You’ve been saving hard and have the deposit to purchase your first home. You’ve looked at many houses and finally found the one. You’ve made an offer through the real estate agent and your offer has been accepted by the vendor.
You organize your pest and building reports. You know your finance is arranged as you’ve been pre-approved by your chosen lender. WRONG!
A pre-approval of finance from a lender is only an “indication” of the amount the lender considers you may borrow based on your previous financial circumstances.
Until you make a formal loan application for the house you have chosen and subsequently you receive written confirmation of finance approval from your lender noting the details of the house you intend to purchase plus a signed loan offer, the lender is under no obligation to provide you with finance.
If you were to exchange contracts based on the “pre-approval letter”, you may not be able to complete your purchase as the finance has not been formally approved for that house.
Not being able to complete your purchase may result in the vendor being able to terminate the Contract, keep your deposit, sue you for any shortfall in the price upon resale of the property (if any) and also sue you for costs and expenses associated with your inability to complete the Contract.
Once your offer has been accepted, you need to make an appointment with your lender as soon as possible to complete a loan application for your chosen home. In most cases, your lender will arrange for a valuation of the property to be carried out to ascertain whether it will provide them with adequate security for their loan.
Many lenders need to submit your loan application to their mortgage departments located either in Sydney, Melbourne, or Adelaide. With Covid-19 in the mix, this takes time so you need to contact your lender quickly as this will enable you to safely exchange contracts and secure the property you wish to buy.
Some lenders provide a letter stating your loan has been approved subject to various conditions set out in the loan contract. This means you must wait to see the loan contract document to find out what terms and conditions you must comply with before the loan will be approved.
At Everingham Solomons, we take our role of protecting your interests very seriously. We work hard to help you secure the home you wish to purchase and make sure you do not end up in the position where you risk incurring a significant financial loss because you were unable to complete your contractual obligations. It might seem like it can take a long time before contracts are exchanged, but it’s all in the interests of looking after you – our client, because Helping You is Our Business.
Click here for more information on Suzanne Hindmarsh.
Most Australians will at some point in their lifetime sign a lease. Whether that be a residential lease for a property to live in, a retail space or for some other commercial endeavour.
Most Landlords will require you to put forth some kind of security deposit/bond in leasing matters.
But what are the requirements for you to do such a thing?
In short security for a Lease is not compulsory. In saying that however, most Landlords will require you to pay one. This gives them some security and goes some way to ensuring that they are not left out of pocket if you damage the property or fail to pay rent.
If you refuse to provide some kind of security, then it is likely that a Landlord simply will not lease the property to you and find a tenant that will.
So what happens to a Security deposit/ bond after you pay it to the Landlord?
Well that depends on what kind of Lease it is that you are signing, so let’s go through them.
Residential
If you are paying a cash security then Landlords are legally required to give you the option of lodging that security with the Rental Bond Board. The Rental Bond Board is a NSW Government run facility which is managed by Fair Trading. It allows both Tenants and Landlords to make a claim for the security in certain circumstances. It also protects the Tenants security by not allowing Landlord to make a claim for the security without cause.
If the Landlord is managing the property without an Agent, then they have ten (10) working days to lodge the security with the Rental Bond Board.
If the Landlord has engaged an Agent to manage the property then the Agent has ten (10) working days after the end of the month to lodge the security with the Rental Bond Board. We also note that a Landlord cannot require you to pay security of more than four (4) weeks rent.
Retail
A cash security paid with respect to a Retail lease must be lodged with the Retail Bond Board NSW, this is a NSW Government run facility very similar to the Rental Bond Board. The security must be lodged within 20 days from receipt of payment.
Commercial
There is no requirement for a Landlord to lodge the security with a Government agency. Commercial leases usually have a provision that notes that the Security Deposit is to be held by the Landlord.
An alternative to paying a security deposit/bond is a bank guarantee. A bank guarantee is a promise given by a bank or lending facility to pay money to the Landlord if the Landlord makes a claim. They are issued for a certain amount and any claim cannot exceed that amount.
Leasing can be complex, overwhelming and is usually a big legal commitment so if you need assistance with a lease, contact us because Helping You is Our Business.
We are often asked whether a local council requires an easement for its water and sewer pipes to remain on a person’s private land and further whether council is entitled to enter upon the private land to carry out repairs and works on that infrastructure.
The Local Government Act provides the answer in respect of storm water works, sewer and water supply works.
Section 59A of the Local Government Act provides that Council is the owner of all works of water supply, sewerage and storm water drainage installed in or on land by the council, whether or not the land is owned by council.
This means that even where council’s infrastructure is located on private land, the works themselves, if installed by council, belong to council.
The works may be considered to have been installed by council even if a developer partly funded the installation and also applies to council infrastructure that was installed prior to Section 59A being legislated.
The Section of the Local Government Act, goes on to allow the council to operate, repair, replace, maintain, remove, extend, expand, connect, disconnect, improve or do any other thing to those works to ensure their efficient operation for the purpose for which they were installed.
This enables the council to both use the works for the purpose they were installed for example, to drain storm water, water supply and sewerage and also to maintain and extend or replace the works.
In effect the section means that council owns the infrastructure works despite the fact that there is no easement or other interest registered on the certificate of title of a private person’s land and allow the council to operate, repair, replace and maintain the works and no easement is required.
It is, however, normal for council with respect to new subdivisions to require easements to be registered on the title of land being created for essential services such as water, sewerage and storm water.
The result is that a landowner cannot require council to remove any such works or prevent council from exercising those powers.
If you have any property enquiries or need assistance in a property related transaction, contact us at Everingham Solomons, because Helping You is Our Business.
Where a farming enterprise has been carried on a rural property, for a minimum of 5 years and where the purchaser intends to carry on a farming operation, then generally the sale will be exempt from payment of GST.
A recent matter highlighted the importance of ensuring that each transaction is examined on its facts and generalisations such as the above rule, are not adopted on a wholesale basis.
The facts: The sellers had operated a farming enterprise (sheep) on their property for many years. They had agreed to sell 15 acres from their rural property to a Purchaser.
The purchaser indicated that he intended to run sheep on the property and has been advised that the GST farmland exemption will apply. That is, no GST is payable in addition to the purchase price.
At first glance this looks to be a reasonable proposition, as the seller has run a farming business for more than five years and the purchaser wishes to run sheep on the property.
The real issue to enable you to determine whether the GST exemption will apply to this sale, is whether the purchaser intends to carry on the business of primary production being the carrying on of a business of maintaining animals for the purpose of selling them for their bodily produce and natural increase.
The issue is whether the running a few sheep on a small block of land amounts to the purchaser “Carrying on a business”.
Factors which the Courts have indicated are relevant in indicating whether a primary production business is being carried on include:
a. Does the activity have a significant commercial purpose or character;
b. Does the taxpayer have more than just an intention to engage in business;
c. Is there repetition and regularity of the activity;
d. Whether the activity is similar to other businesses carried on in that line of business;
e. Is the activity planned, organised and carried on in a businesslike manner;
f. Is the activity directed at making a profit;
g. What is the size scale and permanency of the activity; and
h. Is the activity better described as a hobby, form of recreational or sporting activity?
In the above factual scenario, the running of a few sheep is unlikely to satisfy the commerciality test of “carrying on a business” and accordingly the sale would not be GST free for the sale of farm land.
At Everingham Solomons we have the expertise to advise you on all of your property needs because Helping You is Our Business.
Buying or selling real estate is an exciting prospect. The actual process of transferring ownership in land can be quite daunting for many people. Sometimes a buyer/seller of property has difficulty understanding conveyancing terms their solicitor/conveyancer uses.
The following are some commonly used terms you will encounter when buying or selling property in NSW:-
Vendor: the owner of the property
Purchaser: the buyer of the property
Mortgagee: the Bank providing monies to a person for the purchase of property
Mortgagor: the person borrowing the money from the Bank to purchase the property
Offer: The price the purchaser puts to the vendor (usually through a real estate agent) for the property. Vendor acceptance of the offer does not mean the purchaser has entered into a contract to purchase the land, as this happens on exchange.
Contract for Sale of Land: a document prepared by vendor’s solicitor/conveyancer evidencing the legal agreement between the vendor and the purchaser
Deposit: a sum usually 10% of the purchase price payable to the real estate agent on exchange as a vendor safeguard. The deposit is held by the agent until settlement at which time it is released to the vendor.
Bank Deposit: Your bank may require you to have 20% deposit representing the amount of your savings before it will lend to you.
Exchange: Is when a duplicate copy of the Contract is signed by each of the parties and the documents are “”swapped” so the vendor has a copy of the contract signed by the purchaser and vice versa. Once exchange has occurred, the parties are contractually bound and are unable to pull out of the sale/purchase without suffering serious consequences.
PEXA: stands for “Property Exchange Australia”. It is an electronic settlement system for property transactions including payment of settlement monies, duties, taxes, and any other disbursements and the electronic lodgment of dealings to the Land Registry.
Client Authorisation: a form signed by the vendor/purchaser authorizing their solicitor/conveyancer to act for them in the online workspace of PEXA.
Verification of Identity (VOI): Each vendor/purchaser will need to provide identification documents i.e. passport, driver’s licence, medicare card, birth/marriage certificate to their solicitor/conveyancer for identifying the parties to the transaction.
Completion period: The time between exchange and settlement. The vendor usually stipulates a period between 28 days and 42 days for completion to occur.
Settlement/Completion: the day when ownership of the property is transferred from the vendor to the purchaser. The purchaser supplies the balance of monies to pay for the property (taking into account the deposit already paid) and the vendor provides the documents required for the purchaser to be listed as the registered proprietor of the property. This all takes place on the PEXA platform in most circumstances.
Congratulations: the words you will hear from your dedicated Everingham Solomons solicitor/conveyancer once your sale/purchase has been completed because Helping You is Our Business.
Click here for more information on Suzanne Hindmarsh.
There are various enquiries and inspections you should consider undertaking when purchasing a property. One of those is a Survey Report.
What is a Survey Report?
A Survey Report is obtained from a surveyor to establish that the improvements you wish to buy are actually located on the land you are buying and also to establish if there are any encroachments by improvements onto other properties or by improvements onto the land you are buying. A further purpose is to demonstrate that the house is positioned on the land in order to comply with Council’s set back requirements from the boundaries. The location of the fences may not be a true indication of the property boundaries.
How much does a Survey Report cost?
The cost of a Survey Report for a residential property consisting of a house and land usually starts at $1,000.00 and will increase depending upon the size and location of the property.
Do I need to obtain a Survey Report?
There is no requirement to obtain a Survey Report when purchasing property however, it is an important report you should consider obtaining.
What are the consequences of not obtaining a Survey Report?
There may be no consequences or you may find yourself in a situation where you have purchased a property and the structures on the property encroach upon neighbouring land. You will then have the potential added costs of addressing the encroachment including entering into negotiations with the neighbour for a boundary adjustment or easement for the encroachment, or having to upgrade or demolish the encroachment. You may also encounter difficulties or delays in selling the property if a subsequent purchaser identifies issues with the boundaries. Accordingly, the cost of obtaining a Survey Report at the time of purchase could assist in avoiding the added costs of dealing with issues in the future.
At Everingham Solomons, we discuss the inspection options available to permit purchasers to make informed decisions because Helping You is Our Business.
Click here for more information on Jessica Wadwell
If you are a home owner, your Certificate of Title (land title deed) is an instrument executed by the Registrar General at the Land Registry Services, and is evidence of your ownership of your property. In 2018, all paper Certificates of Title held by the banks were converted to electronic certificates of title called eCT’s.
Where is the Certificate of Title normally kept?
If your property is mortgaged, your eCT is held by the mortgagee – the person or entity who lent the money to you, for example the Bank.
If you do not have a mortgage, your paper Certificate of Title should be kept in a safe place, for example:
• With your solicitor
• In a safe deposit with the Bank
• In a safe place with your other personal papers
What happens if a Certificate of Title is destroyed or misplaced?
If a Certificate of Title is destroyed or misplaced a new Certificate of Title may be obtained from the Land Registry Services. In order to obtain this new document, you must meet the requirements of the Land Registry Services which include:
• Completion of an Application form
• Documents proving your identity
• Documents proving your ownership of the land
Identity Fraud
In the recent case of Chandra & Anor V. Perpetual Trustees Victoria Ltd & Ors, a false application was made for a new Certificate of Title, and as a result the property was able to be mortgaged without the homeowners consent.
Some steps to prevent identity fraud
• Always keep your personal documents in a safe place
• Never sign a document you are unsure of
• Never divulge your passwords or PIN numbers to anyone
• Lock your mailbox or obtain a Post Office box
• Only provide personal information if it is necessary
If your property is not mortgaged, keep your paper Certificate of Title in a safe and secure place.
At Everingham Solomons, we have the expertise to assist you with all legal matters regarding your home, because Helping You is Our Business.
Click here for more information on Suzanne Hindmarsh.
With the increased use of online services across all areas of our lives, cybersecurity is extremely important. Particularly in conveyancing transactions where large amounts of money are transferred between accounts.
Email phishing is of particular concern and requires that we all be extra vigilant in dealing with email communications. Phishing is where a criminal impersonates an organisation in order to steal or alter important information.
For example, let’s say you have a property purchase coming up and have been liaising with your solicitor via email. Your email may have already been hacked without your knowledge and the hackers have been tracking those emails. Your solicitor sends you an email outlining their trust account details for deposit of settlement funds. This email is intercepted by the hackers who change the bank account details. The email then continues to you with the hacker’s account details and you subsequently transfer the funds to the hacker’s account. The funds are never received into the solicitor’s trust account and the panic sinks in. Goodbye money.
In the above example, the end result could have been avoided by telephoning your solicitor to verify their trust account details. This account verification process can be applied to all instances where account details are received via email. Importantly, you should check the telephone number within the email to ensure this also hasn’t been changed by the hacker. You want to ensure you contact the person you have been liaising with to confirm any bank account details rather than the hacker.
As hackers become increasingly sophisticated, it is important that we are all cyber vigilant. Caution is better than catastrophe!
At Everingham Solomons we take cybersecurity seriously because Helping You is Our Business.
Click here for more information on Jessica Wadwell
From time to time the government seeks to stimulate the economy by offering grants and exemptions to entice us to dip our toes into the property market. First Home buyers have been the traditional beneficiaries of these grants, with the original First Home Owner Grant being introduced in July 2000 in an attempt to negate the effect on the property market of the newly introduced GST. Since that time there have been numerous schemes with similar names helping first home buyers realise the Australian dream of property ownership.
Eligible first home buyers can currently apply for two schemes – one that provides a grant of $10,000, and the other an exemption or concession from stamp duty.
First Home Owner Grant (New Homes Scheme)
– Grant of $10,000
– For purchasing a brand new (never lived in & being sold for the first time) home under $600,000
– For building a new home where the total price of land and building is under $750,000
Individuals over 18 that have not owned or co-owned property in Australia may apply for this grant. At least one of the purchasers must be an Australian Citizen or permanent resident. If you have purchased a residential property since 1 July 2000 and lived in it for less than 6 months you may also be eligible for the grant.
One of the purchasers must move into the home within 12 months and continue to live there for at least 6 months. If you are building a new home you must move in within 12 months after the house has been constructed.
First Home Buyer Assistance Scheme
This scheme provides an exemption or concession on the amount of stamp duty payable when a first home buyer purchases an existing home, new home or vacant land on which they will build a home. Thresholds apply which have changed over time, most recently in August 2020.
New Homes – Full stamp duty exemption for new homes under $800,000. If the property is over this amount you will pay a concessional rate of duty between $800,000 and $1 million.
Existing Homes – Full stamp duty exemption for existing homes under $650,000. If the property is over this amount a concessional rate of duty is payable between $650,000 and $800,000.
Vacant land – Full stamp duty exemption for land under $400,000. If the land is over this amount a concessional rate of duty is payable between $400,000 and $500,000.
This scheme is for individuals over 18 who have not owned residential property in Australia. At least one of the first home buyers must be an Australian citizen or permanent resident. You must live in the property for at least 6 months within 12 months of buying the property.
Still confused about whether you are eligible for these grants? Contact the Property Law Team at Everingham Solomons because Helping You is Our Business.
Under an Option Deed and a Lease Agreement, the most common payments are the option fee and the rent. There are other types of payments such as reimbursement of legal costs and fees for grant of easements, but this article will only focus on the option fee and the rent.
Option Fee
In consideration of the landowner’s grant of an option to lease/purchase the land, the developer will pay an option fee to the landowner annually during the option period (e.g. 4 years). Typically, for the purpose of conducting investigations on the land, it is quite common that during the option period contractors for the developer will access the land with equipment to conduct different types of tests. Accordingly, when negotiating the amount of the option fee, the landowner needs to consider the potential impact on the landowner’s farming activities as well as the area of the option land.
Rent
Under the Lease Agreement, landowners for solar farms are typically paid an annual fixed amount per hectare leased. In contrast, landowners for wind farms are typically paid an annual fixed amount per turbine.
In a wind farm project, there are two common methods for calculating the rent:
1. a flat annual fee per turbine, regardless of size or capacity;
2. an annual fee based on the generating capacity of the turbine.
The second method is recommended because modern-day turbines have much greater capacity compared with turbines available previously and, therefore, can result in less turbines being hosted by the landowners.
Rent actually received may be less than you originally expected
At the initial stage of the development process, it is not uncommon for a developer to propose more turbines or solar arrays than will be finally approved or installed, which can result in landowners hosting less facilities, potentially earning less than original expectations. Accordingly, landowners need to ensure that necessary clauses are included in the Lease Agreement to protect their interests in relation to the rent (e.g. minimum amount of rent payable).
Everingham Solomons have experienced Solicitors who have represented landowners in wind/solar farm projects. Please do not hesitate to contact us for any legal advice you may need in relation to a renewable energy project, because Helping You is Our Business.
You’ve been saving hard and have the deposit to purchase your first home. You’ve looked at many houses and finally found the one. You’ve made an offer through the real estate agent and your offer has been accepted by the vendor.
Most Australians will at some point in their lifetime sign a lease. Whether that be a residential lease for a property to live in, a retail space or for some other commercial endeavour.
We are often asked whether a local council requires an easement for its water and sewer pipes to remain on a person’s private land and further whether council is entitled to enter upon the private land to carry out repairs and works on that infrastructure.
There are various enquiries and inspections you should consider undertaking when purchasing a property. One of those is a Survey Report.
From time to time the government seeks to stimulate the economy by offering grants and exemptions to entice us to dip our toes into the property market. First Home buyers have been the traditional beneficiaries of these grants, with the original First Home Owner Grant being introduced in July 2000 in an attempt to negate the effect on the property market of the newly introduced GST. Since that time there have been numerous schemes with similar names helping first home buyers realise the Australian dream of property ownership.
Under an Option Deed and a Lease Agreement, the most common payments are the option fee and the rent. There are other types of payments such as reimbursement of legal costs and fees for grant of easements, but this article will only focus on the option fee and the rent.