AREAS OF PRACTICE
Purchase or Sale of House or Land including Rural Holdings and Farms
BUYING A PROPERTY TITLE INSURANCE ON OR BEFORE SETTLEMENT SELLING A PROPERTY PROPERTY OWNERSHIP
EXCHANGING CONTRACTS GST & TAXES COSTS MORTGAGES FINANCE FOR PROPERTY RETIREMENT VILLAGES
CHOOSING YOUR SOLICITOR
Why Choose Higgins Lawyers
We are able to act for you in all areas of
conveyancing.
We specialise in property conveyancing
We will provide legal advice in relation to your transaction
We will keep you and your real estate agent completely informed of the progress of your sale or purchase
You will receive personal attention from the Solicitor and trained conveyancing staff.
We use modern conveyancing computer programs to handle all transactions efficiently
We have online access to NSW Government Land Titles records.
We are an agent for Office of State Revenue and we can
pay the stamp duty on your contract and transfer in our office.
What questions should I ask my Solicitor?
It is important that you explain carefully your personal situation and exactly
what you want. Finance and time limits need to be discussed.
What will I pay in fees and charges?
What services are included in those fees?
Will, or can there be, any additional charges or costs?
What Government fees will I have to pay?
How long will completion take?
Is there anything I need to do and when do I do it?
Will you personally be handling my file?
How will you keep me up to date with what’s happening?
Buying or selling real estate can be very
stressful as you negotiate the sale or purchase of what may be the most
important and expensive transaction of your life.
You will need someone who can steer you through the maze called conveyancing
and who is an
Conveyancing is the term used for the legal work
involved in the transfer of ownership of
Having a dedicated Solicitor and support staff
handle all the legal work involved in your next
property sale or purchase will help you make your transaction so much
easier.
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Buying a Property
When buying a property speak to your Solicitor first – you should be aware of:
Your cooling off rights before you enter into the contract
All the costs involved before you commit yourself
Your loan approval should be unconditional and in writing
Your budget – what you can afford before you start to negotiate with the agent
Your rights and obligations if you are a first home purchaser
At Higgins Lawyers we can help you understand all aspects of your purchase
in a friendly relaxed manner.What does Higgins Lawyers offer you when we act on your sale or purchase:
Full UP FRONT fees disclosure – no nasty surprises or hidden costs
After hours and weekends by appointment
Our emphasis is on QUALITY and CLIENT SERVICE
For those in remote areas everything can be arranged by mail and courier
We talk and write in PLAIN ENGLISH
Confidentiality is guaranteed
We keep you fully informed without charging you more for the privilege
We can arrange Deposit Bonds and title insurance if required.
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Finance for Buying Property
When buying property it’s important to ensure you have unconditional finance
approval before exchanging contracts.
The finance approval should be in writing on the letterhead of your finance provider.
Often a purchaser has pre-approval of a loan that is conditional on the finance provider
undertaking a valuation of the property.
If you exchange contracts on such conditional approval and the property comes in under value,
you may not get the finance.
RULE 1
is to ensure you have written, unconditional finance approval before exchanging.
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TITLE INSURANCE
Have you heard of Title Insurance??
Title insurance protects against loss from defects that already exist in the titlee
No survey report or building certificate? Title insurance may be of use to youu
Some examples of the risks that title insurance protects aree::
Forced removal by Council of an illegal structure built by a previous owner without Council approvall
Any issue that would have been revealed in an up to date survey report Forced removal or relocation of a structure because it encroaches
over an easement or onto the neighbour’s property.
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ON or BEFORE SETTLEMENT
You are about to take possession of your new home. But don’t forget this – Insurance
Normally, insurance risk passes on settlement day – unless you take possession before settlement
All building insurance should be put in place before the purchase is settled.
Your lender will want a copy of the policy before they agree to settle
Final Inspection
You are entitled to, and should always carry out, a final inspection of the
property before settlement to make sure that the property is in the same
condition as when first inspected and to see that all inclusions are
left on the property.
What happens with Council rates at settlement?
Council rates are levied for the financial year
On settlement they are adjusted so that
the vendor pays the rates uptes are adjusted app to the date of settlement
The purchaser is then liable from settlement until the end of the rating period
Rates are a charge on the land and any
outstanding rates become the responsibility of the purchaser
It is essential that they are paid to date of settlement
Your Solicitor wil make sure the rates are adjusted appropriately.
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SELLING A PROPERTY
A seller is not required by law to attach a survey report or a council
building certificate to a contract for the sale of land. However if
you want a quick exchange it is worth the expense (approximately $1,000)
to provide a survey report and a council building certificate in your
contract so that
Your agent can market your property with all the relevant information available
There will be no delay (sometimes as long as 5 weeks) while the purchaser obtains the survey and building
certificate
You know at the outset if council will not issue a building certificate
You can rectify any problems in relation to the non-issue of a building certificate before the property is put on the
market.
It could make the difference between a
purchaser buying your property or a similar property
If you want to sell an investment property with vacant possession and you have a tenant you
need to know:
A tenant is not bound to move out of the property until:
-The term of the lease has expired, or
-A notice to vacate has been served
You should be sure that the term of the lease has or will expire before the settlement is due or
You must give 30 days notice to vacate to the tenant
You should arrange with your managing agent to give the notice immediately
contracts are exchanged and make sure the contract is more than 30 days in
duration
Either you as the landlord or your managing estate agent must give the notice to the tenant.
Your Solicitor
cannot give the notice.
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PROPERTY OWNERSHIP
Who owns your property?
If you share ownership of a property with another person, or other people, the
joint ownership will be held in one of two ways. Either as -
Joint tenants – each person owns the property jointly and on the death of
one, the property
automatically passes to the remaining joint tenant or tenants, or
Tenants in common – each person owns the property and on the death of one person that share
passes to whoever inherits their estate. As a tenant in common you can sell or gift your share to whom you choose.
What is community title?
A type of subdivision of land where owners share the use of community land set aside for:
- Parks, playgrounds, swimming pools etc
- May incorporate a block of units
- With freestanding houses
- Shops
- Maybe a golf course
It is a flexible way of developing land and small communities.
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What does “Exchanging Contracts” mean?
The buyer and seller agree on a price and the conditions of the sale.
The agreed terms are incorporated into the Contract.
Contracts are drawn up in duplicate and one copy is signed by the seller and
one copy is signed.
The buyer pays the deposit.
Contracts are exchanged so that the Solicitor for each party holds the copy
signed by the other party.
Until the contracts are exchanged either party can withdraw from the
transaction.
It’s only when contracts are exchanged that the contract becomes binding.
What is a “cooling off period”?
Every contract for the sale of a residential property has a cooling off period of
five working days to allow a buyer to organise finance and inspections once
the contract has been exchanged
The seller is unable to withdraw from the sale during this period, however,
the buyer may rescind the contract if they decide not to proceed.
If the buyer rescinds the contract he must pay the seller 0.25% of the purchase price.
The buyer can waive the cooling off period by having the contract explained
to them by their Solicitor and signing a Section 66W Certificate
There is no cooling off period if the property is being sold at public
auction.
If you are buying a property, before the exchange of contracts, your Solicitor will:
- Explain the contract to you
- Organise pest and building inspections
- Obtain surveys and council building certificates
- Discuss your financial position and talk to your lender to ensure you have
formal loan approval
- Negotiate with the seller’s Solicitor any special requirements such as an
extended settlement period or the amount of deposit to be paid
- Keep you informed.
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GST & TAXES
GOODS & SERVICES TAX
The GST came into effect on the 1st July 2000 and is a tax on goods and
services at a rate of 10%. Whilst the GST is collected by the Commonwealth,
all the proceeds go to the States. Non profit organisations are also
included. Small businesses with an annual turn over of less than $50,000 can
elect not to register.
The GST is a most complicated and difficult area of the law. Whether the
GST attaches to the sale of real estate depends on:
i. Whether the premises are new, and
ii. Whether they are residential or commercial.
Sales of existing residential homes are generally not affected.
The sale of new residential premises will, if the vendor is registered
for GST, be subject to that tax. New residential premises are residential
premises that:
Have not previously been sold as residential premises, or not been the subject of a long term lease.
Have been created by renovations, including the removal of or the reconstruction of all of a building or
substantially all of a building.
Have been built to replace premises that have been demolished on the same piece of land.
2007 land tax is calculated -
On the combined value of all land you own at midnight on 31 December 2006
Has a threshold of $352,000
If you own land with a combined value of more than $352,000, land tax
will be assessed at the rate of 1.7% for each dollar plus $100
If the combined value of your land does not exceed $352,000 no land tax is
payable.
YOUR PRINCIPAL PLACE OF RESIDENCE OR FARMLAND IS EXEMPT FROM LANDTAX
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COSTS
It’s important to plan for the costs involved in buying a home. Here’s a list of some of the
expenses involved to help you budget:
- Your loan will have an application fee, a valuation fee
and mortgage insurance and there may be other fees charged by your lender
- Conveyancing fee
- Disbursements – money your solicitor has to spend on your behalf for title
and statutory searches
- Inspection fees – for building and pest inspections. If you are
buying a strata unit you will need a strata inspection report
- Stamp duty – if you are not a first home buyer you will pay stamp duty on
the purchase price of the property
- Stamp duty on your mortgage
- Building insurance – you will need to insure the property you are
purchasing from the date of settlement.
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MORTGAGES
An arrangement whereby
property is used as a security for a loan is called a mortgage. The
mortgagee/lender has a direct interest in the property and the owner's
Certificate of Title is held by the lender until the mortgage is discharged.
An owner may sell the
property before the mortgage is repaid but to do so will require the
mortgage to be discharged.
Mortgages are available
from various sources and each financial institution has a different policy
including interest rates, terms, conditions and lending policies.
A mortgage broker may
be able to assist you in obtaining the loan most suitable to your needs.
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FINANCE FOR PROPERTY
When buying property it’s important to ensure you have unconditional finance approval before exchanging contracts
The finance approval should be in writing on the letterhead of your finance provider
Often a purchaser has
pre-approval of a loan that is conditional on the finance provide undertaking a valuation of the property
If you exchange contracts on such conditional
approval and the property comes in under value, you may not get the finance.
So, RULE 1 is to ensure you have written, unconditional finance approval before exchanging
contracts
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TITLE INSURANCE
Have you heard of Title Insurance?
Title insurance protects against loss from defects that already exist in the title
No survey report or building certificate? Title insurance may be of use to you
Some examples of the risks that title insurance
protects are :
Forced removal by Council of an illegal structure built by a previous owner without Council approval
Any issue that would have been revealed in an up to date survey report
Forced removal or
relocation of a structure because it encroaches over an easement or
onto the neighbour’s property.
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RETIREMENT VILLAGES
Retirement villages are buildings or complexes predominantly for people 55 years or older or who are retired
and who have entered a village contract with the operator of a village.
The operator may own the village or be a
separate person engaged under an agreement to manage the village.
The Retirement Villages Act and
Regulations commenced in 2000 and the Act applies to both charitable and
privately owned retirement villages, but does not apply to residential parks
or boarding houses.
The Act makes provision about issues
including deposits, termination, refunds, disclosure of information and
advertising.
When entering a retirement village
agreement, the operator must provide a signed and dated disclosure statement
in compliance with the regulations.
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TERMS USED IN CONVEYANCING
A summary of
some of the terms used in conveyancing to assist you in understanding the
terms used by your Solicitor throughout the transfer process –
Adjustment Date – the date on which the council and water rates and possibly land tax are adjusted for payment
Agent – A person authorised to act on behalf of another person in the sale, purchase, letting or management of a
property. A real estate agent must be licensed by the Office of Fair
Trading.
Auction – A public auction sale where the property is sold to the highest bidder.
Bank Cheque – A cheque issued by a bank,
which is guaranteed by the bank and is as secure as cash, except that there may be a clearance period on the bank cheque.
Boundary – A line separating adjoining properties
Breach of Contract – Where one of the parties breaks one or more conditions of the contract.
Bridging Finance – Short term finance that has been arranged until long term funding can be set in place.
Capital Gain – The financial gain obtained when you sell an asset for more than you paid for it
Caveat – A legal notice by a person having a (caveatable) interest in the property which may prevent the transfer of
the title.
Caveat Emptor “Let the buyer beware” – This principle of law puts onus on the buyer to be satisfied with the
property before buying. Therefore, it is essential the buyer undertakes pre-purchase enquiries.
Certificate of Title – A document issued
by Land & Property Information detailing the owner, a legal description of
the property and any other interests, such as mortgages, in the property.
Chattel – Personal property, a moveable article such as furniture
Contract for Sale – A written agreement,
signed by both parties, which sets out the terms and conditions of the sale,
description of the property, the price, inclusions and completion date.
Conveyance – The transfer of ownership of
property from the sellers name to the buyer's name.
Conveyancer – A person licensed by the
Department of Fair Trading to practice conveyancing in New South Wales
Conveyancing - The legal process for the transfer of ownership of real estate
Cooling off Period – The current
legislation provides a period of 5 business days from date of exchange of
contracts in which (only) the purchaser may cancel the contract for the
purchase of residential – A notation on a title deed which imposes an
obligation to terms, conditions or restrictions regarding the property.
Deposit – An agreed amount (usually 10%) of the purchase price, which is paid by the purchaser at exchange of
contracts and usually held by the estate agent until completion.
Deposit Bonds – This is a guarantee issued by an insurance company that the purchaser will pay the full deposit by the
due date. There is a fee for these bonds and they are regularly used
instead of money as a deposit. Conditions apply.
Deposited Plan – A plan of subdivision deposited at Land & Property Information. Commonly called a DP.
Disbursements – Miscellaneous fees and charges incurred during the conveyancing process, including search fees and
charges paid to Government authorities.
Discharge of Mortgage – A document signed by the lender and given to the borrower when a mortgage loan has been repaid
in full.
Drainage Easement – The right to drain water over another property.
Easement – A right by a person who is not
the owner of the property, to use or have access over part of that land.
Encroachment – The action of one person intruding upon land over which they have no right.
Encumbrance –An outstanding liability or charge on a property.
Exchange of Contracts – The time at which the Agreement for Sale becomes binding on both parties, the agreed deposit
is paid and the cooling off period commences.
Exclusions – Items which are specifically excluded from the sale.
Fittings – Goods or articles that can be removed from the property without causing damage to it.
Fixtures – Items such as built in
cupboards, stoves, etc which are fixed to the property and cannot be removed
without causing damage. There is still argument about what constitutes
a fixture so these should be detailed in depth in the contract.
Final Inspection – An inspection of the
property, prior to completion, to determine that the property is in the same
state and condition that it was at the date of exchange of contracts
Gazumping – Gazumping is when a purchaser’s offer has been accepted and the purchaser begins pre-contract
enquiries, only to find that the seller has accepted a higher offer from someone else.
Inclusions – Items which are specifically included in the sale.
Inventory – a list of items included with a property, usually furniture, furnishings, moveable items etc.
Joint Tenant – Ownership of a property in equal shares, where if one owner dies his/her share passes to the surviving
owner/s.
Land Tax – A tax levied by the State
Government against some owners of property and based on the value of the property.
Lawyer - See Solicitor
Lot – Each block of land, unit, townhouse, villa is given a lot number.
LPI – Land and Property Information (formerly Land Titles Office)
Mortgage – Any charge on land created merely for securing the payment of a debt.
Mortgage Broker – A person or organisation
offering to organise or broker loans from a group of lenders.
Mortgagee – A person who lends the money to another where the loan is secured by taking a mortgage over the
borrower’s property.
Mortgagor – The proprietor of land or of any estate or interest in land pledged as security for the payment of a debt
in favour of the mortgagee.
OFT – Office of Fair Trading
Old System Title – The title system which pre-dated the Torrens system and still exists in some properties today.
Old system title to a property was proved by demonstrating an unbroken chain
in title.
Option to Purchase – A legal document
giving a person a right to buy. In the document the price and period
are specified. A fee is paid and if the person proceeds to buy the
property the amount of the fee comes off the purchase price. If the
person does not proceed to buy the property the fee is forfeited to the
seller.
OSR - Office of State Revenue
Owners Corporation – the owners of lots in a strata title scheme.
Purchaser – A person who buys a property (buyer).
Proprietor – The owner of the land.
Rescission of Contract – A right to cancel a contract because of the other party’s non-compliance with terms of the
contract.
Restriction on user – A restriction on the use of the land usually imposed by the original developer and/or council.
Right of Way – A right by a person who is not the owner of the property, to use or have access over part of that land.
Settlement – The settlement (or completion) of the sale whereby the purchaser pays the balance of the
purchase money, the vendor gives the purchaser possession of the property
and gives the title deed and the Transfer to the purchaser or his lender.
Solicitor – Anyone who wants legal advice of any kind will go to a Solicitor who must have a tertiary legal
qualification plus a required amount of practical training.
Stamp Duty – This is a tax charged by the State Government for which the purchaser will be liable, unless entitled to
an exemption.
Subdivision– The subdivision of a property
into lots and common property. The lots are the units or other areas
owned by the owners and the common property is everything that does not form
part of a lot and is owned by the owners corporation (all the owners
collectively.)
Survey – A plan that shows the boundaries of a block of land and the positioning of any building/s on that land.
Tenant in Common – Joint ownership of
property and may be in equal or unequal shares. Each joint owner may
dispose of their share in the property independently and unlike Joint
Tenancy, the shares do not automatically pass to the other owners in the
event of death.
Torrens Title – A term used to describe the system of land (or land's) registration expressed in NSW in the Real
Property Act. This type of title is guaranteed by the State Government, except in some cases of fraud.
Transfer – A document registered with the Land and Property Information that confirms the change of ownership as noted
on the Title.
Unencumbered – Describes a property free of mortgages, covenants, restrictions etc.
Valuation – A report detailing a professional opinion of a property’s value.
Vendor – A person who offers a property for sale (seller).
Zoning – A qualification on the allowable use of the property, imposed by Council.
This publication is provided by Higgins Lawyers to its clients for their information on a complementary basis. It represents a brief summary of the law applicable as at March 2009 and should not be relied on as a definitive or complete statement of the relevant laws. Readers should not act or rely on this information without first seeking our professional advice concerning their particular circumstances.
