or below?

Zero to pay – full exemption.

Purchase price between $350,000 and $450,000?

Discounts apply – the discounts work on a sliding scale depending on the purchase price. The closer the purchase price is to $350,000, the less you pay.

There is a calculator tool on the Revenue NSW website which allows you to calculate how much duty would be payable, depending on the purchase price of your block of land.

If the purchase price is over $350,000 then an element of transfer duty will be payable. This amount must be paid on the earlier of 3 months after the Contract date or settlement. Remember – settlement doesn’t occur until the land is registered. As such, in the majority of cases, you will be required to pay the transfer duty within 3 months of the Contract date. The Contract date is the date the Contracts are exchanged/entered into. I often find this is a common misconception among First Home Buyers. If I had a dollar for every time someone told me they thought that “apart from the deposit, nothing is payable until the land is registered”, I’d be hundreds of dollars richer.

Purchase price over $450,000?

Full transfer duty is payable – no discounts apply. Again, this becomes payable on the earlier of 3 months after the Contract date or settlement.

The above information only sets out the thresholds. It is important to note that there is criteria you must meet in order to be eligible.

First Home Owner Grant

In addition to the transfer duty exemptions or concessions above, as a First Home Buyer you may also be entitled to a $10,000 grant. The grant does not apply to the purchase of land but applies to the construction of a new home on the land. In order to be eligible, the total property value (including house and land) must be less than $750,000.

You may be able to apply through your bank when they’re arranging finance for the building contract or you can apply for it yourself when construction of the new home is completed.

Time frames for registration

Whilst you are provided with an anticipated date for registration, this date is approximate only and subject to change.

The Vendor doesn’t have control over registration of the land because there are a number of processes that need to be followed involving third parties. Before the land is registered, council must approve the plan of subdivision, construction works must be completed and the plan of subdivision must be lodged to Land Registry Services.

It is because of this and a number of other external factors like weather, that an exact time frame of when the land will register cannot be given.

Sunset Date

Generally speaking in a Contract for Sale of unregistered land, there is a ‘sunset date’. This is the latest date that the Vendor has to have the land registered by and is usually longer than the anticipated time frame for registration provided by the sales office.

This is important to consider because as a worst-case scenario you could be waiting until the sunset date. It’s only until the sunset date has passed, that you have any options under the Contract terms.

In most cases, if the sunset date has passed, you have the option to get out of the Contract, get your deposit back and apply for a refund of any transfer duty paid.

For further information please don’t hesitate to contact:

Melina Costantino
Licensed Conveyancer
melina@couttslegal.com.au
02 4607 2104

*This information is current as at April 2019 and applies to First Home Buyers in NSW

This blog is merely general and non specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.

eConveyancing: the 1 July 2019 mandate

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Conveyancing is the legal process involved in buying or selling property. eConveyancing is the same process but completed electronically meaning the paperwork involved in a manual conveyance is substantially reduced. The transition to eConveyancing aims to transform NSW into the most efficient and secure place to buy and sell property. 

eConveyancing has been a long time coming and from 1 July 2019, mainstream property dealings can no longer be lodged in paper in NSW. This includes transfers, mortgages, discharge of mortgages, caveats, withdrawal of caveats and transmission applications.

Currently in NSW, over 85% of eligible conveyancing transactions are being completed electronically. This percentage is only set to increase as we reach the 1 July mandate.

So, how will this benefit you? So glad you asked.

You get your money faster. Funds are paid and cleared in your account instantly, on the day of settlement. There is no more waiting for cheques to be banked and for funds to then clear. With eConveyancing you have immediate access to funds from settlement.

Reduces costs. Some banks charge $10, even $15 per bank cheque required for settlement. With e-Conveyancing, funds are paid electronically, eliminating the need for bank cheques and additional expenses like bank cheque fees.

Safety first. e-Conveyancing is tightly regulated. Processes are in place to verify the identity of the parties and allow parties to electronically sign documents securely. For all those tech savvy people, the data is encrypted and the receiving computer checks the data to make sure it wasn’t changed in transit.

Less risk and more certainty. I was reading something not to long ago that reported 1 in 5 people surveyed experience delays to settlement. Delays to settlement can mean additional expenses and make for a stressful situation. With eConveyancing the risk of errors and delays is significantly reduced, giving you added certainty of a successful on-time settlement. This is achieved through electronic signing as well as better checks and balances through electronic channels. For example, there are no cheques drawn in eConveyancing, the funds are electronic. This eliminates the chances of cheques being drawn incorrectly resulting in a delay or even a cancellation to settlement.

Less paperwork. Sending documents in the post to be signed increases the risk of delays to settlement, particularly when documents are lost. With electronic signing, there are far less, if any, documents being posted.

Saves time. In order for settlement to occur, the Transfer must be signed. Electronic signing means you can avoid the hassle of printing, scanning and posting documents. You don’t need to make time to drop into the office to sign documents either. The Transfer is signed by your Solicitor or Conveyancer on your behalf, using their digital certificate.

Peace of mind. In the manual world documents required to transfer ownership to you are typically not lodged for days or sometimes weeks after settlement. With e-Conveyancing it is instant, giving you peace of mind. The change of ownership occurs on the day of settlement, with electronic lodgement to Land Registry Services. This also means Government authorities like Council and Water are advised of the change of ownership much sooner.

Moving forward, in order to complete your property transaction it is important that you ensure your Solicitor or Conveyancer is registered for eConveyancing.

At Coutts not only are we registered for eConveyancing as a firm, but each member of our property team has undergone extensive training and are certified with PEXA (Property Exchange Australia).

For further information please don’t hesitate to contact:

Melina Costantino
Licensed Conveyancer
melina@couttslegal.com.au
02 4607 2104

This blog is merely general and non specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.

New laws give added protection for purchasers in NSW when purchasing off-the-plan

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At the end of last year, new laws came in to give purchasers in New South Wales added protection when purchasing off-the-plan properties.

 

A contract for a property being purchased off-the-plan is a contract for the sale of a residential property that has not been completed at the time the contract is entered into.

 

In an off-the-plan contract, there is a sunset clause. The sunset clause is a provision that provides for the contract to be cancelled if the property is not created by the sunset date. The sunset date will be noted in the contract and is the latest date by which the property must be created.

 

Mr Dominello, the Minister for Finance, Services and Property said it best in a recent Media Release when he said “While it works well in most cases, we’ve all heard the horror stories when things go wrong”.

 

In summary, the major amendments to the Conveyancing Act include:

  • Founding minimum disclosure standards

    Prior to entering into a contract, purchasers must be provided with a disclosure statement, which includes a copy of the proposed plan, proposed by-laws (list of rules) and schedule of finishes (list of the inclusions). Penalties will apply to the vendor if a disclosure statement is not provided.

  • Keeping developers accountable for delivering what they promised

    Purchasers must be given a copy of the final plan and a notice of any changes (if applicable), at least 21 days before they can be required to settle. Additionally, purchasers can cancel the contract or claim compensation if they are adversely affected by changes made, after which time they become entitled to a refund of the deposit paid.

  • Extending the cooling off period

    The cooling off period under a contract for the purchase of an off-the-plan property is extended from 5 to 10 business days after the contract is entered into.

  • Clarifying the powers of the Supreme Court

    The Supreme Court can award damages where the contract is cancelled by the vendor under a sunset clause. The Supreme Court can also make an order allowing the vendor to cancel the contract under a sunset clause, but only if the vendor proves to the court that the order is just and equitable in all the circumstances.

 

The changes are of significant importance when you consider that 12% of all residential property sales in NSW are off-the-plan sales.

For further information please don’t hesitate to contact:

Melina Costantino
Licensed Conveyancer
melina@couttslegal.com.au
02 4607 2104

This blog is merely general and non specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.

What does a Notice to Complete mean?

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You have been told you cannot settle on your Contract on the due settlement/completion date and you are going to be issued with a Notice to Complete. So, what does this mean for you?

Contracts in NSW will generally have an additional condition in the Contract stating if settlement/completion does not occur on the correct date then a Notice to Complete can be issued.

When you enter into a Contract to sell or purchase you will be provided with a settlement date also referred to as a completion date. This date is when you must settle/complete the Contract by.

A Notice to Complete can be issued on behalf of the Vendor or the Purchaser.

If, by the settlement/completion date, for some reason a party cannot settle/complete then the other party may issue a Notice to Complete.

There may be many reasons settlement cannot take place, such as the bank may not be ready, the funds for purchasing may not be available, or the property is not completely vacated. The Notice to Complete will provide an additional 14 days for settlement/completion to take place within. This is an assurance for the party ready to settle that an end date is in place and pressure is on the party that is not ready.

As a vendor who has issued a Notice to Complete on a Purchaser, it is at the end of those additional 14 days that you have the right to either extend the Notice to Complete period or terminate the Contract. Upon termination of the Contract you keep any deposit paid by the Purchaser and possibly sue for any financial loss/damages incurred due to the default by the Purchaser. You will then be entitled to place the property back on the market.

As a Purchaser who has issued a Notice to Complete on a Vendor, it is at the end of those 14 days that you have the right to terminate the Contract, get a refund of the deposit paid, possibly sue for any financial loss/damages you may have incurred and walk away from the matter.

For further information please don’t hesitate to contact:

Meagan Groom
Licensed Conveyancer & JP
meagan@couttslegal.com.au
02 4607 2102

This blog is merely general and non specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.

What happens if I can’t purchase a property that I’ve put down a holding deposit on?

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If Contracts have exchanged with a cooling off period, you have the option to get out of the Contract prior to the expiration of that cooling off period, for any reason.

 

In the instance you decide not to proceed with the purchase, you will forfeit the 0.25% deposit (the holding deposit which equates to a quarter of a per cent of the purchase price) to the Vendor. This is compensation to the Vendor for having the property off the market for you.

 

Working example. You entered a Contract to purchase a property for $800,000. You pay a 0.25% deposit of $2,000 to the Agent. Contracts were exchange on 1 November 2018 with a 5 day cooling off period. The cooling off period expires at 5pm on 8 November 2018. On 7 November 2018 you are advised that you will not be able to obtain the finance required to proceed with the purchase and instruct your Conveyancer to rescind the Contract. The Contract comes to an end and you forfeit your holding deposit to the Vendor.

For further information please don’t hesitate to contact:

Melina Costantino
Licensed Conveyancer
melina@couttslegal.com.au
02 4607 2104

This blog is merely general and non specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.