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

Buy Low Sell High

Buy Low Sell High is the first seminar in our free Property Seminar Series.

Buy Low Sell High is designed to provide an overview of the sale process, from engaging a real estate agent right through to handing the keys to the purchase.

We delve into:

  • WHO // you will need to engage to sell + why
  • WHAT // who does what, from the agent to the stylist right through to the broker + lender
  • CONVEYANCING // the general conveyancing process
  • SETTLEMENT DAY // what to expect + what happens if there is a delay
  • TRAPS + PITFALLS // that you should be wary of when consider to sell your property

So when the time is right to move on to your next dream home, selling your property for the best price will be a breeze!

Secure your FREE ticket through Eventbrite here.. https://www.eventbrite.com.au/e/buy-low-sell-high-tickets-75801936633

REFRESHMENTS INCLUDED + ALL CHILDREN WELCOME!

Spring Clean Your Life Planning

Spring has sprung, the days are getting longer and the sun is getting warmer – if you haven’t already, you are likely getting out in the garden, cleaning the house, and planning your summer projects around your home and garden.

In all the excitement of improving your physical environment, spare a thought for your life planning; that is, your future estate, asset and tax planning – it is a great time of year to give these a freshen up too!

Your Will is an easy place to start.  We recommend that a review of your existing Wills should be undertaken every 5 years, or earlier, if your current circumstances change.  If you don’t have a Will, NOW is the perfect time to get that process started.

Aside from regular reviews, there are certain milestones which are ideal point to consider and update your Will.  If any of the following have occurred in the last 12 months, or are likely to occur in the next 12 months, a review is necessary:

  • ENTERING A NEW RELATIONSHIP
  • MARRIAGE
  • CHILDREN
  • PURCHASING OR SELLING PROPERTY
  • CHILDREN BECOMING ADULTS
  • RETIREMENT
  • ESTABLISHING A BUSINESS
  • BUSINESS OR TRUST CHANGES
  • RELATIONSHIP BREAKDOWN, SUCH AS SEPARATION OR DIVORCE

If any of the above scenarios have recently changed in your life, it would be a good idea to grab copies of your signed Will, have a sit down and read over what you have in place.  If you see anything which requires change, or you are unsure about the impact of a life event, come see our legal team and we will assist you with the review.

Another issue worth noting is how marriage, separation and divorce can affect your Will if you fail to update it.  Each has a different consequence, and failing to consider and update your Will and Powers of Attorney at the time can result in the wrong people being in control of, and entitled to, your hard-earned assets.

The key to good long-term life planning is to be prepared, and obtain advice before committing to a significant life, asset or business change [where possible].  This isn’t limited to Wills, as changes can also impact Powers of Attorney, ownership of assets [ie. if owned jointly with others], business structures and agreements and superannuation entitlements.

Contact our Legal Team today to get your Life Planning spring clean underway.

 

Kayla Kennedy – Solicitor

LLB

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)