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  • Do I Need To Pay Stamp Duty When Buying A Home? | Enterprise Legal

    Beware of Stamp Duty!

     

    Purchasing a property is usually a huge milestone in most people’s lives. Whether you are purchasing your first home, upgrading to a larger property or purchasing an investment property, buying a house is an extremely exciting time. However, during this time, it is important to realise that the purchase price is not going to be the only cost associated with securing your new property!

    When budgeting for your property purchase, it is important to make sure you consider all financial aspects of the transaction. One of the key costs that is often overlooked by prospective buyers is Transfer Duty, which is more commonly known as ‘Stamp Duty’ (even though it hasn’t officially been called this for many years!).

     

    What is Stamp Duty?

    Stamp Duty is a tax owing to the State Government’s Office of State Revenue on most ‘dutiable transactions’. A dutiable transaction includes purchasing a property or transferring an interest in a property, either from one person to another or into a separate entity (eg. transferring from a person to a Trust or Company). Stamp Duty is calculated based on the higher of the purchase price payable or the value of the property in the transaction, meaning that the amount payable can vary significantly. It also means that in many cases where you are receiving an interest in a property for free or at a discounted price, stamp duty will still be payable on the total value of the property.

     

    Stamp Duty Concessions and Exemptions

    You may be eligible for certain stamp duty concessions or exemptions, depending on your situation and whether you meet the specific criteria applicable. For example, first home buyers who are purchasing a property for under $500,000.00 may be eligible for the first home concession. This concession can only be accessed by a person that has never owned property anywhere in the world, who is purchasing the property as an individual (eg. not using a Trust or company).

    Buyers who have owned a property previously but are purchasing the property in question as their primary residence, may be eligible for the home concession.

    If you are purchasing a property in a Company or Trust, you will not receive the first home or home concession despite you living in the property and you will need to pay stamp duty at the highest rate.

     

    When Else is Stamp Duty Payable?

    Whilst purchasing a property is the most common scenario in which the obligation to pay stamp duty will arise, there are several other situations in which it may need to be paid. Check out our EL's recent video, 'Stamp Duty Explained', for more details regarding some of the other common scenarios in which stamp duty will be payable.

     

    Stamp Duty Top Tips

    When you are thinking of purchasing your next home, don’t forget to consider how much Stamp Duty you will be payable in addition to the purchase price, how you are going to fund the payment of stamp duty (eg. if you are getting finance, will you need to add it to your loan) and what Concessions or Exemptions you may be able to apply for.

     

    If you would like come clarification on what Stamp Duty you will be paying on the purchase of your next property, contact EL's Property Conveyancing team today:

     

    ☎️ | (07) 4646 2621
    ✉️ | 
    🌐 | Property Conveyancing Services

  • Why It Is Important To Ensure That The Warranties Are Assigned To You When Purchasing Your Off-The-Plan Unit

    Purchasing a unit that is still getting built at the time of signing the contract seems hassle free, and a weight off your shoulders with not having to think about costing, delays, daily discussion with builders and to be presented with a brand-new beautiful unit at the end!

    In some sense, purchasing off-the-plan can be great, but because of the lack of control during the build process, there can be pitfalls too! Ensuring that you obtain the benefit of enforcing the warranties with the builder is one of the most important things to do when you are purchasing to ensure you can continue on hassle free once settlement has occurred. 

     

    What Are Warranties And Why Are They Important?

    A warranty in a construction contract is written guarantee given by the builder to the owner that they will fulfil their obligations under the contract. Some of the most important warranties that are commonly in construction contracts are:

    1. that the materials used will be of good and merchantable quality;
    2. that the work will be carried out in a good and workmanlike manner;
    3. that the work and materials used to complete the works will be fit for purpose; and
    4. that the materials used and the completed works themselves will be reasonably fit for the purpose for which they are required.

    It is obvious to see why every owner would want to see these warranties in their construction contract. These warranties set a standard for the industry and will ensure that your home is built correctly and safely by qualified people.

    Another imperative contract term that is common to explicitly see in a construction contract is a defects liability period. This is usually one year from the date of completion. This allows the owner to call upon the builder for any defects that has occurred in the building and the Builder must come and rectify that defect within a reasonable time period.

    Minor defects are common in the first 12 months post construction, this is why the defects liability period and warranties are so important. 

    If a warranty is not fulfilled by a Builder or the defects liability period not complied with, the Builder  would be in breach of the construction contract and the other party to the contract typically has a  claim against the builder to force them to comply. 

     

    Who Would The Warranties Be Given To In The First Instance?

    Just like any construction contract, the Builder would be providing warranties to the person that has engaged them to build the unit. In this case it would be the person/developer that is selling you the finished unit. 

    In some instances, the Developer can be the Builder, and, in that instance, there would most likely not be a construction contract in place. 

     

    What About Home Warranty Insurance?

    Whilst the Home Warranty Insurance (that is required to be undertaken before any works is commenced) stays with the property, which means an incoming purchasers may be able to rely on it , there are other things to consider that may not be included under that scheme. For example, any manufacturer warranties in respect to any of the work under the construction contract or goods and equipment like appliances, washing machines and/or garage roller doors that also form part of the work under the construction contract. Equally, there are a number of pre-set criteria that must be met prior to being eligible for the Home Warranty Insurance, and home owners are often left out of pocket because the scheme doesn’t apply to them and their circumstances on the basis of specific criteria not being met and/or exclusions. 

    It is also important that you do a search of insurance when purchasing the property to ensure that the Builder has actually taken out that insurance that they are required to on the property.

     

    What Does That Mean For You As The Purchaser?

    Unfortunately, what we see at Enterprise Legal, is people who find themselves with defects in the property or with the equipment provided, and very little to no control in being able to get this fixed. Due to the lack of assignment of the warranties under the Property Contract, the Seller ‘wipes their hands clean’ once settlement has taken place and the have received their funds from the sale. Without the correct documents and special conditions in place in your Property Contract, you would have no right to ensure the builder replace the defects (e.g. roller door, air conditioning unit, defective roofing system etc.).

     

    How Can You Ensure You Can Enforce Those Warranties Once You Have Purchased The Unit And A Defect Occurs?

    To ensure that you have the benefit to enforce the warranties with the Builder once settlement has taken place, you should make sure the warranties under the construction contract between the Builder and Seller are assigned to you. It is important to cover off on the assignment of warranties prior to signing the Property Contract. As such, at Enterprise Legal, we recommend a Deed of Assignment of Warranties is put into place between yourself, the Seller and the Builder. This Deed will ensure that any warranties provided to the Seller by the Builder under the Construction Contract is assigned to you so you may rely on them should a defect occur in your unit once settlement has taken place. Typically, Builders also have a 12 month defect liability period post construction, during which period they have an obligation to rectify defects promptly and effectively. The Deed can also assign this defects liability to you, as the incoming Purchaser. 

    At Enterprise Legal we recommend to all clients that the engage us to review their draft Property Contract, not only from a property perspective, but from a construction perspective to ensure that things like warranties are considered as it can be something easily missed and unfortunately could cost a Buyer a lot of time and money down the track should it not be address at the beginning of the process. 

     

    If you are looking to purchase an off -the-plan unit and need assistance, please reach out Enterprise Legal's expert property conveyancing team:

    ☎️ | (07) 4646 2621
    ✉️ | 

  • 6 Key Changes to the REIQ Residential Contracts | Enterprise Legal

    On 20 January 2022, the Real Estate Institute of Queensland (REIQ) released new versions of the Contract for Houses and Residential Land (17th edition) and the Contract for Residential Lots in a Community Titles Scheme (13th edition).

    The latest editions contain many amendments, but Enterprise Legal considers the following six changes to be the most significant:

     

    Pool Safety

    Both Contracts now allow for a Seller to provide a No Pool Compliance Certificate to the Buyer prior to the Contract being signed and in doing so, there is no other requirement from the Seller in relation to the pool on the land. The Buyer will no longer have a termination right if the pool is not compliant at Settlement.

    If however, the Seller does not disclose that there is not a Pool Compliance Certificate, prior to entering into the Contract, then the Seller will be required to obtain one prior to Settlement, at the Seller’s cost. If they fail to do so, the Buyer will have a right to terminate.

     

    Smoke Alarms

    From 1 January 2022, dwellings and residential units offered for sale must have smoke alarms installed that comply with the current requirements – these requirements have been getting ‘phased in’ for a number of years now. The new versions of the Contracts specify that should a Seller fail to comply with these requirements prior to Settlement, the Buyer will be entitled to a deduction at Settlement equal to 0.15% of the Purchase Price. Sellers and real estate agents should be aware of this and consider whether it is more appropriate to include a Special Condition fixing this deduction at an amount that has bearing on the actual cost of making the residence compliant. 

     

    New Seller Warranty

    The new contract editions require Sellers to warrant, as at the Contract Date, they have not received any communication from an authority that may lead to the issue of a show cause notice, enforcement notice or notice to do work. This requirement is a lot broader than previous, which only required a Seller to make a disclosure if an actual notice had been issued. In reality, authorities such as Councils and service providers usually correspond with owners prior to issuing formal notices and this new requirement put the onus on Sellers to disclose any such correspondence. 

     

    New Termination Rights

    Buyers now have a termination right is there is infrastructure that is unrelated to the delivery of services to the property that passes through the property and such service is not protected by a registered easement, BMS or statutory authority.

    Buyers will also have a termination right if any service to the property passes through another property and such service is not protected by a registered easement, BMS or statutory authority.

    This means that it is very important for Sellers to complete a ‘Dial Before You Dig’ or similar search prior to entering into the Contract, so that they are aware of the location of all services which may need to be disclosed. 

     

    Settlement Extensions

    This new concept allows either party to unilaterally extend Settlement by up to 5 Business Days after the Scheduled Settlement Date specified in the Contract.

    This mechanism only applies to Settlement and does not apply to other conditions like the Finance or Building and Pest Condition. 

     

    Default Place for Settlement

    The standard condition has been amended so that is a Seller does not advise the specific location for Settlement (e.g the specific law firm) at least 2 Business Days before the Settlement Date, Settlement will be required to take place at the Titles Office closest to where the land is located. Again, given the erroneous results this condition could result in, we recommend including a Special Condition to amend it.

     

    Summary

    There has been some significant changes made in the latest REIQ Contract updates for residential dwellings and units and it is important that parties understand what these mean and include appropriate Special Conditions to amend the Special Condition if required. 

    Firm Director, Peta Gray and Lead Conveyancer, Adrianna Williamson recently presented a Webinar regarding these changes and recommendations for dealing with those changes. 

     

    If you would like to receive a copy of the Webinar recording, or have any further questions about the changes and what that could mean for you, please contact our conveyancing team

    ☎️ | (07) 4646 2621
    ✉️ | 

     

    Our team has also made a range of Special Conditions, including the ones referred to in this article, available for your use via the links below:

    REIQ Contract for Houses & Residential Land (17th edition)

    REIQ Contract for Residential Lots in a Community Titles Scheme (13th edition)

  • Refinancing and Purchasing a Property at the Same Time? | Enterprise Legal

    Often to get the best deal (or even to get the deal done at all) on a new property purchase, you will need to refinance your existing loans to a new bank. Seems simple yes? Well, when you refinance at the same time as purchasing a property, it adds a whole extra layer to your transaction and as such, there are some important things you need to keep in mind during the process.

    You Need to Drive Your Refinance Process

    As we (your lawyers) are acting for you in relation to your purchase transaction and not the refinance transaction, this means we have limited ability to drive the matter, as your old financier will not discuss the matter with us as we are not a party to the transaction. It is important that you and your Broker (if you have engaged one) ‘drives’ this matter by completing the relevant forms needed as soon as required and checking in to ensure both banks will be ready by the Settlement Date under you property contract.

    Why is it Important to Drive Your Refinance Process?

    Most of the time, you will be refinancing when purchasing a property which means that it will happen simultaneously (eg. at the same time) with the settlement of your property purchase on Settlement day. This means if your refinance is not ready due to either your old or new financier not being ready, then your purchase transaction will not be able to proceed, placing you in breach of your contract. 

    Keep Us Updated!

    It is important to tell us from the start whether you are refinancing or not. As we don’t have the privilege to see how the refinance transaction is tracking, it is also important to keep us updated on how it is progressing. This also means letting us know what the outgoing (old) bank’s ‘payout figure’ is (eg. how much money you have to give them to leave), so we can ensure that your new loan covers not only the refinance with your outgoing bank but also your purchase transaction as well. 

     

    Between ourselves, you and your Broker, it is a collaborative effort to ensure your refinancing transaction and property transaction runs smoothly with no hiccups.

    Ensure a smooth transaction and getEnterprise Legal's expert conveyancing team in your corner when you buy your next property by getting in touch with us today: 

    ☎️ | (07) 4646 2621
    ✉️ | 
    🌐 | Property Conveyancing Services

  • Top Tips When Purchasing Land 'Off the Plan' | Enterprise Legal

    Building your dream home can be one of the most exciting times in your life but securing the perfect location can be difficult in some circumstances, especially in the current market.

    One of the ways to secure your dream block that is becoming increasingly popular is purchasing property ‘off the plan’. This simply means that the 'Lot’ (or block) you are purchasing has not yet been ‘created’ by the developer at the time of signing your land Purchase Contract. While purchasing off the plan can seem like a great way to secure your dream block, it is important to understand some potential issues you may face with this strategy.

     

    Sunset Date

    A Sunset Date is a date inserted in your Purchase Contract to say that the Seller must ensure the Lot has been created with the Titles Office by this date. By law, a Seller can take up to 18 months to do this. It is important to look at this date before you sign your Contract to make sure it fits in with your plans for the property, especially if you are planning on building straight away.

    There are two approaches that a Seller may have in relation to a Sunset Date. Under the first approach, they may have a shorter timeframe, knowing that the subdivision is only a few months away from being completed and having a shorter timeframe is obviously more attractive to potential buyers. However, whilst you may think that the land will be subdivided by the date specified in the Contract, some key steps (i.e Ergon connection, council sealing) may take longer than expected and push dates out, meaning the Seller will need to ask for an extension of the Sunset Date to accommodate these delays. In these circumstances, you can agree or otherwise terminate the Contract, missing out on your ‘dream block’.

    Alternatively, a Seller may include the full 18 months in the Contract as the Sunset Date even though they are expecting the works to be completed in 6 months (for example). The reason why sellers do this is to leave extra time ‘up their sleeve’ legally under the Contract, should progress be pushed back.

    As a Buyer, it is extremely important that you understand that even though you may have been told by the Seller or real estate agent that the subdivision will be completed by a certain date, you will not really have the ability to rely on these representations, if they don’t match the timeframes and dates specified in the Contract. The takeaway here is to prepare for the ‘worst case scenario’ timeframe (eg. 18 months) and don’t get sucked in if the Seller or the agent make you promises to the contrary!

     

    Build Contracts

    As a Buyer, arguably the exciting part of this process is the actual building of your new home. Unfortunately, a lot of people rush into signing a build contract without fully understanding what some ramifications may be should there be a delay in the purchase of your block of land settling (refer to our comments above).

    With the current state of the market and the construction industry, price increases are common. This is due to a range of factors, including an increase in the price of materials, supply chain issues and shortage of labour. If you sign your Build Contract around the same time as your land Purchase Contract, there is real potential for these costs to increase significantly over a potential 18 month period.

    Even if you have a ‘fixed price’ Build Contract in place, it is important to check that there are still not any clauses in the Contract that allow for a price increase in certain circumstances. During these times, builders are relying heavily on these clauses to increase the contract price. Most standard contracts allow for the builder to increase a fixed price if there are material increases that ‘were outside of the builder’s control’.

    Secondly, delays with your land Purchase Contract settling may cause issues with your Build Contract, depending on the anticipated start date included in your Build Contract. Should the builder not be at fault for the delay under you Build Contract (for example, if settlement of the land has been pushed back), you may need to pay the builder delay damages for each day that they are unable to commence the build. This is why it is so important to consider the Sunset Date in your land Purchase Contract and how this will affect your anticipated start date under your Build Contract, despite what you may have been verbally told by the seller or agent.

    Given the potential severity of the above issues, we highly recommend that any Buyer who plans to build obtains legal advice on both your land Purchase Contract and your Build Contract, to ensure that both contracts work together to protect you from incurring unintended costs. . Unfortunately, at Enterprise Legal, we have seen dozens of times where this has occurred during the last two years, where clients should have had their Contracts reviewed.

     

    If you would like to know more or for assistance with obtaining legal advice when purchasing vacant land ‘off the plan’ to build your dream home, please get in touch with EL's expert Property and Construction team:

    ☎️ | (07) 4646 2621
    ✉️ | 
    🌐 | Property Conveyancing Services

  • 5 Changes to the REIQ Commercial Contracts in 2022 | Enterprise Legal

    On 21 July 2022, the Real Estate Institute of Queensland (REIQ) released new versions of the Contract for Commercial Land and Buildings (9th edition) and the Contract for Commercial Lots in a Community Titles Scheme (8th edition).

    The latest editions contain many amendments that have been made to align with the recently-amended REIQ Residential contracts that came into effect earlier this year, as well as some further changes made specifically to these commercial contracts:

     

    New Termination Rights

    Buyers now have a termination right if there is:

    1. an error in the boundaries or area of the property;
    2. an encroachment by structures onto or from the property;
    3. there are services that pass through the property which do not service the land and are not protected by an encumbrance disclosed to the Buyer in the contract; or
    4. a mistake or omission in describing the property of the Seller’s title to it.

    Equally, should there be any services to the property that pass through other land (e.g. a neighbouring property) that are not protected by a registered easement, building management statement or statutory authority and it has not been disclosed to by the Seller to the Buyer in writing before the Buyer has signed the contract, the Buyer may terminate the contract.

     

    So what does this technical jargon actually mean? It means that it is vital that sellers complete searches such as a ‘Dial Before You Dig’ or similar prior to entering into the Contract, so that they are aware of the location of all services and any potential encroachments or errors in boundaries which may need to be disclosed to the Buyer. Failure to do this could give the buyer a convenient excuse to terminate the Contract later down the track.  

     

    Warranty of Present Use

    The standard REIQ Contracts now stipulate that the seller does not warrant that the Present Use that is noted in the Contract is lawful. For example, this means that even though the present use of the property might be a ‘gym’ or ‘fitness centre’, that does not mean that a gym of fitness centre is lawfully allowed to be carried on from the property. . Further, in clause 7.7(1), if the present use is not lawful under the relevant town planning scheme, and the Seller has not disclosed that to the Buyer, the Buyer may terminate the contract. 

     

    Consequently, it is very important for buyers to consider whether the use of the property is lawful for a particular use and to ensure they undertake appropriate due diligence to verify this, instead of simply ‘taking the Seller’s word’ for it. Equally, as a Seller, it is important to disclose if you are unsure whether the current use of the property is lawful. We highly recommend disclosure to the Buyer even if you are unsure to avoid the buyer relying on potential termination rights in this regard. 

     

    Lease Warranties

    Clause 10.3 now provides a large list of matters the Seller warrants that are correct as at the contract date in relation to current leases over the property. If there is a change in any way to these warranties during the Contract period (eg. between when the Contract is signed and settlement), the Seller must notify the Buyer of the change. 

     

    Settlement Extensions

    This new concept allows either party to unilaterally extend Settlement by up to 5 Business Days after the Scheduled Settlement Date specified in the Contract. This mechanism only applies to Settlement and does not apply to other conditions like the Finance or Building and Pest Condition. 

     

    Default Place for Settlement

    The standard condition has been amended so that if a Seller does not advise the specific location for Settlement (e.g. the specific law firm) at least 2 Business Days before the Settlement Date, Settlement will be required to take place at the Titles Office closest to where the land is located. Given the erroneous results this condition could result in, we recommend including a Special Condition to amend it.

     

    Summary

    There have been some significant changes made in the latest REIQ Contract updates for commercial buildings and units and it is important that parties understand what these mean and include appropriate Special Conditions to amend the Standard Condition if required. 

     

    If you are purchasing or selling a commercial building or unit and would like guidance from Toowoomba's finest, you can get the ball rolling by contacting EL's conveyancing team:

    ☎️ | (07) 4646 2621
    ✉️ | 

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