Conveyancing / Residential

Recent Changes to the laws effecting Residential Property Sales

The Main change in 2018 is the requirement for an ATO clearance certificate to be obtained by the seller, and provided to the buyer’s solicitor, for all sales over $750,000.

All sellers must obtain the ATO clearance certificate and provide to this to the buyer, prior to settlement, or be liable to forfeit 12.5% of purchase price to ATO.

If the seller has not provided the certificate to the buyers solicitor, the buyers solicitor must withhold 12.5% of funds provide by the buyer and their bank from the seller, and remit this to the ATO directly. To get any of the funds returned to them the seller must then lodge a Tax Return with the ATO to have the amount assessed by the ATO and to obtain any amount of money the seller may be eligible to be refunded. The funds of the seller (taken from the buyer) are able to be credited towards any and all the sellers’ tax liabilities as may be assessed by the ATO as outstanding.

A good real estate agent will normally assist you as a seller to obtain the relevant certificate.

You can also check out the process for getting the ATO Clearance Certificate at this link

Recent Changes to the laws effecting Residential Property Purchases

There are two main changes to property purchases in 2018. In addition to the requirement for a seller to provide the ATO clearance certificate – which for example may cause settlement delay that effect the buyer -  if the correct cheques are not made, there is an additional Stamp Duty now payable buy some buyers.

Basically buyers must now pay additional stamp duty if they are not an Australian citizen. This is an additional percentage of duty on top of the standard stamp duty rates payable.

You can check out the stamp duty requirements at his link

Frequently Asked Questions When Buying or Selling a Residence >

  1. What are the legal steps to Selling a Residence?

  • Sign contract of sale with agent

  • Contract received by lawyers

  • Client to notify bank of sale of property and complete necessary paperwork

  • Lawyer to send initial correspondence outlining steps and process

  • Await dates of notification of any conditions by buyer (e.g. finance and building and pest)

  • Review and attend to execution of transfer documents

  • Negotiate with buyers representatives and financiers as to settlement time on appointed day

  • Arrange settlement adjustments

  • Prepare settlement cheques

  1. What are the legal steps to buying a Residence?

  • Sign contract of sale with agent

  • Contract received by lawyers

  • Client to notify bank of purchase of property and complete necessary paperwork

  • Lawyer to send initial correspondence outlining steps and process

  • Buyer to obtain building and pest reports and advise lawyer of results

  • Buyer to facilitate finance application

  • Order and review searches on property

  • Prepare and send to Sellers lawyer transfer documents

  • Negotiate with sellers representatives and financiers as to settlement time on appointed day

  • Arrange settlement adjustments

  • Final settlement searches and checks

  • Prepare for settlement

  1. What are legal instruments needed to be developed and supplied?

Simple – a Form 1 and 24 transfer of property form. But we need to get it right for you.

  1. What are the common pitfalls that go wrong?

  • Failure of conditions  - such as finance.

  • Failure to notify by due dates.

  • Failure in drafting of contracts,for example clauses that don’t make legal sense and cant be effected.

  • Bank not being ready to settle (this is quite common with banks making errors or not having completed their own requirements and having to cancel and re-schedule)

  • Negative search results (for example contamination or main roads resumption and an ending of the contract by one of the parties)

  • Failure of building and pest (this is quite subjective and so one buyer may opt to end the contract on this term in the same scenario where another buyer woudlbe happy to proceed)

  1. What can we do to assist to prevent these problems?

  • Communication with you and with your real estate agent can assist you and your agent to do everything reasonable and commercial that you want to try to effect your preferences in a given scenario.

  • Review of the terms of your contract as soon as we first get it from you or your agent - to make sure that it is OK.

  • Confirm terms with you – the client – to make sure that it says what you agreed to.

  • Adhere to and review due dates – using our best practice software to help us - and to remind you adn your agent.

Conveyancing / Commercial 

The conveyancing process for commecial property is effectively the same as for residential property, except for a mandatory requirement for an asbestos management report in certain properties. We will explain this to you if it effects you.

The recent changes regarding ATO Clearance Certificates and Stamp Duty also effect Commercial Property Sales and Purchases. 

Conveyancing / SMSF

Again the process is the same as for residential except that where bank finance is used the property must be purchased by a Bare Trustee, of a Bare Trust, within the SMSF. We have seen a number of instances of this not being adhered to and properties not being able to settle, or being settled and then required by the ATO to be sold.

We take extra care with SMSF purchases to ensure that the exactly correct name is on the purcahse contract. For advice about how to own a property within your SMSF you can ask for assitance from one of our Superannuation Accountants at Ascendia Accountants. www.ascendiaaccountants.com.au