Our dedicated conveyancing team has extensive experience when it comes to acting for buyers and sellers of residential property. We understand that buying or selling (whether it is your home or an investment property) is not only an important financial commitment but it can also be an emotional and stressful time for you. Don’t forget we do know what you are going through. All of us at RBF Law have at some point bought or sold property and we understand that the process can be overwhelming.
The RBF Law team will be there to protect your interests and to guide you through every stage of the conveyancing process. We aim to make it as ‘stress-free’ as possible for you.
Conveyancing is basically the legal process of transferring ownership of property from a seller to a buyer.
How does the conveyancing process work in Queensland?
The conveyancing process starts from the time you enter into a contract (whether buying or selling) and usually ends shortly after settlement when the property transfer from the seller to the buyer is registered in the Land Titles Office.
During this process it is usual for contract conditions such as cooling off, pest and building inspections and finance to be satisfied as well as any special conditions which have been included in the contract.
Once all contract conditions are satisfied, then the conveyancing process proceeds to settlement.
Can I have my lawyer review the contract before I sign it?
Yes – we strongly recommend that we be given the opportunity to check the contract before you sign it. We will then discuss the terms of the contract with you to ensure that any specific requirements are correctly shown in the contract which could include special conditions.
What are usual contract conditions?
A buyer usually has a contract subject to building and pest inspections and finance. The contract is also subject to the buyer having a 5 business day statutory cooling off period (unless waived or shortened).
If the buyer terminates the contract during the cooling off period then the seller is able to impose a monetary termination penalty equal to 0.25% of the purchase price. That penalty will be deducted from the deposit paid by the buyer and the balance will then be refunded to the buyer by the deposit holder.
The buyer must arrange for a licensed building and pest inspector to attend at the property and provide written reports.
The buyer must then decide whether they are satisfied with the reports and provide written notice to the seller by 5pm on the building and pest inspection date noted in the contract. A buyer must act honestly when deciding if the reports are satisfactory.
If the buyer is not satisfied with the building and pest inspection reports then they may be able to terminate the contract provided they have acted reasonably (there must be some real defect with the property).
The seller will also have a right to terminate the contract if the buyer does not notify the seller of the outcome of the building and pest inspection condition by 5pm on the due date.
Buyers should be aware that sellers are not obliged to fix any issue raised in the building and pest inspection reports nor is the seller required to make allowance for a reduction in the purchase price for those issues.
A buyer must apply for finance as soon as possible after the contract is entered into and take all reasonable steps to obtain finance approval by the finance date noted in the contract.
All decisions relating to the acceptability of any finance approval condition rests with the buyer.
The buyer must give written notice to the seller by 5pm on the finance date whether or not they have obtained satisfactory finance approval.
The seller will also have a right to terminate the contract if the buyer does not notify the seller of the outcome of the finance condition by 5pm on the due date.
vacant land is being purchased so a soil test is required.
A special condition needs to be included in the contract at the time of negotiations and before the contract is signed by the buyer and the seller. You should contact our experienced team to provide you with advice and guidance on the conditions best suited to your transaction.
When you purchase a property with another person (irrespective of whether that property is to be your principal place of residence or for an investment) you will need to inform your solicitor whether you will be holding the property as ‘joint tenants’ or ‘tenants in common’.
When a property is owned ‘as joint tenants’, this means that each owner holds the exact same and equal interest in the property as the other owner(s). It also means that on the death of an owner his or her share will automatically be transferred to the surviving owner(s) irrespective of the provisions of the deceased’s Will. This is known as the right of survivorship.
On the other hand, if you decide to purchase a property ‘as tenants in common’ then each owner holds an individual interest in the property and that interest is recorded on the title to the property being purchased. For example, each owner may own equal 50/50 shares, or own a 1/100 and a 99/100 proportion, or a 1/3 and 2/3 proportion or any other proportion as agreed to. This will mean that on the death of an owner his or her share will be transferred in accordance with his or her Will and will not be automatically transferred to the surviving owner(s).
Your decision on the tenancy can affect you in the future particularly from an estate planning perspective as well as from a tax perspective as you may wish to minimise the amount of assets you hold and prefer to hold a minimal portion of property only.
When is the deposit required to be paid?
A contract will state the total amount of the deposit required to be paid by the buyer and will also state the date for payment.
A buyer must pay the deposit strictly in accordance with the terms of the contract. If a buyer proposes to pay the deposit by direct debit or bank transfer then they should endeavour to ensure it is received by the deposit holder by the date stated in the contract. If not, the seller may argue the buyer has breached their obligations under the contract.
If the deposit is not paid by the buyer on the due date then the seller may have a right to terminate the contract and claim compensation from the buyer even after the deposit is paid.
To reduce risk, a buyer should consider paying the deposit by cheque and deliver it to the deposit holder on or before the due date.
A buyer should always have sufficient evidence of when they paid the deposit to the deposit holder.
Why do I have to undertake searches if I am buying a property?
that warranties in the contract are correct.
We will contact you and let you know if there are issues with any of the search results received and we will give you advice on your rights under the contract and any options you may have.
Do I need to arrange insurance if I am buying a property?
Yes - both the REIQ and ADL contracts provide that the property is at the buyer’s risk from 5pm on the next business day after the contract date (unless a special condition is inserted into the contract stating that the property is to remain the risk of the seller until settlement). This is why it is important for a buyer to take out the appropriate insurance as soon as a contract has been signed.
Here are the different types of insurances which should be considered depending on whether the property being purchased is vacant land, a house, a high-rise unit, a townhouse or a house in a gated community.
Unit - with common walls The body corporate is responsible for insuring the building (replacement value) and public liability for the common property and any relevant body corporate assets. A buyer is required to insure the contents such as carpets, curtains, internal blinds, whitegoods, window breakage, etc, as well as arrange public liability insurance for the interior as well as for any exclusive use areas.
Unit, Townhouse, House in a gated community - with no common walls The body corporate is responsible for public liability insurance for the common property and any relevant body corporate assets. The body corporate may insure the building with the agreement of all lot owners. A buyer should insure the building for replacement value and insure the contents such as carpets, curtains, internal blinds, whitegoods, window breakage, etc, as well as arrange public liability insurance.
Are you buying or selling a property with a tenant?
The details of your tenancy must be noted on the contract. These details include the tenant’s name, the start and end dates of the tenancy, whether it is a fixed or a periodic tenancy, the rent and bond paid and the property manager’s details. If the tenancy is not noted then you will be required to give the buyer vacant possession of your property on settlement. If you have tenants but the property is being sold with vacant possession you will need to issue the tenant with the required notice to vacate (there are specific time limits depending on whether it is a fixed tenancy or a periodic tenancy and whether there is a breach). If you are unable to provide vacant possession to the buyer on settlement then the buyer will be able to terminate the contract or delay settlement and may be entitled to claim compensation from you.
If you are buying the property to live in as your principal place of residence and you intend to claim a home occupation transfer duty concession then you must ensure the current tenancy expires within 6 months of settlement. The tenants will be required to vacate the property immediately upon expiration of the tenancy. You must not renew or extend the existing lease or enter into a new lease with another person otherwise you may lose your eligibility for the duty concession. If the end date of the current tenancy agreement is longer than 6 months after settlement then you will need to make appropriate arrangements (including serving a notice to vacate on the tenant) to ensure the tenant vacates the property within the required 6 month period.
Alternatively, you may wish to include a special condition in the contract that the seller is required to provide you with vacant possession of the property by the settlement date. This means that the seller must make the appropriate arrangements with the tenant to vacate the property.
If you agree to allow the seller to continue to stay in the property after settlement then they must also move out within 6 months of the settlement date for you to be able to claim the home occupation transfer duty concession.
What happens on a settlement?
Settlement is the day noted in the contract when all of the parties’ legal and financial representatives meet at a prearranged place and time. Settlement must take place between the hours noted in the contract which is usually between 9am and 4pm. If the settlement date falls on a public holiday or a weekend then settlement must occur on the next business day. At settlement, all of the required legal documents are exchanged for payment of the purchase price and possession of the property is then given to the buyer.
What happens if either the buyer or the seller cannot settle on the settlement date?
The party who is unable to settle usually requests an extension of time from the other party.
If the buyer requests the extension, then the seller is able to impose a monetary penalty which is determined by the terms of the contract. This usually involves default interest being charged on the balance purchase monies calculated daily from the original settlement date through to when settlement actually occurs. If the contract does not stipulate the default interest rate then that rate is usually the rate determined by the Queensland Law Society at that particular time. The seller may also require settlement adjustments to be calculated as at the original settlement date and may also require the buyer to pay their additional legal fees.
If the seller requests an extension of the settlement date, then the buyer may impose similar conditions.
If an extension of time is granted then it should be granted on the basis that time will remain the essence of the contract. This will then enable a party to force the performance of the contract should they be required to do so at a later date. If time is not of the essence, then a party cannot force settlement to occur on a specific date which can have significant implications for the party who wants to settle at a later time.
The seller can either affirm or terminate the contract.
resell the property. If the property is resold at a lesser value, then the seller may sue you for the difference in the resale price. They may also sue you for any expenses relating to any repossession, any failed attempt to resell, and the resale of the property. However, this is on the basis that the resale of the property settles within 2 years of your contract being terminated by the seller.
The buyer can either affirm or terminate the contract.
Whether you are a buyer or a seller, the best way to make sure that you are protected is to make sure that you do everything that you can to prepare for settlement on the due date.
I am buying in a community titles scheme - what are my maintenance obligations?
The maintenance responsibilities for the body corporate and the lot owners will vary depending on the type of format plan applicable to the community titles scheme.
Properties in a community titles scheme such as units, duplexes or townhouses are either registered under a building format plan or a standard format plan.
A building format plan usually applies to a high-rise apartment complex but it can, in some cases, also apply to a townhouse development. This type of plan defines the land using the structural elements of a building including floors, walls and ceilings.
On the other hand, a standard format plan includes townhouses and villas where each lot has a building and a yard. The boundaries of those lots are defined by the measurements shown on the survey plan and any marks on the ground.
utility infrastructure that is on common property, or in a boundary structure or services more than 1 lot.
exclusive use areas for a lot.
utility infrastructure such as equipment, pipes and wiring that is on common property, or in a boundary structure, or services more than 1 lot.
Transfer duty (also referred to as stamp duty) is a tax charged by the State Government on a purchase contract and is payable by the buyer. Transfer duty is calculated on the purchase price and different rates apply depending on whether the property is being purchased as a principal place of residence, for investment purposes or by a company or trust. The buyer will need to have documents stamped and pay the transfer duty either 30 days from when the contract becomes unconditional or on settlement, whichever occurs first. If the contract is not stamped and transfer duty is not paid on time then penalty interest can be imposed.
A buyer who buys a property to live in as their principal place of residence is eligible to apply for a concession on the transfer duty payable. In some circumstance, such as a first time buyer, the concession may result in nil transfer duty if the purchase price is less than $500,000.
you must not dispose of the property during that year (i.e. must not transfer, sell, lease, rent or otherwise grant exclusive possession of all or part of the property before you move in).
I am a foreign buyer so do I have to pay additional transfer duty?
A foreign buyer or entity who is purchasing residential property in Queensland will be required to pay a 7% Additional Foreign Acquirer Duty. This duty is an extra amount payable in addition to normal transfer duty, landholder duty or corporate trustee duty which is payable in a particular transaction.
This additional duty will apply to purchases by individuals (who are not Australian citizens or permanent residents); companies incorporated outside of Australia; companies incorporated in Australia in which foreign persons have a 50% interest or more; and a trust where 50% of the trust interests are held by foreign persons (such as unitholders or beneficiaries).
'Residential land' for the purpose of the 7% Additional Foreign Acquirer Duty includes established homes and apartments; vacant land on which a home or apartment will be built; land for residential development; and buildings refurbished, renovated or extended for residential use, but does not include land used for hotels and motels purposes.
A transaction which is exempt from transfer duty, landholder duty or corporate trustee duty will also be exempt from the Additional Foreign Acquirer Duty.
If this applies to you, then you should contact us for an estimate of the transfer duty payable on your transaction.
What happens if the sale price (or market value) of a property is $750,000.00 or more?
The Foreign Resident Capital Gains Withholding Tax Regime will affect real property if the sale price (or market value) is $750,000.00 or more where contracts are entered into on or after 1 July 2017. Despite the regime referring to ‘foreign residents’, it is important to note that it will apply to all sellers (whether a foreign resident or an Australian tax resident). It is important to understand that this regime is different to the requirements of the Foreign Investment Review Board where foreign persons generally need to apply for approval or obtain a no objection notice before purchasing property in Australia.
An Australian tax resident selling real property with a market value of $750,000.00 or more will need to obtain a clearance certificate from the ATO prior to settlement to ensure they do not incur the 12.5% withholding tax which is to apply from 1 July 2017.
A foreign resident seller can apply for a variation of the withholding tax rate or make a declaration that a membership interest is not an indirect Australian real property interest and therefore not subject to withholding tax.
If a clearance certificate or a variation notice is not provided by the seller at settlement then the buyer must retain 12.5% of the purchase price and pay this amount to the ATO as a withholding tax following settlement. Penalties may apply if a buyer does not comply.
The existing threshold of $2million or more and a 10% withholding tax rate will apply for all contracts entered into before 1 July 2017, even if they do not settle until after 1 July 2017.
A clearance certificate is valid for 12 months and is specific to a particular entity (i.e. the registered owner recorded on title) and not linked to a particular property.
This new regime applies to a range of transactions beyond the sale of taxable Australian real property. You should contact us if you think this regime may apply to your sale.
When does Gold Coast City Council Local Law 17 apply to a property?
must ensure their sale contract contains a clause disclosing to the buyer that Local Law 17 applies to their purchase. A failure to disclose the application of Local Law 17 to a buyer may mean that the seller is liable to a fine.
When does the GST Withholding regime apply to a sale?
The GST Withholding law applies to ‘new residential premises’ or ‘potential residential land’ (with some limited exceptions). GST generally only needs to be withheld where the buyer is the recipient of a taxable supply of ‘new residential premises’ or ‘potential residential land’. The REIQ contracts have a GST Withholding section which must be completed at the time the contract is prepared for signing by the buyer.
new buildings are built to replace demolished buildings on the same land.
‘Potential residential land’ is land that is permissible to be used for residential purposes but does not contain any buildings that are residential premises.
Residential premises will no longer be ‘new residential premises’ if they were built for sale but are then used solely and continuously for rental for a period of at least 5 years – they will be treated as existing residential premises (with some exceptions).
The GST Withholding obligations will not apply to transactions where the seller is not registered or required to be registered for GST because the sale is not a taxable supply or the buyer is purchasing the property for a creditable purpose and they are registered for GST (e.g. land is purchased for the purpose of building a house and selling it in the ordinary course of business).
The withholding amount will be different depending on the circumstance. The withholding amount must be notified by the seller to the buyer prior to settlement. The buyer will be required to complete the required forms online with the ATO prior to settlement and provide copies of those forms to the seller. A buyer will not need to register for GST just because they have a withholding obligation under a contract. If there is an obligation for GST to be withheld on settlement, then the buyer will be required to withhold that amount and pay that amount to the ATO on settlement. However, the REIQ contract provides a reversal of this payment obligation and the seller must collect a bank cheque for the GST on settlement and remit it to the ATO but the buyer will still be held liable for the GST payment. Sellers will also still need to lodge their BAS and report their GST liabilities or entitlements on taxable supplies of these types of properties.
What is the effect of the new Combustible Cladding Regulation?
The Regulation requires all building owners (such as bodies corporate) of certain classes of building to register and complete an online checklist via the QBCC by 29 March 2019. Depending on the outcome, further steps may be required to be undertaken by later dates as set out in the Regulation. Penalties apply if the initial checklist and any further required steps under the Regulation are not completed.
If a building has non-confirming cladding then a notice to that effect must be displayed in a conspicuous part of the building for so long as the cladding remains in place and every lot owner and tenant must be given a copy of that notice (including new tenants and new owners).
Sellers of buildings subject to the Regulation are now required to disclose whether the seller has complied with the relevant provisions of the Regulation and copies of those documents are to be provided to the buyer prior to settlement.
If you sell a lot in a community titles scheme where cladding is present you are not required to give disclosure to the buyer prior to settlement but you should carefully consider whether you should disclose the existence of combustible cladding in the sale contract as the non-conforming cladding may be considered by the buyer as a defect in common property which you were aware of (or ought to have been aware of) which may then give rise to the buyer terminating the sale contract.
If you are a buyer of a certain class of building or purchasing a lot in a community titles scheme it is strongly recommended that you conduct a comprehensive search of the body corporate records to ascertain whether combustible cladding is present.
What happens if a legal problem occurs with my contract?
The RBF Law team will be there to provide you with comprehensive legal advice when legal problems arise. Our conveyancing matters are managed by our conveyancers but our Legal Practitioner Director maintains a high level of involvement and supervision at all stages of the transaction. At RBF Law we will protect your interests and guide you through every step of the conveyancing process. We aim to make it as 'stress-free' as possible for you.