What is Conveyancing? How our Conveyancing Lawyers can Help You?
Wondering what is conveyancing? How our conveyancing lawyers can help you? Conveyancing is the process of transferring ownership when an individual or entity is buying or selling residential or commercial land.
Our conveyancing lawyers deliver exceptional service related to all legal matters.
General Guide to the Conveyancing Process in Queensland
Set out below is a general guide to the conveyancing process in Queensland when selling or buying residential land:
Property Negotiation
As conveyancing is regulated by state laws in Australia, the process of buying or selling residential property is unique to each state and territory. In Queensland, in the interest of protecting sellers and purchasers, there are some of the most comprehensive conveyancing protocols across Australia. Early compliance with the protocols is necessary to ensure that:
- If you are a seller, you do not enter into a contract that imposes upon you an obligation that you cannot fulfil and exposes you to termination or damages; and
- If you are a buyer, you are aware of the limited protection that you obtain under a standard contract and the risk that you might have in settling on a property that suffers from deficiencies.
Therefore, each step of your conveyancing matter requires careful execution of the necessary compliance requirements. This is essential to ensure a smooth and timely settlement. If any issues arise with the terms or conditions of the contract, we can advise you of your rights and help you achieve your desired results.
With our extensive experience in property conveyancing, our conveyancing lawyers can support you through the negotiation stages of the contract. Whether at the onset or throughout the conveyancing process, we are dedicated to helping you achieve the best possible outcome.
Pre-Contract Advice
When buying or selling residential property, our conveyancing lawyers always encourage clients to seek pre-contract advice before signing any documents. In our experience by obtaining pre-contract legal advice a client is able to consider:
- What matters should be investigated before deciding to buy or sell
- What responsibilities have to be fulfilled before selling
- What special conditions may have to be inserted into a contract to protect their interest
- Timelines for mortgagors and financiers
- Requirements for pest and building
When you buy or sell residential property in Queensland, you and the other party are bound by the contract terms as soon as it is signed.
Seeking pre-contract advice from an experienced property lawyer before signing the contract ensures that you fully understand your rights and responsibilities. Although contracts may seem relatively simple and “standard,” it is always in your best interest to seek legal advice. This helps uncover any hidden factors that were not part of your initial negotiation to buy or sell the property.
Preparation of Contract when selling residential property
When selling residential property, the Real Estate Agent engaged to market the property often prepares the Contract of Sale. The contract terms should accurately reflect what the parties have negotiated.
Disclosure of Property Interests
When preparing the contract, disclose any encumbrances, covenants, tenancies, environmental issues, or owner-builder work affecting the property. Provide this information to the Agent so they can include it in the contract. Additionally, specify any chattels or improvements the seller wants to retain.
Compliance with Disclosure Laws
Strict laws govern the disclosures and documents presented to the Buyer when signing a contract. If certain forms or information are missing from the contract, the buyer might have the right to withdraw from the transaction until settlement. For instance, Gold Coast City Council’s Local Law 17 allowed contracts to be terminated for non-compliance.
Ensuring Seller Protection
Our conveyancing lawyers will work with you and the Agent to protect your interests as a Seller and ensure all required disclosures are in the Contract.
Pre-Contract Advice for a Buyer
As a buyer, it is preferable to obtain advice before signing the contract. However, you must get advice as soon as possible after signing it. Agents often add special conditions that limit the buyer’s right to terminate based on building and pest conditions.
Common Contract Changes
For example, agents may amend the building and pest condition to allow termination only for structural damage or active termite infestation. This change can force buyers to proceed with settlement even if there is damage requiring costly repairs. Similarly, many buyers are unaware that the contract may not allow termination if there are unapproved improvements or structures on the land. The cost of obtaining approvals for these can be substantial.
Avoiding Issues with Early Advice
You can avoid these issues by seeking appropriate advice before signing the contract. If you sign the contract without advice, your only remedy might be to terminate it within the 5-business-day cooling-off period. For this reason, it’s crucial to seek advice as soon as possible, ideally before signing.
Time is of the Essence
When entering into a contract to buy or sell a house in Queensland, time is of the essence. This legal term means that each party must fulfil their obligations under the contract strictly by the due date. For instance, you must settle by 4 pm AEST on the settlement date. Otherwise, the seller may terminate the contract or seek to enforce it, potentially claiming compensation from you.
Arranging a settlement with both an outgoing and incoming financier can be challenging. Our Gold Coast conveyancing lawyers are experienced in these matters and work to make the process as smooth as possible.
Cooling Off Period
Many contracts for residential property will be subject to a cooling off period. That cooling off period is provided for under the Property Occupations Act 2014. Termination under the cooling-off period does attract a termination penalty under the Act.
It is crucial to seek legal advice before signing the contract, even if it mentions a potential cooling-off period under the Property Occupations Act. This act does not apply to all property transactions, and the cooling-off period can be waived or shortened.
Consult a lawyer before waiving or shortening the cooling-off period. Conveyancing lawyers usually recommend against waiving or shortening it unless pre-sale searches are satisfactory and it’s crucial for the transaction, such as before an auction. Most contracts from auction property sales do not include a cooling-off period.
Inspections
Building and Pest Inspections
Contracts in Queensland can include conditions requiring buyers to conduct a building and pest inspection before a specified date. It’s crucial to allocate enough time for these inspections and to hire a qualified building and pest inspector.
Reviewing the Inspection Report
Once the licensed building inspector provides the report, the buyer must carefully review it to fully understand the property’s condition. If the inspection results are satisfactory, the buyer’s lawyer must notify the seller’s lawyers before 5 p.m. on the stipulated date.
Addressing Defects and Report Concerns
Despite a satisfactory report, buyers may still discover defects after completion. Reports often include disclaimers and qualifications that may leave buyers without recourse. Address any concerns about the report promptly, and make recommendations for invasive tests seriously.
Options if Inspection Results are Unsatisfactory
Unless special conditions state otherwise, if the inspection results are unsatisfactory, the buyer may terminate the contract or negotiate with the seller if they are still interested in proceeding. Many agents may attempt to limit the buyer’s right to terminate the contract through special conditions. Our conveyancing lawyers advise against agreeing to conditions that severely limit the buyer’s termination rights, as this may force buyers to settle contracts despite significant property defects.
Swimming Pool Inspections
If you have a swimming pool, you must arrange for a licensed inspector to ensure its safety. The inspection will verify that the pool meets construction standards and adheres to safety regulations, including those related to fences, signs, and access. Inspectors must be licensed by the Pool Safety Council.
If the pool complies with regulations, the seller will provide you with a Form 23 Pool Safety Certificate. If the pool does not meet regulations, the seller must give you a Notice of No Pool Safety Certificate.
As a potential owner, you have rights under the standard terms of the contract, and the seller has specific obligations they must fulfil.
Our Gold Coast conveyancing lawyers can advise you on your contractual rights and obligations as a Buyer and Swimming Pool owner.
Finance
If a contract is subject to finance, the buyer must take all reasonable steps to obtain finance approval by the finance date. This includes submitting a finance application shortly after the contract date and diligently pursuing the application.
If the buyer fails to take reasonable steps to secure financial approval, they may not be able to rely on the finance condition to terminate the contract. The seller can request evidence that the buyer has made reasonable efforts to obtain satisfactory finance.
The seller must receive written notification on or before 5 pm on the finance date, indicating whether the finance is approved, waived, or not approved. If the buyer does not provide notice that they have obtained finance or fails to give any notice, the contract will continue. Both parties will retain the right to terminate the contract unless the buyer waives the clause.
Searches
Many searches can be conducted before selling or buying property. Our conveyancing lawyers currently recommend that sellers complete several searches before listing their property for sale or entering into a sale contract.
By doing so, sellers can identify any potential issues before they commit to a contract. This helps avoid situations where they might be obligated to deliver something that could become impossible.
As a buyer, searches are critical and can reveal any number of issues or deficiencies with the property which may give rights of termination or compensation if raised before settlement. Examples of things which might be discovered by appropriate searches include (but are not limited to):
- Unregistered easements which would restrict the construction of improvements on property including pools;
- Potential requirements from the Department of Main Roads for road widening;
- Outstanding notices from the Local Authority requiring the removal of unauthorized structures or improvements;
- Amounts owing in respect of the land that can ultimately become payable by the buyer including body corporate levies, rates, and land tax.
Our conveyancing lawyers will provide you with a list of available searches for the property and explain their relevance. We will charge you for the searches you select at the prices we are charged.
Pre-Settlement Inspection
Under most standard contracts, the buyer is entitled to a pre-settlement inspection of the property. This inspection lets the buyer confirm the property’s upkeep and check for missing agreed-upon inclusions.
If the pre-settlement inspection uncovers any issues, we can advise you on your contractual rights and obligations before settlement.
Adjustments and Preparation for Settlement
The contract price can include several adjustments. Typically, the seller covers holding costs for the property until the settlement date, while the buyer takes on these costs afterwards. This means we adjust costs like rates, land tax (to some extent), and body corporate levies based on whether they’ve been paid, either in favour of the seller or the buyer.
We then arrange a settlement with the seller’s mortgagee and the buyer’s financier, if applicable. Both mortgagees and financiers have certification and approval processes that must be met before they approve the settlement. Dealing with them can be frustrating and time-consuming. They often fail to recognise that missing the settlement deadline can lead to contract termination. This could require the seller to refund the deposit to the buyer.
Settlement
At settlement, the following will usually occur:
- The seller’s financier will give to the buyer a release of any mortgage on the land in exchange for payment of the balance owing under the mortgage;
- The seller will provide to the buyer a transfer of the land (if the buyer does not already have it);
- The purchase price is paid by the buyer and/or the buyer’s financier;
- The buyer’s financier will take the transfer, any release of mortgage, and their own mortgage to be lodged with the Department of Natural Resources and Mines for registration.
As mentioned above, if settlement does not occur on the scheduled date, a party may be found in breach of the contract. This breach can lead to the contract’s termination and claims for damages or specific performance of the contract.
Given these risks and procedures, buyers and sellers should not only hire lawyers to represent them but also ensure these lawyers are skilled professionals. These conveyancing lawyers should understand the contracts and their clients’ obligations, not just the procedures.
Our conveyancing lawyers offer top-notch service and are supported by our litigation lawyers in case of any breach by the other party.
New GST Remittance Rules Affecting Property Sales
On 29 March 2018, the Government introduced changes to strengthen compliance with GST laws. These changes affect property settlements and are part of a new GST regime.
Effective 1 July 2018, purchasers of newly constructed residential properties or potential residential land (e.g., new subdivisions) must now withhold the GST amount. They are required to remit this amount directly to the Australian Taxation Office (ATO).
Why the Changes?
The new GST regime shifts the obligation to remit GST from developers to purchasers. This change aims to prevent developers from failing to remit the GST collected from purchasers to the ATO. It also addresses issues where developers might claim input tax credits for development costs while not properly handling GST on taxable sales of residential property.
What is the Rate of Withholding?
The rate of the withholding amount varies depending on whether the margin scheme applies to the transaction. If the margin scheme does not apply, the withholding rate is 1/11th of the GST-inclusive purchase price specified in the contract.
If the margin scheme does apply, the withholding rate is currently set at 7% of the GST-inclusive purchase price. However, the legislation allows the Minister to adjust this rate, with a maximum limit of 9%.
Withholding Obligations for Purchasers
Generally, purchasers of new residential land and potential residential land (including subdivisions and home and land packages) must pay the withholding amount directly to the ATO at settlement. Alternatively, they may provide a cheque payable to the ATO to the developer at settlement. This withholding amount is calculated regardless of whether it matches the actual GST liability for the transaction.
The purchaser must remit the withholding amount to the ATO on or before the date when monies (excluding the deposit) are first provided for the asset. For most property transactions, this will likely be the settlement date. However, for contracts where the price is paid in instalments, the withholding amount is due on or before the date for the first instalment of the balance purchase price.
If there is a discrepancy between the withheld amount and the actual GST liability, the developer must seek a refund for the difference from the ATO.
Notification Obligations for Developers
The new GST regime requires developers to provide written notice to the purchaser 14 days before settlement. This notice must indicate whether the property is a new residential property and include the vendor’s ABN.
If the purchaser receives notice stating the property is not new residential property, and this proves incorrect, the purchaser can use the developer’s notice to avoid an administrative penalty from the ATO for failing to withhold.
If a developer fails to provide the required notice of the amount to be withheld, they face a fine of 100 penalty units for individuals (currently $21,000) or 500 penalty units for companies (currently $105,000).
Developers must provide this written notice for the sale of all residential property, not just new residential land and potential residential land.
When Does the New Regime Take Effect?
The changes take effect on 1 July 2018 and exclude all contracts entered into before that date provided that the property transaction settles before 1 July 2020. If settlement occurs after 1 July 2020, the new GST regime will apply to pre-1 July 2018 contract date transactions.
The Effect on Developers
The new GST regime will have the potential to create cash flow issued for developers as they will no longer have the benefit of temporary access to the GST amount after settlement.
Contact our Conveyancing Lawyers on the Gold Coast
Do not hesitate to contact our conveyancing team on 07 5574 0623 or sallyc@qbmlaw.com.au to obtain a quotation or discuss a proposed sale or purchase. Getting us involved early can ensure a smooth transaction through until settlement.
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