Residential Property

To buy or sell first? Part two

To-buy-or-sell-first-2.jpg

If you are looking to buy a new home and sell your existing home you've most likely wondered whether you should buy or sell first.

There are several things to consider when making this decision so you are best prepared for the journey. In part two here we'll look at things to consider when buying first.

Buying first

Pros

  • There is less pressure to just ‘get’ a new home so you can settle on time – you can really shop around
  • You have greater certainty that you will only have to move once
  • In a quickly rising market you may be able to achieve a higher sale price and secure a better price on your new home

Cons

  • Bridging finance may be required if you do not sell your existing home in time for settlement
  • You won’t have a clear budget for your new purchase
  • You will need to ensure you have a cash deposit sufficient to cover the purchase or be prepared to obtain a deposit bond

Deposit Bond

When buying a property, first you will need consider options for payment of the deposit.  The traditional method of payment of a deposit is cash.  However, when cash is not available like when your equity is tied up in your existing home, a deposit bond maybe a suitable option.

There are private companies that issue deposit bonds and banks can issue the equivalent being a bank guarantee.  Each issuing institution will have different fees and criteria so you will need to investigate these and ensure you comply.

Your conveyancer and mortgage broker can assist in this process.

Bridging Finance

When buying first your ability to cover the mortgage of two properties will be a main consideration.  Bridging finance is an option worth discussing with your mortgage broker.  Bridging finance loans have:

  • shorter terms of between 6 and 12 months;
  • fixed and variable rates are typically still offered;
  • higher interest rates; and
  • Lenders Mortgage Insurance may still apply if the loan is more than 80% of the total value of both properties.

Extended Settlement

As noted above, a longer settlement period of approximately 10-12 weeks (or longer if you are moving to an area where properties are scarce) maybe a necessary consideration.

The downside of an extended settlement is you may need to accept a sale price that is lower than you originally expected in order to sell in time to achieve settlement.

Contingency Plan – Conditional Purchase

A last resort to overcome the cons is to make your purchase dependant on the sale of your home.  As noted above, this can be negotiated be your conveyancer or solicitor.  Keep in mind that a vendor does not have to agree to this request.

Other Considerations

If settlement of both your sale and purchase have been timed perfectly there are some last minute considerations that need to be covered to ensure settlement goes well.

  • Timing for final inspection

When buying property you are entitled to a final inspection of the property within 48 hours prior to settlement.  This is also relevant for the people buying your property.

  • Timing for settlement

If settlement has been timed perfectly it will occur at the same time on the same day.  Otherwise, settlement may need to occur a few days apart to allow funds to clear and cheques to be drawn.  Settlement is most likely going to occur after 2pm as many banks have this requirement.

Do you have to attend settlement – the short answer here is no.  Your solicitor to conveyancer will arrange attendance by a settlement agent on your behalf.

  • Timing for moving out/moving in

So, settlement has been set for the same time on the same day.  Great news – you only have to move once.

Now it is time to co-ordinate moving.  The best option tends to be hiring a removalist with a truck large enough to fit all of your furniture and possessions in, in one go.  This will allow you to pack up and vacate the property easily prior to settlement.

  • Moving into new property including the collection of keys

Once you have moved out of your old home, you will be waiting for the keys to move into your new home.  In order for you to collect the keys , your solicitor or conveyancer will call the agent and let them know settlement has been finalised, this will happen within 30 mins to 1 hour of the set settlement time.  This call will enable the agent to release the keys to you and you will finally be able to move into your new home.

If you're thinking of selling first, have a read of part one here.

If you would like more information on the process of buying and selling please contact Kylie Fuentes our licensed conveyancer in Picton.

To buy or sell first? Part one

Kylie-To-buy-or-sell-first-.jpg

If you are looking to buy a new home and sell your existing home you've most likely wondered whether you should buy or sell first.

There are several things to consider when making this decision so you are best prepared for the journey. In part one here we'll look at things to consider when selling first.

Selling first

Pros

  • You are in a better position to negotiate your sale price
  • You will know what your limit is on purchase price when buying your new home
  • The need for bridging finance is less likely
  • You can plan ahead and extend the settlement period to allow you to secure your new home

Cons

  • In a quickly rising market your new home may be more expensive than you planned for
  • You may need to consider temporary accommodation if you have not secured a new home by settlement on your sale
  • Possibility of storage fees or double the removalists fees
  • If permitted under your contract you may use the deposit paid by the purchaser towards the deposit payable on your new home

Negotiating power

A main benefit in selling your existing home first is that you will know exactly what you can spend on a new home.  This will help you budget your family expenses and make the right move for you and your family.  By selling first, you also put yourself in a better position to negotiation the best sale price as you are not under pressure to achieve settlement on a certain date.

Extended settlement

In this scenario however, a good option is to have a longer settlement period of approximately 10-12 weeks (or longer if you are moving to an area where properties are scarce).  This will allow time for the cooling off period on your sale to come to an end and for you to secure a new home to move into.  This will also reduce the likelihood of needing temporary accommodation and extra moving costs.

Releasing your deposit

Many people looking to move on in the property market may be hesitant due to access to funds for a deposit, especially if your deposit funds are tied up in the equity in your home.  By selling first you can overcome this issue.  Ensure when your Contract is prepared that it allows you to use the deposit being paid by the purchaser prior to settlement.  By having this provision in your Contract you will be able to access these funds for your purchase.

Leaseback

If an extended settlement will not work for your buyers you could raise the option of a leaseback provision.  By doing this you effectively extend your moving out date until you secure a new home.  This is useful if your existing home is one investors are likely to be interested in as they will have a guaranteed tenant from the settlement date.  The details of this kind of provision are usually negotiated at the time of exchange.

Contingency plan – Conditional Sale

A last resort to overcome the cons is to make your sale dependent on you purchasing your new home.  Your conveyancer or solicitor can insert a clause into the Contract that stipulates that settlement is not triggered until you have secured your new home which will allow you to line up settlement allowing you to only have to move once.  Keeping in mind this may reduce the number of buyers interested in your existing home.

Contingency plan - Renting

If the above options do not suit your needs or your purchaser you may need to consider a short term rental until you have secured your new home.  If you do consider this option, when looking at rentals be very clear that it is short term situation and check what the termination costs are if you move out earlier than the lease expiry date.

If you're thinking of buying first keep an eye out for part two where we'll outline further considerations to help you prepare for the journey.

Ready to discuss your next buying or selling property transaction? Talk to the team at Coutts Solicitors & Conveyancers.

What should I tell my Conveyancer?

Allyce-What-should-I-tell-my-Conceyancer.png

A lot of people do not know when exactly they should start talking to a conveyancer. The simple answer is, the earlier, the better. As your conveyancer, the more we know about your buying or selling situation, the better we are able to act on your behalf.

As a purchaser or seller it is important to remember that the smallest amount of information, while it may seem unimportant to you, can have a severe impact on your transaction. As your conveyancer we don't want to come across any surprises so it is extremely important that you communicate to your conveyancer if you have, for example, severe financial restrictions, tight time limits, or any other specific concerns or requirements relating to your situation.

To assist you in your next sale or purchase, we have prepared a short summary listing some of the things you'll need to tell you conveyancer in your first meeting.

Selling

If you are selling, be sure to make your conveyancer aware of the following, if they apply to you:

  • If you are looking at changing/have changed your name since you bought the property (meaning the legal owner on the Certificate of Title will differ from your new name);
  • If you are separating/have recently separated (in these circumstances, instructions will be required from both parties);
  • If you are getting married/have recently married (meaning that your legal name has or will change);
  • If you are re-financing/recently re-financed (this may hold up settlement of your sale – important for us to know right at the start);
  • If you are not an Australian Citizen/Permanent Resident (this is extremely important given the new laws regarding foreign purchasers and sellers);
  • If you pay land tax;
  • If you pay local land services rates;
  • If you anticipate your property will sell for $2,000,000.00 or over;
  • If a party to the Contract has passed away; and
  • If you are also looking at purchasing at the same time (and require a simultaneous settlement).

Buying

If you are buying, be sure to make your conveyancer aware of the following, if they apply to you:

  • If you are looking at changing/have changed your name (we will need to ensure that the name on the Contract is correct);
  • If you are getting married/have recently married (again, we will need to ensure that the name on the Contract is correct);
  • If you have a guarantor to your loan (this is important for settlement/mortgage document purposes);
  • If you are re-financing during your purchase (again, very important for settlement purposes);
  • If you need a 5% deposit to be acceptable by the Vendor;
  • If you need another person on the Contract (such as a parent or sibling) for the purposes of loan approval;
  • If you are not an Australian Citizen/Permanent Resident (this is extremely important given the new laws regarding foreign purchasers and sellers);
  • If this is your first purchase; and
  • If you are relying on the sale of another property to be able to purchase.

Whilst the above is not a conclusive list of what your conveyancer needs to know in your first appointment, it is a start. Before you meet with your conveyancer it is a good idea to have a think about how your situation differs or is special from what you would consider a normal situation, and be prepared to discuss this with your conveyancer.

Ready to discuss your next buying or selling property transaction? Talk to the team at Coutts Solicitors & Conveyancers.

Identification requirements & foreign investment

Natali-ID-requirements-1.png

Are you aware of the new identification requirements that took effect back in May 2016? Here's a quick guide to what you need to know.

As your Solicitor/Conveyancer we are required to verify the identity of our clients and to make sure that you have the authority to deal with the property. This being the case, you will be required to produce at least 100 points of identification from the following:

70 points

  • Birth Certificate
  • Citizenship Certificate
  • Current Australian Passport
  • Expired Australian Passport which has not been cancelled and was current within the preceding two years
  • Current Passport from another country

40 points

  • Current Australian Driver’s Licence
  • Current Photo/ID card

25 points

  • Current credit card from a bank or building society or credit union
  • Current telephone, gas, electricity bill
  • Foreign Driver’s Licence
  • Medicare card

Not only are there new identification requirements, it is also now a legal requirement that all purchasers of a property sign a purchaser declaration. The purpose of this declaration is:

  • to determine whether a transaction is a transfer of residential land to a foreign person;
  • to identify foreign persons for surcharge land tax liability;
  • to collect and report to the ATO, information on transfers of land in NSW.

Please note that if you are identified as a foreign person, you could incur surcharges in relation to stamp duty as well as land tax. The Office of State Revenue can provide you with more information in regards to his matter.

Do you need assistance with meeting the new identification requirements or completing a purchaser declaration? The team at Coutts Solicitors & Conveyancers can help.

First home buyer benefits and your spouse

First home buyer benefits

Some of the most common questions we receive in relation to obtaining first home buyer benefits are:

  • “If my spouse has purchased a property before, can I still claim first home benefits?”
  • “If my spouse purchases this property and I purchase a property later, can we both receive first home benefits?”

A spouse is a husband or wife and in relation to the term “de facto”, the Office of State Revenue uses the definition found here under Section 4AA of the Family Law Act 1975.  You should ensure you fall into either of these categories and if you are unsure, it is best to check before you enter into a Contract for Sale.

There are currently two benefits available to first home owners:

  • First Home New Home Scheme
  • First Home Owner Grant

First Home New Home Scheme

This scheme provides an exemption from stamp duty on properties up to the value of $550,000.00 and concessions on properties valued between $550,000.00-$650,000.00, you must meet the following eligibility criteria:

  • The Contract and Transfer must be for the purchase of the whole of the property.
  • All purchasers must be ‘eligible purchasers’.
    • An ‘eligible purchaser’ is defined as a natural person (i.e not a company or trust) at least 18 years of age who has not, and whose spouse/de facto has not:
      • At any time owned (either solely or with someone else) residential property in Australia other than property owned solely as a trustee or executor;
      • Previously received an exemption or concession under First Home New Home.
    • At least one eligible purchaser must occupy the home as their principal place of residence for a continuous period of six months, commencing within 12 months from the date of settlement.

First Home Owner Grant

To receive this grant you must meet the following eligibility criteria:

  • Each applicant is a natural person and not a company or trust.
  • Each applicant must be at least 18 years of age.
  • All applicants and/or their spouse/de facto have not owned a residential property, jointly, separately or with some other person, in any State or Territory of Australia before 1 July 2000.
  • All applicants and/or their spouse/de facto have not previously owned a residential property jointly, separately or with some other person in any State or Territory of Australia, and occupied that property for a continuous period of at least 6 months.
  • Each applicant has entered into a contract for the purchase of a new home or signed a contract to build a home on or after 1 January 2016. In the case of an owner builder, laying of the foundations commenced on or after 1 January 2016.
  • The total value of the property does not exceed the cap amount of $750,000.00.

This must be the first time an applicant and/or their spouse/de facto has received a first home owner grant and at least one applicant must occupy the home as their principal place of residence for a continuous period of six months, commencing within 12 months from the date of settlement.

Basically the short answer is that, as ALL applicants for each first home benefit must NOT have either jointly or solely owned a property previously, you will not be entitled to any first home benefit if your partner has previously owned a property.

The Office of State Revenue will assess each application on a case by case basis so if you feel that you have circumstances that don’t quite fit into any of the above criteria, we can submit an application on your behalf for individual assessment.

If you would like to speak to Carina about first home buyer benefits please contact us.

Article written as an update to the original entry posted in June 2016. Updated 30 September 2016.

Do we need to pay our property grants back?

Do-we-need-to-pay-our-property-grants-back.jpg

If you have recently built a home with your partner, or bought a brand new home, and you have now separated, there is a chance that you will need to pay your property grants back.

Below we explain when you need to pay your property grants back, when you don’t need to, and what else you should know to protect yourself.

If you are selling the property

If you are selling the property for which you received property grants, then there is a high chance that you will need to pay back those grants. The rules for property grants are as follows:

  • New Home Grant

    • If you purchased a home complete and ready for occupation or an off the plan purchase you are not required to pay back the grant.

    • If you purchased vacant land with the intention to build a dwelling:

      • But did not commence construction within 26 weeks of settlement then you must repay the grant; or

      • If you completed construction then you will not be required to pay back the grant.

  • First Home New Home Stamp Duty Exemption/Concession

    • If you purchased vacant land with the intention of building a dwelling; or

    • If you bought a new home that had not been lived in previously, then:

      • At least one purchaser must have occupied the Property for a continuous period of 6 months in the first 12 months. If this has been achieved then the stamp duty exemption/concession does not need to be paid back.

      • If you have not commenced construction or neither purchaser has lived at the property for the required period then the exemption/concession must be paid back on or prior to settlement of the sale.

  • First Home New Home Grant

    • The guidelines above for the Stamp Duty Exemption/Concession are also applicable to the grant.

If one of you is keeping the property

If one of you is going to keep the property and buy the other out, there is a chance that you will not need to pay back the grant money that you have received.

In order to avoid paying back any stamp duty concession or grant received on your Property you must meet the eligibility and residence requirements, which are set out below:

  • New Home Grant

    • If you purchased a home complete and ready for occupation or an off the plan purchase you are not required to pay back the property grant.

    • If you purchased vacant land with the intention to build a dwelling:

      • But did not commence construction within 26 weeks of settlement then you must repay the grant or request an extension to meet the requirements of the grant which would avoid the need to pay back the grant; or

      • If you completed construction then you will not be required to pay back the grant.

  • First Home New Home Stamp Duty Exemption/Concession and Grant

    • Either purchaser must have lived at the Property for a continuous period of 6 months within the first 12 months after settlement or completion of the dwelling.

What should be done from a Family Law point of view?

If you have separated and have property together, you should be entering into a formal family law settlement. To read more about why, please click here.

In addition to providing you with protection and certainty in the future, a formal family law property settlement will also help the party who is going to keep the property avoid having to pay stamp duty on the transfer into their sole name.

A family law property settlement is also important if you have previously received property grants. Any settlement should cover who, out of the two of you, will be responsible for paying back the grants in the event that the conditions set out above are not complied with. If you are not keeping the house, and you are selling your share to your former partner, you may want any settlement to say that you will not be responsible for paying back the grants in the event that your former partner does not comply.

This will help both of you move forward into the next chapter of your lives with certainty.

If you would like more information about this, please contact our office to make an appointment.

Stamp duty exemptions for couples

Stamp-duty-exemptions-for-couples-Kylie-and-Nikki.jpg

Stamp duty exemptions for couples may apply when a person in a marriage or de facto relationship owns a property and wants to put their partner on the title. 

There are also exemptions that apply when separation takes place and you want to transfer the title back into the sole name of one of the parties.

Stamp duty exemptions during the relationship

When you decide to add your spouse to the Certificate of Title you may be eligible for a stamp duty exemption. This will depend on your individual circumstances.

Firstly, in order to receive stamp duty exemptions in this circumstance the property must be residential land:

  • on which your principal place of residence is located;
  • that you intend to construct your principal place of residence;
  • on which you are constructing your principal place of residence; or
  • in which you have shares that allow you the right to occupy the property as your principal place of residence.

Once you have established that the property meets the ‘principal place of residence’ requirements then the following apply:

  • if you are married, then a full exemption will be received when adding your spouse to the Certificate of Title; and
  • if you are in a de facto relationship, then: - you must have been in the relationship for two years or more to receive a full exemption; or - if you have been in the relationship for less than two years then no exemption will apply.

If you would like to know more about adding your spouse to the Certificate of Title please contact one of our Licensed Conveyancers.

Stamp duty exemptions after the relationship

In the event that separation has taken place, one party may want to keep the house and ‘buy’ the other person out. When doing this, you will need to transfer the property into the sole name of the person who is retaining it. This transfer will incur a stamp duty liability on the value of the share that is being transferred to the person who is keeping the property (which is different to the amount that they are ‘paying out’ to the other person).

There are stamp duty exemptions available in this scenario, but only if there is a formal family law property settlement in place. Once the formal settlement is done, the transfer can be effected without stamp duty liabilities occurring.

To find out more about why doing a family law property settlement is important, click here.

Selling Rural Property

kylie-selling-rural-property.jpg

Is the property you are selling considered residential under the Conveyancing Act 1919 (NSW) or is it rural property?

You have been approached by a land owner to sell a large parcel of land which has a residential dwelling on it. So you proceed as though this is the sale of a residential property without considering the sale on its individual facts.

Residential property under section 66Q of the Conveyancing Act 1919 (NSW) is defined as anything non residential, or with a land area of less than 2.5 hectares (6.2 acres).  As such, property in excess of 2.5 hectares (whether it be solely residential or farmland) is considered rural.  Now we know this, what size if the property you have been approached to sell?  Does it exceed 2.5 hectares?

If it does exceed this land area or is non-residential (used solely for farming purposes or otherwise), the details below will apply.

Marketing rural property

Under section 63 of the Property, Stock and Business Agents Act 2002 (NSW) the requirement for an agent to hold a copy of the proposed Contract for Sale states this only necessary in relation to residential property.  As such, marketing of a property deemed rural under the above definition can be marketed prior to the agent holding a copy of the proposed Contract for Sale.

Cooling off periods and Rural Property

Section 66X of the Conveyancing Act 1919 (NSW) requires every contract for the sale of residential property to contain a clause which provides for a 5 business day cooling off period.  This, as you can appreciate, causes confusion because the standard clauses in a Contract for Sale contain this cooling off provision.  However, if you look closely once again it only applies to residential property.

Therefore, if you have established the property is not a residential property under s66Q of the Conveyancing Act 1919 (NSW), then there is no legal obligation for the Contract for Sale of a rural property to contain a cooling off period.

If you have any questions about this topic or other conveyancing related enquiries, please contact Kylie Fuentes.

Changes to The State Revenue Legislation Amendment Act 2016

As a Licensed Conveyancer  at a Law Firm, I deal with many clients, from first home buyers to investors and businesses. The State Revenue Legislation Act  effects a large portion of my clients and determines what they can do, the grant amounts they will receive and the tax they need to pay. So when The NSW Office of State Revenue or OSR,  announced changes to the act with The State Revenue Amendment Act 2016, I realised many of my clients would be unaware or confused by the changes. So for those people or businesses undertaking a transaction with the OSR,  and to help you understand the changes, I have summarised the changes to the act below. The changes include:

  • To be classified as a "Substantially renovated home" for the purpose of the First Home Owner Grant and First Home New Home Exemption or Concession from Duty, the home must now be created by renovations that remove or replace all, or substantially all of the building.
  • To be classified as a "home built to replace demolished premises" for the purpose of the First Home Owner Grant, the home must be built on the same land that the demolished premises stood.
  • Unoccupied land which is eligible for the principal place of residence land tax exemption that is occupied by a person other than the owner can now be exempt for a period of up to 4 years from when that person stops using the land for residential purposes.
  • Wages that are paid to a person by a body corporate wholly owned by at least 2 local councils, for activities carried out for those councils, are now exempt from payroll tax.
  • After a successful objection or review, the chief Commissioner must now pay interest on a refund made to a taxpayer.
  • Enterprises may now voluntarily report amounts which are not classified as unclaimed because the total is $100 or less. The amount must be paid to the Chief Commissioner and can be claimed by the owner of the money.
  • The Chief Commissioner may now allow an owner of unclaimed money whose right to the money has expired to still claim the money.
  • References to anything done or held by a trustee of a unit trust scheme as trustee in respect of corporate reconstruction transactions and corporate consolidation transactions that are exempt from duty now extend to include anything done by or held by a custodian of the trustee of a managed investment scheme.

For more information on the The State Revenue Legislation Amendment Act 2016 click HERE.

If you need legal advice in relation to a property or business transaction. Coutts can give you the advice you need. 

Can I sell my home to a buyer with 5% deposit?

If you have your house on the market, you are selling at a time where  property prices and mortgages are high, buyers will need to offer a deposit to purchase, but the current market conditions mean it is uncommon that a buyer will have a 10% deposit. However, the Contract for Sale of Land stipulates that a 10% deposit must be paid on exchange of Contracts. So this leads many people to question " Can I sell my house to a buyer with a 5% deposit? " and if so, how is this done? and is there any risk? The simple answer is yes you can and yes it does come with a risk, but there are ways to minimise the risk.

You can accept any deposit you wish under the Contract for Sale as long as it is agreed to by all parties, but here is the catch…

  • If you agree to accept a 5% deposit and if you ever had to terminate the Contract on your buyer, then you would have to try and recover the balance of the 5% due to you under the Contract. This would be done through litigation (going to court), which is an expensive process with no guaranteed outcome.
  • If you do not feel comfortable agreeing to a 5% cash deposit, you can always ask your buyer to obtain a 10% deposit bond. A Deposit Bond acts as a substitute for the cash deposit between signing a Contract and settlement of a property. At settlement the purchaser would then pay the full purchase price including the deposit. A Deposit Bond can be issued for all or part of the deposit amount required, up to 10% of the purchase price.

Thus, it is safer to ask for a 5% cash deposit together with a 5% deposit bond, which would total your whole 10% deposit.

Ideally, it is up to you whether you agree to accept a 5% deposit, just remember that it does come at a risk. Even though you are lead to believe it is “common practice” you are entitled to the 10% deposit under the Contract for Sale, you do not need to accept the 5% even if there is a “special condition in the Contract” as if you do accept the lesser deposit,  that is most likely all you will get if the Contract is terminated.

If you are thinking of selling your property you will need a contract of sale before you market your property. This can be done by a licensed conveyancer. Contact Coutts Solicitors & Conveyancers.

Top 10 things to know before you purchase in a Retirement Village

If you are approaching the age of around 60 you are probably in the midst of planning your retirement. One of the big decisions to make is where you will live. There are many options depending on what your lifestyle and finances will allow, but many people will consider moving to a retirement village. If you are looking at moving to a retirement village here is a list of the top 10 things you need to know before you make the final decision.

What is a retirement village?

A retirement village is a community that is for people who are around 60 years of age and over. The community contains a range of accommodation and usually provides further facilities to cater to your lifestyle.

What do I receive as a resident in a retirement village?

Retirement Villages are maintained by the village which gives you more time to actually enjoy your retirement! Most retirement villages also provide a 24 hour emergency assistance.  Finally there are usually a number of facilities provided within the village, such as pools, tennis courts, bowling greens as well as third party services such as hairdressers and doctors.

Do I buy into a retirement village?

There are many different types of retirement villages, some of the most popular being either a leasehold or a loan and licence agreement. Regardless of the type of scheme, you will be required to contribute an “ingoing contribution” which is an amount of money that is required to be paid upon entering into a retirement village.  This amount is set based on size of unit, size of village, etc.

Can I sell my retirement village unit?

All retirement villages will allow you to be able to “sell” your unit, however most require an “outgoing contribution” which is an amount of money that you are required to pay to the village upon exiting the village. Again, this amount depends upon the retirement village itself and varies from village to village.

Am I entitled to any capital gain?

This is important to check when entering into a retirement village as this varies from village to village. There are villages that do not entitle you to any profit made from the “sale” of your unit, so this is something to be aware of.

Who is responsible for any capital loss?

Again this varies from village to village, however with most villages you will be responsible for any capital loss, regardless of whether you are entitled to any capital gain.

Do I have to pay fees to live in a retirement village?

As retirement villages provide you with services and facilities, all villages have a maintenance fee or lease fee or recurrent charge, which is payable. The amount is usually set annually and is set based on the cost of maintaining the village as a whole.

Do I own my retirement village unit?

Generally speaking you don’t “own” your unit, however you are entitled to the sole use of your unit and have rights and protection under the retirement village legislation.

Are there rules associated with living in a retirement village?

Yes, all villages have rules that you need to abide by in a retirement village. These rules will cover things like whether pets are allowed within the village and whether other people are able to reside at your unit with you.  You need to have read and be happy with the village rules before entering into the retirement village.

Who looks after the retirement village?

Retirement villages are maintained by the Village Manager. Some villages also have committees that residents are able to join to be able to have your say within the village to ensure that the resident’s needs are being met by the retirement village.

Retirement Villages in the Macarthur

There are many retirement villages around the Macarthur Area and their contracts will vary. That is why it is important to seek legal advice from a licensed Conveyancer to go through the contract with you and help you to understand what you are entering into.

If you would like advice on your retirement village contract and need a Conveyancer to act on the purchase. Please contact Carina Novek, Conveyancing Manager at Coutts Solicitors & Conveyancers. Your initial consultation is free.

What is a Put and Call Option?

A Put and Call Option is an agreement, usually between a landowner and a Builder. The agreement allows the landowner to allocate certain blocks to the Builder for their exclusive right to sell to third parties, for an ‘option fee’. The benefit to the landowner is that they have a guaranteed sale because even if the Builder doesn’t find a third party, the ‘put’ option allows them to make the Builder purchase the lot. The benefit to the Builder is that they get to package the land up as a house and land package, guaranteeing their build on that block of land. The risk to the Builder is that if they do not find a third party to purchase the block of land, they are required to.

There is also such thing as just a Call Option. The difference here is that the landowner no longer has the option to require the Builder purchase the lot however if the Builder doesn’t nominate a third party to purchase the lot, they may forfeit their option fee.

Option Deeds entered into between landowners and Builders include certain terms and conditions. Usually the most crucial is the Call Option expiry date. The Call Option expiry date is the latest date that the Builder has to nominate a third party to purchase the land. In most cases, in order to nominate a third party purchaser to purchase the land, the Builder must ensure that a both building and land contracts have been entered into by the Call Option expiry date.

If you would like advice on Put and Call Option deeds please contact Melina Costantino, expert in Conveyancing for Builders and Developers at Coutts Solicitors & Conveyancers.

First Home Owner Grant reduced

The First Home Owner Grant has been reduced to $10,000 as of 1 January 2016. The First Home Owner Grant (New Homes) scheme has been available for several years to assist eligible first home owners to purchase a new home or build their home by offering a grant.  The grant amount is determined by the date of the eligible transaction. This is the date of the contract to purchase a new home or contract to build a home.

  • For eligible transactions made on or after 1 January 2016, the grant amount is $10,000.
  • For eligible transactions made between 1 October 2012 and 31 December 2015, the grant amount is $15,000.

Here is a re-cap on the some of the terms and conditions associated with the grant:

  • New homes only – this means a home that has not previously been occupied, sold as a residence, renovated or built to replace demolished premises
  • Individuals only – not applicable to companies or trusts
  • If you OR your spouse OR your de facto has owned a property in Australia before, you are ineligible
  • At least one of the applicants must be a permanent resident or Australian Citizen
  • The total value of the property cannot exceed $750,000
  • At least one of the applicants must live in the home as their principal place of residence for a continuous period of six months commencing within twelve months of being the owner or if you are building, within 12 months of construction being completed

Other things to consider:

  • The grant is not available for the purchase of vacant land however where you have entered separate Land and Building Contracts:
    • Once you are making an application for a construction loan, you can apply for the grant through your financial institution and the grant is available to draw down from your first progress payment; or
    • You can apply for the grant directly from the Office of State Revenue once construction of your home has been completed provided the application is lodged within 12 months of completion of construction.

Please note: If you have not yet claimed the First Home Owner Grant but previously entered into a Contract for the purchase or construction of a new home and the date you entered that Contract is before 1 January 2016, you are still eligible for the $15,000.

This is a summary only. For more detailed information about First Home Buyer incentives please click through to this link http://www.osr.nsw.gov.au/first-home-buyers otherwise feel free to contact our office.

*This information is current as at February 2016

Swimming Pool Compliance 2016

Do you have a swimming pool or spa? Are you looking at selling your home?If you said yes to both of the above questions then the Swimming Pool Compliance 2016 requirements will effect you. As of 26 April 2016 all homeowners selling their properties need to provide one of the following: 1. a valid compliance certificate from Council or a qualified private certifier; or 2. a Final Occupation Certificate that is less than 3 years old. One of these documents must be attached to the Contract for Sale so make sure when you are instructing your conveyancer that you provide this information. If you are in a strata complex you are affected by this new legislation also, so make sure the Owners Corporation have a compliance certificate for any pools within your complex.

If you have any questions about the new legislation click here to contact the licensed conveyancers at Coutts.

Joint tenants and tenants in common

What are Joint tenants and tenants in common ? If you and your partner have just thought about purchasing a property or are in the process of purchasing a property this is a question you will need to know the answer to. When you review your contract with your conveyancer you will be asked if you would like to purchase your property as Joint tenants or tenants in common. Most people are not aware of this until the appointment and do not realise the implications of their choice. We at Coutts endeavour to help you make the best choice for your current circumstances ensuring you have an easy transaction from beginning to end. As like every person, buying a property is quite complex and it can be a stressful period. One of the biggest decisions you both have to make is whether you wish to buy the property as Joint Tenants, Tenants in Common in equal shares or Tenants in Common in unequal shares. In this article I will describe to you the differences between joint tenants and tenants in common.

It is important to pick your shares earlier on in the purchasing transaction. During your Contract Review with your Solicitor or Licensed Conveyancer they will describe the difference. This article is going to give you a clear understanding on the differences and describe what these mean in "layman" terms so that any persons,  purchasing a property can make an easier decision prior to signing on the dotted line.

It is important to understand, discuss and decide on your shares prior to completion date, as if you make the wrong decision it will cost time and money to amend your shares later on down the track. It is not impossible to change your shareshowever, choosing the most suitable option early on will save you time and money and protect your best interests.

Joint Tenants

Usually, married couples are joint tenants. They own 50% of the property each. This means that if one party was to die the share he/she hadat the time of death can be transferred to the surviving partner. Therefore one person would have the whole 100% share.

One thing most people don't know about Joint Tenants is that you cannot "leave" your share to another person. For example if you and your de facto are joint tenants and you pass away you can't leave your share to your children regardless of the terms of your will. Your share will be left automatically to your de facto partner. It is up to them whether they choose to leave part of the property to your children when they pass away.

Tenants in Common in equal Shares

Tenants in Common in equal shares are normally made by couples who purchase who are not married. This means that yourself and your partner own 50% of the property each and if one of the partners were to pass away their 50% share will be left in accordance with the terms of their Will. This is becoming more common with second time around partnerships and couples with children to previous marriages.

It is very important that if you select to be a tenant in common that you prepare a Will immediately. In the Will you can set out how you wish for your 50% share to be divided. So, what does this mean for your partner who is left behind? It means that the people who are entitled to your share can force your surviving partner to sell the property to obtain your share of the property.

I have in previous years seen where this is an issue. An elderly person has been made to sell the property because step children wanted to sell the property to obtain their share of their parents half of the house. In this case we can create a life estate later on to protect the interest of an elderly person to ensure that they can live in the property until such time as they pass away or decide to move on.

Tenants in common in unequal shares

This is the same principal as above the only difference being on how many shares you own.

For example Brother and Sister are purchasing a property. Property is worth $1,000,000. The brother puts in $800,000 of his savings and sister puts in the remaining $200,000 into the property. As you can see the brother contributed 80% of the purchaseprice and the sister contributed 20% of the purchase price. Both wish to be tenants in common in unequal shares. Therefore, they will own the property as "brother as to 80/100 shares and Sister as to 20/100 shares".

As long as the shares add up to the value of 100th or 10th you can have as many people purchasing or as many shares as decided.

Given the rising prices of housing in all of Sydney many parents are choosing to either go guarantor on the children's property or even putting large sums of money towards their children's home. To protect their interest many parents are added onto the Contract and onto the deeds. An example where we can mix joint tenants and tenants in common is: husband and wife buy property, dad contributed a large some of money towards the purchase. Husband and wife own the property as joint tenants 50% and dad owns other half of the property, 50% as a tenant in common. This means that if the husband was to pass his share will automatically go to his wife. However, if the father passes away his 50% share would be distributed as per the terms of his will. If at any stage the husband and wife want to purchase back the fathers 50% then husband and wife would have to obtain a valuation from a registered property valuer and pay 50% stamp duty on the value of the property.

As you see from the examples whenbuying a property things can get quite complex. So ensure that you have discussed these matters with your partner prior to signing on the dotted line. If you would like any more information about your shares in a property please contact Coutts Solicitors & Conveyancers on 1300 268 887.

Title Insurance

What is title insurance?

Title insurance is a specialised insurance that provides protection to home owners against unknown and hidden risks that may exist at the time of purchasing a property.

Why do you need title insurance?

Even the best conveyancer or property lawyer cannot identify all potential risks to your property during the conveyancing process.  Title insurance provides that extra level of protection against the unknown.

So, what risks can title insurance cover?

  • Illegal or unapproved building works
  • Survey or boundary defects
  • Registration gap
  • Fraud, forgery and identity theft
  • Planning and title defects
  • Outstanding rates and taxes
  • Zoning issues
  • Breach of relevant laws
  • Forced removal or remediation of structures due to thirds party work

Top points for title insurance

  • It is a one-off premium
  • There is no excess on claims
  • No fault claims – no fault or negligence needs to be proved
  • No cap on cover apart from policy amounts

What is the cost to you?

The premium varies depending on the value of the property and the type of property you are purchasing, enquire with your conveyancer or property lawyer to find out more.

If you would like to know more about title insurance please contact Coutts on 1300 268 887.

What are Deposit Bonds?

Deposit Bonds are becoming a common part of the conveyancing process, especially with ever increasing property prices.  So it is important for vendors and purchasers alike to understand what Deposit Bonds are.

What is a Deposit Bond?

A Deposit Bond is a substitute for all or part of the typical cash deposit paid on exchange of Contracts in the conveyancing process.  It almost like a form of insurance where the institution providing the deposit bond is saying the purchaser is good for the money.

Deposit Bonds can be for short terms of up to 6 months or long terms up to 48 months (this is beneficial if purchasing off the plan).

Where can you get a Deposit Bond from?

Deposit Bonds can be obtained through specific companies that only deal in deposit bonds, or through your banking institution.

What is required to obtain a Deposit Bond?

Documentation required to support your application varies between institutions, however as a general guide, you may need:

  • Copy of your loan approval;
  • Evidence of funds to complete the purchase;
  • Signed and dated Contract for Sale (if selling existing property)

What is the cost of a Deposit Bond?

The cost varies between institutions and will vary depending on the value of the deposit bond and how long you need it in place.

Benefits of a Deposit Bond

The benefits of a deposit bond vary between the individuals circumstances, however some top benefits include:

  • Provide a greater flexibility at auctions, as the deposit bond can provide you with a maximum deposit of 10% of your maximum bid. These types of deposit bonds are not made in favour of a specific vendor and can be issued for a 6 month term.
  • First home buyers may not always have a full 10% deposit, but can get funding for 95% of their purchase, so instead of committing to a cash deposit a deposit bond (possibility with the need for guarantor) can be obtained to ease the pressure.
  • When buying off the plan, instead of having your 5% or 10% deposit being invested in a low interest earning account for up to 48 months, you can leave your money where it is and obtain a deposit bond for the period of the Contract.

If you would like to know more please contact one of the Licensed Conveyancers at Coutts on 1300 268 887.

What is a Sunset Clause?

There has been a lot of reports in the media lately regarding sunset clauses and changing the way they operate.  To best understand the need for reform of these clauses, its important to first understand "What is a sunset clause?"

What is a sunset clause?

A sunset clause most commonly appears in a contract for off-the-plan sales, either for apartment blocks or unregistered vacant land.  This clause sets the date that a contract may be rescinded (wound back) or cancelled without penalty, by either party if conditions are not met.

Sunset clauses may allow a period of 12-36 months (if not longer) for the developer to have the property ready for settlement.  They also provide that this period can only be extended by a further 12 months past the original date.

What does a sunset clause achieve?

The intention of a sunset clause is to protect the purchaser from being tied to a development that never gets completed, and to protect the developer by ensuring that purchasers cannot pull out of settlement if the project is completed in accordance with the sunset clause.

What is the current situation?

There has been a great deal of media attention on sunset clauses due to the tactics of some developers to use the sunset clause to their advantage in a market where we are seeing great price increases.  Allegations have been made that some developers are delaying construction to push past the sunset date.  This allows the developer to pull out of the contract and then put the property back on the market for a higher price.  In the current market this can yield significantly higher returns.

This affects purchasers as their deposit has been tied up in a development that has essentially put them out of the market since the time they paid their deposit.  This could be for a period of 2 years or more, meaning many can now not afford what they originally signed up to purchase.  It also affects confidence of purchasers, particularly in relation to off-the-plan sales with those involved in the above situations stating they will not consider purchasing off-the-plan again.

What is being done to prevent this in the future?

Consumer protection is high on the agenda of Victor Dominello, the Minister for Innovation and Better Regulation.  In the past week he has announced two potential options to prevent or avoid these situations in the future.  The options are:

  1. To imply a term in all off-the-plan contracts that only allows the purchaser to rescind. This arrangement aligns with that in Western Australia. 
  2. To imply a term where if the vendor rescinds a contract under a sunset clause and then resells the property within a certain period of time, the purchaser is entitled to damages equal to the difference on sale price between the two contracts.

Such proposals will turn the Sunset Date clause on its head.  Purchasers previously affected by the underhanded tactics of developers have welcomed the reforms with the hope no one will have to endure their experience in the future.

Consultation with various stakeholders regarding off-the-plan contracts and the reforms have commenced and the wider community can take part by completing the survey at http://www.fairtrading.nsw.gov.au/ftw/About_us/Have_your_say/Buying_property_off_the_plan.page.

If you would like to know more about off-the-plan contracts or sunset clauses please contact the Conveyancing Team at Coutts Solicitors and Conveyancers on 1300 268 887.

Purchasing unregistered land

So I asked my client, I said, “What did you discover having already bought unregistered land that you didn’t expect?” The response I received, which inspired me to write this blog was “they lie about registration”. This blogs not about how developers lie, but it is about what you as a purchaser of unregistered land need to consider even after you’re told the anticipated registration date. You need to be aware as a purchaser of unregistered land that while you are provided with an anticipated date for registration, this date is approximate only and subject to change. There are two things to consider, the process involved in registering land and the provisions in the Contract for Sale.The developer doesn’t have control over registration of the land because there are processes that need to be followed and third parties that are involved in these processes. Before land is ‘registered’ construction works need to be completed, council must approve the plan of subdivision and the plan of subdivision must be lodged to the Land and Property Information. In this process there are several parties involved, it is because of this that registering the plan of subdivision can take time. It is also because of this that exact time frames of when the land will register cannot be given.

Generally speaking in a Contract for Sale of unregistered land, there is a provision for what’s called a ‘sunset date’. This is the latest date that the developer has to have the land registered by. It’s your worst-case scenario. This date is important to consider because as a worst-case scenario you could be waiting until then. It’s only until this date is exceeded that you have any options. In most cases, if the sunset date is exceeded, you have the option to elect to no longer proceed with the purchase.

So it’s risky business purchasing unregistered land but that doesn’t mean you shouldn’t, now though, you are more prepared and can enter these sorts of transactions with a better understanding.

Swimming Pool Legislation

A reminder to all pool owners who are selling or intend on selling their property. As of the 24 April 2014 a Pool Safety Compliance Certificate must be attached to the Contract for Sale to be able to sell a residential property. Click here for more information about getting a swimming pool fence inspection and having a compliance certificate issue.

mypoolinspection.com.au/nsw/real-estate.html