Contracts Can Be Cruel!

You found the perfect property, the vendor and their agent have been amazing, friendly, flexible and have been open to all of your requests through the negotiation stage.  Sounds to good to be true?  It might just be!

If you’re thinking about purchasing a property, do not take the word of the vendor or their agent.  The details of any negotiations are in the pages of the contract.  As stated by Ronald Regal – “trust, but verify”.

Conveyancing has gone through significant changes over the past 5-10 years.  Processes and legislation have modified and, subsequently, so to has the contract of sale.  Gone are the days of fairness and equality in a contract, with contracts now re-written to solely protect the vendor leaving the contract reflecting a ‘no vendor liability’ or ‘take it or leave it’ status.  Further, as the property market expands and there is more interest surrounding a property, you may feel pressured to sign on the dotted line without first obtaining advice.

A contract reflects the negotiations between you and the vendor.  A standard clause now placed in contracts is that the contract is the entire agreement and you will not be able to rely on any promises, assurances or agreements made by the vendor or their agent unless that are inserted into the contract.  It is, therefore, very important that all negotiations with the vendor are disclosed and inserted into the contract.

It is also important for the contract to be reviewed so you are aware of your obligations.  The worst contracts will see you not being able to make any claims against the vendor for damage caused by the vendor or for their failures to comply with building regulations or contamination of the land.  Further, the penalties applied for delayed settlements, delayed paperwork and requests for finance approval extensions can make for a very expensive exercise.

A further catch is when an agent asks for you to sign the contract as a way to secure your offer to the vendor, but, you have not yet had the contract reviewed and amendments may be required.  The agent may then provide this to the vendor and, if accepted, the contract becomes binding.

Amendments to the contract are part of the negotiations and should be completed prior to your signing any contract.  You may be able to reply on the 3-day cooling off period, but, it is best to speak with our office in this regard.

If you need any advice in relation to your purchase or potential purchase, please get in touch with us and we would be happy to assist you!

 

Katherine Taylor – Solicitor

BCriminology (History), LLB

[Sub]Divide + Conquer

The subdivision and development of your land is an excellent way to make a profit on the assets you currently have. As always, there a few matters that need to be considered prior to diving into this potentially lengthy process.

SO… Is your land suitable?

Your ability to subdivide and develop your land depends largely on whether the property is suitable in terms of size, location and zoning.

When your Council is considering a subdivision application they will examine the size of the land, if the property is subject to zoning or planning overlays that may restrict or prohibit subdivisions, and will compare these with their development strategy for the area. They may impose conditions if the subdivision would affect natural resources, environmental areas and biodiversity, land use, heritage and infrastructure. They may refuse the application if it is not within their development strategy. As a first step, speaking with Council will give you an idea of their requirements and if the property is suitable.

WHO PREPARES THE APPLICATION + how is the plan of subdivision created?

As well as speaking with Council, we recommended you also speak with a land surveyor. The role of a surveyor is to dive deeper into the property’s suitability. They will examine the property, determine is suitability, assess the most appropriate way to subdivide the land, create a new plan of subdivision, work with Council and external sub-contractors to ensure all conditions are satisfied to obtain the statement of compliance from Council and to submit the subdivision application to our office for registration.

WHAT’S NEXT… Once the Council have given the tick of approval?

Once all the conditions of the subdivision are satisfied and Council have provided their statement of compliance, we [ie. your legal team] will attend to the registration of the plan of subdivision. As part of this application, we lodge a summary form to the Titles office with copies of the plan of subdivision documents. We will also obtain the lender’s consent to the subdivision if there is an existing mortgage over the property.

WHAT HAPPENS… once the plan of subdivision has registered?

Once the subdivision has registered, new certificates of titles will be issued for the new pieces of land. If there is any common property in the new plan of subdivision [such as a common driveway] an owner’s corporation [as known as a body corporate] will be established and they will own that particular piece of land. You will also need to consider the management and maintenance of that common area.

HOW LONG… will the subdivision process take?

The time frame for the development and subdivision of the land will vary depending on the work to be completed on the property, including whether or not buildings will be constructed.  However, you can generally expect that a subdivision process can take between 12-18 months to finalise from start to finish.

WHAT ELSE… might you need to consider?

  • HOME DESIGN if you intend to construct houses on the subdivided land as part of the development we recommend speaking with a builder and/or architect to discuss potential home designs. The proposed plan of subdivision may limit your design options.
  • FINANCE: the subdivision of land can be a costly exercise. It is a good idea to enquire into the costs involved in the development and discuss these with your accountant, broker/lender and a financial advisor.

Below is a summary of the costs you can expect to pay for a 2-lot subdivision:

Council Fees $3,000
Council Levies $15,000
Surveyor Fees $10,000
External Subcontractors $40,000
Builders/Architects $600,000

(based on construction of two homes valued at $300,000 each)

Legal Fees $1,200 – $2,000
TOTAL ESTIMATE $669,200.00

*The above is an estimate only. The final cost is dependent upon the property, the development and the costs set by Council, the surveyor and the external contractors.

  • STRUCTURE OF OWNERSHIP: If you are entering into a subdivision project with others, you should also consider how you should own the property [ie. personally or within a trust/company structure], and how contributions, expenses and distributions are managed. Our legal and accounting teams can advise on this based on your individual plans and circumstances.
  • SALE OF SUBDIVIDED PROPERTY: If you intend to sell the developed land, you will need to further consider your Capital Gains Tax [CGT] and Goods and Services Tax [GST] obligations. We recommend speaking with your accountant in this regard.

If you are interested in learning more, please do not hesitate to contact one of our friendly property lawyers.

 

Katherine Taylor – Solicitor

BCriminology (History), LLB

PPSR – Personal Property Securities Register

Hidden interests…buyers beware!

Persons who obtain finance, more commonly commercial, car or personal finance, a security interest is generally registered on the Personal Property Securities Register known as the PPSR.  In doing so, they are securing their interests on the borrower’s personal property, such as cars, boats, plant and equipment, but does not include land, certain licences and a few other exceptions.  While registration of a security interest is not compulsory, a financier (secured party) may lose its priority to the personal property if it is in competition with other security interests.

If you are looking to purchase business, plant, equipment, car, boat, trailer or the like, a search of the person and/or company in ownership of the property is a must as part of your due diligence.  At settlement and transfer of the property you have a right to clear and free possession of that property from the seller.  If the personal property is under finance and the PPSR charge is not released when the property is transferred to you, the financier has a right, in the first instance, to repossess the property should the seller default on their loan arrangement.  It is important that any security interests are discharge prior to the property being transferred to you.

The PPSR is a single national register for personal property security interests and an online noticeboard of the particulars of a security interest for a particular individual or company.

Follow the link below to find out more information about the PPSR: https://www.ppsr.gov.au/ppsr-overview

If you wish to discuss your own secured property or that of a sellers please contact our legal team on 03 5278 95000 or email legal@cannygroup.com.au

 

Katherine Taylor – Law Clerk

BCriminology (History)

New Year Resolutions that Will Make A Real Difference To You + Loved Ones

Now that the dust has settled on what was hopefully a fun-and-family-filled Christmas and New Year period, it is a great time to reflect on those hastily-made New Year’s resolutions, and consider the difference it will make if you actually see them through.

Perhaps you resolved that in 2019 you will exercise more, quit smoking, drink less, or spend less time looking at your phone.

For others, you may have decided that 2019 is the year you get your personal, financial or business affairs in order. That may include getting those Wills and Powers of Attorney prepared (which you’ve been meaning to do for years), getting that accounting or financial advice you know will make a difference, or kick-starting that business which you’ve been daydreaming about.

Now these are New Year’s resolutions that will make a real difference to you, your loved-ones, your financial health and your current/future employees.

The most important part is getting the process started. The second-most important part is making sure that each of the elements of your plan complement, and do not contradict each other. For example, the superannuation or asset planning which you undertake with an accountant or financial advisor should be reflected in your will, your business plan should be supported by adequate funding arrangements and succession agreements, and your business tax planning and compliance must be complemented by appropriate employment agreements for your staff.

Ideally, this means you should be seeing a lawyer, accountant and financial adviser contemporaneously, and have them talk to each other to ensure each element is consistent. But who has the time and energy for that?

This is where Canny Group can help you stick to your New Year’s resolutions. We have a team of experienced accountants, lawyers and financial advisers under one roof who are ready to listen, identify your needs or the needs of your business, and work cohesively to get your affairs in order, or your dream off the ground, for the best possible start to 2019.

 

Stefan Manche

Senior Associate Solicitor – LLB, BComm (Finance) 

Early Release of Deposit

When selling a property you are entitled to have your deposit released to you prior to settlement under Section 27 of the Sale of Land Act (VIC). It involves the preparation of a Section 27 Statement. This Statement provides the purchaser with details of any mortgage over the property and of any caveats lodged against the property. If there is a mortgage we are required to obtain written details of the amount due under the mortgage from your bank and attach this to the statement. This information can be requested when completing your discharge of mortgage.

The completed section 27 statement is provided to the purchaser’s representative. The purchaser may sign or object to the statement. If the purchaser does not sign or object within 28 days of their representative receiving the document, the deposit may be released to you without their approval. A purchaser may object to the statement if the information contained in the statement is incorrect or if the purchase price is not sufficient to discharge the mortgage.

It is worth keeping in mind that when deposit is released to you your real estate agent is able to take their commission and advertising costs from the deposit.  If you would like more information, we are always here to help.  Please get in touch with our team.

 

Katherine Taylor – Law Clerk

BCriminology (History)