Tips for Purchasing a Property at Auction

Headshot of Nick Hawkins - Solicitor at Everingham Solomons TamworthPurchasing a property at auction has different challenges to buying through a negotiated sale. Many purchasers can find the experience daunting, especially if they are attending an auction for their first property purchase. These are some things you should know before attending any auction:

1. There is no cooling-off period if you buy a property at auction. This means that if you are the highest bidder at the auction you will then have to sign a contract for the purchase on the same day. This makes the purchase binding and you cannot pull out of the contract if you change your mind about buying the property.

2. It is important to speak with a banker or mortgage broker well before attending the auction to obtain preliminary finance approval and ensure you are able to borrow enough to complete the purchase. You will generally have a 6 week settlement period after the auction and you will then be required to complete the settlement and pay the balance of the purchase price. If you don’t begin to organise finance approval until after the auction it is unlikely that your loan will be approved in time and you risk being in default under the contract.

3. In addition to organising finance approval with a bank you need to have enough funds on the day of auction to pay the deposit. A deposit is usually 10% of the purchase price which you will be required to transfer to the real estate agent upon signing the contract immediately after the auction.

4. Before the auction you need to complete all of your own inspections and enquiries about the property so that you are satisfied that it is in an acceptable condition. If you wish to organised pest and building inspections, you should do this well before the auction date. If the pest and building reports reveal hidden damage or termite infestation you will not be able to get out of the contract after signing the contract at auction.

5. Importantly, you should request a copy of the contract as soon as possible from the real estate agent and ask your solicitor to review the contract before the auction. If you are successful at auction you will be bound by whatever conditions are in the contract so it is important to seek advice beforehand. Your solicitor will ensure the contract is fair and complete and will be able to negotiate conditions that you may require in the contract. They can also provide advice as to whether the property will actually be suitable for the purpose you intend to use if for, i.e. will you be able to build a pool in the back yard? Is the property able to be subdivided? What sort of businesses are permitted to be operated on the property?

If you need further advice in relation to any property transactions or you require a solicitor to review a contract before auction, contact a solicitor at Everingham Solomons because Helping You is Our Business.

Click here for more information on Nick Hawkins.

Development and the requirement for Council approval

Headshot of Jessica Wadwell - Conveyancer at Everingham Solomons TamworthDoes all development need Council approval? 

The type and size of the development will determine whether Council approval is required.  Generally, minor development such as small decks or garden sheds are identified as exempt development and can be undertaken without Council approval.  Development such as home additions will require Council approval.  Prior to undertaking any development, you should seek Council or legal advice specific to your development.

How do I obtain Council approval of an unapproved structure? 

The owner or an authorised third party can apply for a Building Information Certificate.  This certificate is issued by Council and is confirmation that Council will not issue an order, or take proceedings for an order or injunction, for the repair, demolition, alteration, addition or rebuilding of the building.  Applying for this certificate will require a survey report of the property and Council’s inspection of the structure.  If Council refuses to issue the certificate, Council must notify the applicant setting out the reasons for its decision and the work required to be undertaken to permit a certificate to issue.  Depending upon the type of work required, this may result in additional costs.  Once issued, the certificate is for a period of seven (7) years and covers such matters which exist at the time of issue of the certificate.

Selling a property with an unapproved structure?

Vendors should discuss any unapproved structures on their property with their solicitor.  This is due to the prescribed warranty under the Conveyancing (Sale of Land) Regulation 2017 that provides ‘the vendor warrants that, as at the date of the contract and except as disclosed in the contract … there is no matter in relation to any building or structure on the land … that would justify the making of any upgrading or demolition order’.  A breach of this warranty by the vendor may result in the purchaser being permitted to rescind the Contract.

Purchasing a property? 

Be alert to structures that require Council approval.  Initially, you or your solicitor should make enquiries of the vendor to obtain copies of the Council approvals held.  If the vendor does not hold approvals, Council records can be inspected with consent of the vendor.  These records may take time to obtain, so parties should be conscious of potential delays.

Important reminder!

If you are planning to undertake development upon your property, check whether Council approval is required.  If so, ensure all approvals are in place before works are commenced and the works are consistent with the development consent.  Don’t forget to schedule the appropriate inspections during construction to obtain that final approval known as an occupation certificate.

Feeling overwhelmed by the process of obtaining Council approval?  Contact the friendly and experienced team at Everingham Solomons, where Helping You is Our Business.

Click here for more information on Jessica Wadwell

What happens to a mortgage for land when a person dies?

Headshot of Suzanne Hindmarsh - Conveyancer at Everingham Solomons TamworthAfter your funeral and your family has had time to process the loss of a loved one, it is necessary for the executor to deal with the deceased’s assets and liabilities.

As land is involved and a Will was made, Probate will need to be obtained. This is a document issued by the Supreme Court acknowledging the validity of the deceased’s Will and authorizes the executor/s to administer the Estate.

If a Will was not left, the next of kin of the deceased will need to apply for Letters of Administration. This is a document issued by the Supreme Court authorizing the next of kin (known as the “Administrator”) to administer the Estate according to intestacy rules.

The executor needs to contact the Bank to advise of the death and provide certified copies of the Death Certificate and Probate in due course.

There are three ways you can hold land in NSW and transfer the land.

They are:-

Sole Owner

The deceased holds land only in their name. The land will be dealt with as part of the deceased’s Estate. Subject to the deceased’s Will, the land may be sold or left to a beneficiary.  If left to a beneficiary, a new loan needs to be prepared. Written consent from the Bank needs to be obtained prior to the land being transmitted to the beneficiary. A Transmission Application form is required to be lodged with NSW Land Registry Services through the electronic conveyancing platform called PEXA.

Joint tenant

The deceased and another person holds the land as joint tenants. This is the most common way married or de facto couples own land. Whilst each person holds an individual interest in the land, when one person dies, the legal concept of “survivorship” takes place. That is, the interest of the deceased person will automatically pass to the surviving joint tenant. The land does not form part of the deceased’s Estate. The surviving joint tenant needs to speak to the Bank about continuing on the mortgage payments and the Bank needs to provide their consent prior to the lodgement of a Notice of Death form to NSW Land Registry Services by PEXA.

Tenants in Common

The deceased and another person are co-owners of the same land holding as tenants in common in equal shares or hold an unequal share, for example 80/20. When a person dies their individual share in the land does not automatically pass to the other surviving owners. Instead, the deceased person’s share in the land will form part of their Estate and be distributed in accordance to their Will or if they did not leave a Will, by the laws of intestacy. If the land is not to be sold but instead to be transmitted to a beneficiary, the beneficiary needs to prepare new mortgage documents. A Bank’s written consent needs to be provided prior to lodgement of Transmission application to NSW Land Registry Services by PEXA.

At Everingham Solomons, we have the expertise to assist you with all legal matters regarding your land, because Helping You is Our Business.

Click here for more information on Suzanne Hindmarsh.

The name’s Bond. Deposit Bond.

Headshot of Sarah Rayner - Solicitor at Everingham Solomons TamworthDeposit Bonds can be quite useful when buying Property. When you exchange on a Contract of Sale to Purchase property, you will usually be required to make payment of a Deposit, usually in cash, which is 10% of the purchase price.

There are circumstances where this can be tricky though. Maybe your assets are invested and you require some time to access them or perhaps your bank is issuing you a loan which will cover 100% of the purchase price, but your loan funds are not available until settlement.

So, what do you do in these situations? The Vendor will still require payment of the Deposit before you enter the Contract.

Usually, a convenient way to address this situation is to have a Deposit Bond issued. A Deposit Bond is essentially a guarantee from a provider that they will make payment of the Deposit, if a purchaser defaults on the Contract. It is a promise to pay.

Some of the perks of Deposit Bonds are that there are multiple providers of Deposit Bonds in NSW, and they usually can be obtained fairly quickly. But there is usually an upfront fee associated with the issuing of a Deposit Bond.

Each provider will have specific criteria you will have to meet to become eligible for a Deposit Bond, which usually will be that you have an asset base in which they can secure the Bond against.

However, you cannot simply assume that a Bond will be accepted by the Vendor in your transaction. You will need to ensure that the Contract of Sale allows you to make payment of the Deposit by way of Bond.

The other big consideration is that the Deposit that you paid by way of using a Deposit Bond isn’t really paid. It is a promise to pay made by the provider. The amount that you are securing with a Bond will become payable at settlement of your transaction. So, the Bond is really only a temporary placeholder for the Deposit. You will still need to have the full amount payable, in cash, available at settlement.

If a Purchaser defaults on the Contract of Sale in which a Bond has been used in lieu of a cash Deposit, and the Vendor becomes entitled to retain the Deposit, the Vendor can then “cash in” the Bond with the provider. The Purchaser will remain liable to the provider to reimburse the amount of money owed to them.

This generally means that while there are a few extra hoops for the Vendor to jump through to collect a forfeited deposit, from the Vendor’s perspective accepting a Deposit Bond instead of a cash Deposit when you are selling, is relatively low risk.

If you have questions about Deposit Bonds, or purchasing property in general, contact Everingham Solomons because Helping You is Our Business.

Click here for more information on Sarah Rayner.

Solicitors Trust Accounts

Headshot of Suzanne Hindmarsh - Conveyancer at Everingham Solomons TamworthSolicitors Trust Accounts are regulated by the Legal Profession Uniform Law (NSW), Legal Profession Uniform Law Application Act 2014, the Legal Profession Uniform Law Application Regulation 2015 and Legal Profession Uniform General Rules 2015.

These laws are in place to regulate the conduct of money held in Trust for clients. Such money might include funds required to settle property purchases, to pay stamp duty, probate filing fees, for distributions in deceased estates, for debts recovered, for settlement of claims, or funds required to pay legal expenses.

Trust accounts are subject to external examination every year, as well as periodic random audits by the Law Society’s Trust Department. These external examiners and auditors will check transactions through the Trust accounts to ensure they comply with the Regulations.

Solicitors are required to have written instructions to transfer funds from the Trust account. Often these instructions are incorporated into the Costs Agreement the firm enters into with the client.

Contrary to a common misconception, Solicitors do not earn any interest on clients funds held in their Trust account. In this state, all interest earned on funds in Solicitors Trust accounts are paid directly to the Law Society of New South Wales.

Clients may direct, if a significant amount is involved for a lengthy period, that their Solicitor deposit their Trust funds into a Controlled Money account to earn interest whilst funds remain under the control of the Solicitor.

On completion of a matter where Trust transactions have occurred, a Solicitor is required to provide a Trust Statement to the Client. On 30 June each year, subject to some exceptions, a Solicitor is required to provide Trust Statements to all Clients where there has been Trust transactions within the preceding 12 months.

Should you have any queries about Trust accounts, we would be happy to discuss them with you because Helping You is Our Business.

Click here for more information on Suzanne Hindmarsh.

Injury Sustained on a Public Area – Is the Public Authority Liable?

Headshot of Terry Robinson - Accredited Specialist and General Counsel at Everingham Solomons TamworthA recent matter in the District Court of NSW considered a claim of negligence brought against a Council.

The claimant was a high school student participating in a touch football competition on a sports field maintained and owned by the Council.

During the game, the claimant fell to the ground alleging her foot got stuck in a hole in the playing surface of the field causing her injury to her knee.

To succeed in her claim, the claimant needed to prove on a balance of probabilities, that there was a hole in the playing surface of the field that caused her to sustain her injury.

The claimant admitted that she did not see any hole in the ground and ultimately was unable to establish that she fell into one.

The Council was also able to show evidence that groups such as touch football associations were issued permits to allow them to play on sports fields on the condition that the sporting entity had to inspect the playing field and surrounding areas prior to play for hazards and defects (such as holes) and any identified risks needed to be fixed before play and reported to the Council.

There was no evidence presented of any reports or defects in the playing surfaces from the touch football association or other sporting bodies who had recently used the sporting field.
Further the sporting Association gave evidence that their usual practice was to inspect the playing fields for risks prior to play and this was supported by a completed checklist which did not identify the hole in the surface of the field.

Additionally, Council had a system of maintenance of the park where the fields were regular inspected by a number of workers and no reports had been lodged of any defects in the playing surface.

The case highlights the importance of bodies having the control or ownership of public areas, having risk management procedures integrated into the day-to-day operation and management of public places such as sports fields, parks etc, to enable the early reporting, identification and elimination of risks on public land.

It also highlights that a claimant should have sufficient evidence and documentation to prove negligence and to prove their case as otherwise it could be an expensive gamble.
At Everingham Solomons Solicitors, we have the legal expertise to advise you regarding all of your legal matters, because Helping You is Our Business.

Support for First Home Buyers

Headshot of Nick Hawkins - Solicitor at Everingham Solomons TamworthSaving money to buy property, or even pay a deposit, can be very difficult especially when buying property for the first time. Fortunately, the government is currently offering a number of grants and schemes that can make it a little easier.

First Home Buyer Assistance Scheme

The First Home Buyer Assistance Scheme provides an exemption for first home buyers from having to pay stamp duty on their purchase. The requirement to pay stamp duty is completely waived for first home buyers purchasing a new or existing home for $650,000 or less or buying vacant land for $350,000 or less. A first home buyer may still be eligible for a partial exemption it the value of the property exceeds these amounts.

To be eligible for the scheme you and your spouse must never have owned any interest is residential property in Australia and at least one of the first home buyers making the application must be an Australian citizen or permanent resident. There is also an additional requirement that you must live in the property for 6 months within the first 12 months of buying the property.

First Home Buyer Deposit Scheme

An additional expense for first home buyers is lenders mortgage insurance (LMI). LMI can cost thousands of dollars and is required to be paid by first home buyers that have less than a 20% deposit saved to purchase a property. Under the First Home Buyer Deposit Scheme, eligible people only need to have a 5% deposit saved and the government will guarantee the remaining 15%.

However, there are currently only 10,000 places available between 1 July 2021 and 30 June 2022 for first home buyers to qualify for this scheme. You must also be an Australian citizen and have a taxable income of less than $125,000 for an individual or $200,000 for couples to be eligible. This scheme is not available for individuals with permanent residency status in Australia.

First Home Super Saving Scheme

The First Home Super Saving Scheme allows first home buyers to release funds from their superannuation to buy property. The benefit of this scheme is that purchasers can draw from their superannuation to help fund their purchase or pay a deposit. It also makes it easier to save for a deposit as funds put straight into your superannuation are usually taxed at a lower rate than income tax.

Importantly, only voluntary contributions you have made to your super fund can be released under this scheme. Super contributions made by your employer cannot be released. You can also only release up to $15,000 of voluntary contributions you have made from any one financial year. The total amount of voluntary contributions that can be released is capped at $30,000.
If you need any assistance with purchasing your first property, or any other property transactions, please contact a solicitor or conveyancer at Everingham Solomons because Helping You is Our Business.

Click here for more information on Nick Hawkins.

Understand the “Permitted Use” in your Commercial or Retail Lease

Headshot of Ya Zhang - Solicitor at Everingham Solomons Tamworth

If you are a tenant, you need to understand how you can use the leased premises when entering into a commercial or retail lease. For example, you may intend to use the premises as a restaurant or as a bookstore in Tamworth. How you can use the lease premises is negotiated and agreed before you enter into the lease and is provided in the “permitted use” clause of the commercial or retail lease.

The permitted use clause should accurately describe how you intend to use the premises during the lease term, including what you will be doing on the premises now and in the future, and any products or services you will manufacture or sell on the premises. The permitted use clause, even just a few words, is an important commercial term in the lease.

First of all, the permitted use has an impact on the future of the tenant’s business. A broader description of the permitted use is preferred as it will allow a range of activities to be carried out. A narrow description may restrict the tenant’s ability to expand the business. Therefore, tenants need to consider if the permitted use is broad enough to adequately cover their core business and any ancillary activities.

Secondly, tenants should consider the ability to transfer the lease to a third party. A highly restrictive permitted use may affect the tenant’s ability to assign the lease if the landlord is not willing to consent to a change to the permitted use. This is particularly relevant if the tenant intends to sell the business. A broad description of permitted use in the lease would make it easier to find a purchaser of the business.

Lastly, permitted use is closely related to the development approval. Before entering into the lease, tenants should research and enquire about whether the premises are suitable for their intended use and ascertain whether their intended use is permitted on the premises. If the intended use of the premises has not been approved by the council, the tenant will need to lodge an application and obtain the development approval from the council.

If you have any inquiries in respect of your commercial or retail lease, please contact Everingham Solomons because Helping You is Our Business.

Click here for more information on Ya Zhang.

Abolition of Certificates of Title for land in NSW

Headshot of Jessica Wadwell - Conveyancer at Everingham Solomons TamworthFrom 11 October 2021, all paper Certificates of Title for land in NSW will be cancelled and converted to electronic Certificates of Title.

What does this mean for me as a landowner?

1. If you hold a paper Certificate of Title, that paper title will be cancelled.
2. Those who pay off their mortgage will not receive a paper title.
3. A cash purchaser of land will not receive a paper title following settlement.
4. When a parcel of land is subdivided, consolidated or in any other way created, a paper title will not be issued for that new parcel of land.

Don’t panic! The cancellation of your paper Certificate of Title will not change the ownership of your land.

The Torrens Title Register is the primary register for land held in NSW. This register records land ownership and will continue to be the primary source recording a person’s interest or estate in land in NSW.

The purpose of the cancellation of paper Certificates of Title is in line with the Registrar General’s transition to 100% electronic Conveyancing.

Whilst most dealings with land registered on the Torrens Title Register must already be lodged electronically by a subscriber i.e. solicitor or conveyancer, once this transition is complete, all documents must be lodged electronically by a subscriber.

At Everingham Solomons, we strive to complete your conveyancing transaction efficiently, accurately and securely, because Helping You Is Our Business.

The Death of the Title Deed

Headshot of Sarah Rayner - Solicitor at Everingham Solomons TamworthOver the past few years, The NSW Property Law system has been progressively moving towards a system in which land dealings are being lodged electronically. The electronic system is known as eConveyancing.

Recently, the Office of the Register General has announced the date in which NSW will become a 100% electronic system.

This date is being referred to as the Cessation Date.

The Cessation date of 11 October 2021 brings with it a multitude of changes.

One of the bigger changes to the system is the abolition of the Certificate of Title (CT), or more commonly known as the title deed. The Real Property Amendment (Certificates of Title) Act 2021 now dictates that CTs will no longer be issued when completing a property transaction and further still all CTs in existence will be cancelled.

This will mean that a CT will no longer be a legal document.

However, current advice is that you shouldn’t immediately run to the shredder to destroy any CT you have lying around your house, but that you should retain these Certificates for at least six (6) months after the Cessation date.

The NSW Torrens Title Register will remain the sole way of proving Legal ownership of Property in NSW.

In place of a CT being issued, the NSW Land Registry Service will be issuing an Information Notice.

The Information Notice is said to contain details of the Land affected, the dealing registration number, the date of the dealing and other important information.

With these changes, you can expect that your legal representative will now be required to carry out exhaustive identification checks before they will be able to proceed with your transaction.

For all your property transactions contact Everingham Solomons because Helping You is Our Business.

Click here for more information on Sarah Rayner.