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Gazumping will occur when an agent or seller accepts an offer you make to buy a property at an agreed price but then sells the property to someone else, usually for a higher price. As the agent is legally obliged to pass on to the vendor any further offers received for the property up until the exchange of contracts, gazumping can occur.

In NSW, a property sale is binding for the seller and buyer when contracts are exchanged between the two parties. The exchange occurs when the seller signs their copy of the sale contract; the buyer signs their copy, and the two parties exchange their signed contracts. The 10% (of purchase price) deposit is also paid at this time. 

Unfortunately, if you are gazumped, the agent nor the seller is obliged to compensate you for any money you may have spent on legal advice, inspection reports, finance application costs or inquiries. Only your expression of interest payment must be refunded to you in full.

You can protect yourself

• Have your finance ready so you can pay the 10% (of the purchase price) deposit
• Have the contract of sale reviewed as quickly as possible by a professional
• Present your offer in writing and ask to see confirmation of other offers (although the agent does not have to oblige)
• Aim to exchange contracts as soon as possible and offer to waive the cooling off period, gain professional advice about this process first.
• Consider that you may have to offer more on a property under high demand
• Be aware that it is ultimately the vendors choice of who they sell to and it may not always be the hight price

Note: Gazumping cannot occur after a finalised auction

Always make sure you have your contracts reviewed by a professional – contact Select Conveyancing Lane Cove. 

Reference: NSW Fair Trading

When you are buying a property in Australia it is a tax that is payable on your purchase! How much it is and who gets the money are some interesting topics to discuss.

So you have found the perfect property, how much is stamp duty going to cost you?

Remember that as a conveyancer I am here to provide you with all the below amounts and dates of payment. This is just to give you an idea of the costs that may be involved in your purchase.

Who has to pay stamp duty?

• Every buyer of real estate has to pay stamp duty.
• A transfer of property incurs stamp duty.
• A mortgage incurs stamp duty.

Is there ever an exemption?

State governments can offer exemption when there is a change of hands following divorce or death and often when it is between family members.

First home buyers in most states receive a concession or exemption.

When do you pay?

NSW – Within 3 months of settlement

VIC – Within 30 days of settlement

QLD – Payable within 30 days of settlement

ACT – Payable within 28 days of settlement

WA – Within 2 months of settlement

SA – Payable on settlement day

NT – Within 60 days of the transaction or settlement, whichever is closer

TAS – Payable within 3 months of transfer but generally on settlement

How much is it?

The cost of stamp duty is decided by the individual state and territory governments. This is why it can vary depending on where you are purchasing a property.

There are also concessions in some states for first home buyers and the rates can vary if you are buying land only without a house.

Have a look at the links below to see the calculators for your state.

NSW – Buying or Selling Property NSW revenue

VIC – Buying or Selling Property VIC revenue

QLD – Buying or Selling Property QLD revenue

ACT – Buying or Selling Property ACT revenue

WA – Buying or Selling Property WA revenue

SA – Buying or Selling Property SA revenue

NT – Buying or Selling Property NT revenue

TAS – Buying or Selling Property TAS revenue

What is the money used for?

Typically it is added to the budget for the government of that state and helps to pay for health, transport, emergency services and more. If you are curious just have a look at the pages above for further information.

If you are curious about what stamp duty will be payable on your next purchase – speak to Nicola at Select Conveyancing

If you are buying or selling a property you may ask yourself should I choose a conveyancer or lawyer!

The answer to this question really comes down to your individual circumstances that may surround the purchase or sale.

• Is it just a sale or purchase?
• Does it have other legal transactions associated?

Both a conveyancer or lawyer are suitable for all aspects of the purchase or sale of a property. You may, however, have other legal requirements attached to the sale, such as wills, divorce proceedings and more that may lead you to need a lawyer.

Affordable

• Generally, a conveyancer may be more affordable than a lawyer. Ask about our rates.
• Both may offer fixed fee services but you may find that with a lawyer you have a junior or an assistant doing the work for you.

Focus

• The conveyancer’s focus is solely on property law as it is their one speciality.
• You will likely deal with the conveyancer (Nicola Lacey) directly rather than an assistant.
• The lawyer needs to have knowledge of all the different laws pertaining to the services they offer.

What does a conveyancer do

Before the contract

Sellers – have their conveyancer prepare a draft contract to check ownership, rates, charges, restrictions, certificates and various other legal requirements.

Buyers – view a potential property, perhaps receive a contract and have their conveyancer review it for them prior to or during the offer process.

Exchange of the contract – binding the buyer and the seller

Sellers – Provide a signed copy of the contract, contracts are checked and confirmed to be identical and contracts are exchanged between both the seller and the buyer. Both the buyer and the seller are now legally bound.

Buyers – The deposit is given usually to the real estate agent to be held in trust, and a signed contract is given along with the deposit. Contracts are checked to be identical and both the parties are bound by the contract.

Stamp Duty

In NSW stamp duty is payable, it is liable from the day that the contracts are exchanged. Stamp Duty must be paid within 90 days of the exchange, it can, however, be paid in full prior to settlement or at settlement if required.

Cooling off or 66W certificate

It is a legal requirement to have a cooling off period of 5 business days. This time allows the purchaser to change their mind but if they do then they must forfeit 0.25% of the purchase price. For example, on a $500 000 property, this would be $1,250.

A majority of sellers request a 66W certificate – this waives or shortens the cooling off period and speeds up the exchange and settlement process.

Inspection of the property

The purchaser of a property is able to have a prepurchase inspection within the 3 days before settlement. This inspection is to ensure that the property is going to be left in a clean and clear condition and all possessions have been removed. It is at this time that the purchaser can pause the settlement until any problems are rectified/resolved. The settlement may even continue with the buyer withholding part of the final payment until any problems are resolved.

Settlement

This is the party of the process where ownership exchanges hands. prior to this moment the conveyancer will be completing all the required checks and finalising figures for the settlement. The transaction will be registered and the transfer official.

Keys – Immediately following settlement, keys, remotes, security codes and more will be handed over. Generally, the seller will have given all these items to the real estate agent who completed the sale.

If you have any questions about this process – please contact Nicola at Select Conveyancing

Sydney property prices are tipped to continue dropping for the rest of 2018 and perhaps even beyond. The ANZ has tipped that prices could fall a further 10% in the coming months.

What does this mean

It means that it is the perfect time to be buying. If you are in a position to buy and you can get the finance you need there is potential for a great buy when it comes to Sydney property.

With the lenders tightening their financial strings many potential buyers have dropped out. So with less demand, the prices drop and this is the biggest drop since the GFC in 2008.

According to news.com.au – Figures showed the number of buyers actively looking for a home dropped by nearly a quarter over the past year, pushing the median price of a Sydney house down 14 per cent and the median unit price down 7.9 per cent.

So where does that leave potential buyers

If you are a potential buyer who can use the equity in your home you are well positioned to get a great investment property purchase. Interest rates are low and you won’t have to face some of the lending restrictions of people without home equity. This combination of lower property prices, built-up equity, tightened lending restrictions and low-interest rates leaves it open for investors in the right financial position to think about refinancing their current mortgage and look for new opportunities. Are you looking?

Buying Property

Buying property is a great way to invest in your future. We are fortunate in Sydney as there is long-term consistent growth so you can expect that over time your investment is going to grow in value. Have a read through our other articles to find more hints and tips about buying property and contact us for the conveyancing on your next property purchase.

Are you a first home buyer looking to get into the Sydney market?

Did you know that the average time it takes for couples to save their 20% deposit is 6 years and 7 months and twice as long as a single? This is to purchase an entry-level house and based on average wages.

Sydney remains the city with the highest property prices in Australia. This means that on average it is taking 8 months longer than Melbourne buyers and more than double the time for buyers in Hobart or Darwin.

Saving to buy an entry priced unit (costing $593K) has remained at 5 years nine months for many years.

Currently

Property is currently seeing less urgency for buyers to snap up the first property they can. The availability of property is also at their highest in 5 years. What this means is that when you are shopping for your property, there is more choice and more time to make the right decision.

Options

With Sydney property growth many buyers are able to get into the market with just a 5% or 10% deposit and pay the mortgage insurance. With the market cooling off a lower deposit is not always the best choice.

Advice

Make sure you seek advice based on your individual circumstances and try not to overcommit yourself in the property market. Know what options you can take up relating to being a first home buyer – e.g. NSW exemption of stamp duty for property under $650K.

When you are ready to purchase your property – Select Conveyancing will help you through the process to make it as easy as possible.

Source of timelines – Domain Property

A property auction is a gathering of potential buyers for a property. It is run by an auctioneer and is covered by very strict rules. If you are planning to buy a property this way here are a few things for you to know and consider seriously. For example, if you are the highest bidder when the hammer falls, you are legally required to sign the contract to buy the property then and there.

Some terms to know

Reserve price – before the auction, the vendor (seller) will set a price with the auctioneer that is the minimum price they will accept. If the reserve price isn’t reached during bidding, the auctioneer will privately ask the vendor if they will sell at a lower price.

Passed in – if bids do not meet the vendor’s reserve price, the auctioneer will seek more bids. If bids still do not meet the reserve, the property may be ‘passed in’ or ‘withdrawn from auction’. The highest bidder then gets first right to negotiate privately with the seller.

Fall of the hammer – towards the end of the auction, the auctioneer will call for any final bids. Once there are no more bids, the auctioneer will count down the ‘fall of the hammer’, which will signal the end of the auction. No bids can be made after the fall of the hammer and the highest bidder is legally obliged to sign and exchange contracts on the spot.

How an auction works

To participate or bid at an auction, potential buyers must register with the vendor’s agent and be given a bidder’s number. The auctioneer oversees the bidding process. They take bids from potential buyers and keep track of the current bid price. Before auctioning a property, the seller will nominate a reserve price, which is usually not advertised. If the bidding continues beyond the reserve price, the property is sold at the fall of the hammer. If you are the successful bidder, you must sign the contract of sale and pay the deposit on the spot (usually around 10 percent of the purchase price).

The day of the auction

On the day of the auction, the property may be open for inspection, usually half an hour before the auction starts. Use this opportunity to take a final look at the property, the contract and auction rules.

Agents must give all potential bidders a copy of the Bidder’s guide before the auction. The Bidder’s guide contains important information you need to know, such as how you register to bid and what kind of identification you must provide to register. It is important to know how to register as you cannot bid if you are not registered. Agents are also required by law to have a list of the following auction conditions clearly visible for all potential bidders:

• The highest bidder is the buyer, subject to any reserve price
• The auctioneer is entitled to make one bid only on behalf of the seller
• Before the auction, the auctioneer must announce that the auctioneer is permitted to make one bid on behalf of the seller
• The auctioneer must announce immediately before, or in the process of making the bid, that he/she is making a vendor bid
• The auctioneer can refuse a bid that is not in the interest of the seller
• The auctioneer has no authority to accept a late bid (a bid after the fall of the hammer)
• If there is a disputed bid, the auctioneer is the sole arbitrator and makes the final decision
• The successful buyer’s name must be given to the auctioneer as soon as possible.

Attend a few auctions as a spectator to become familiar with the auction process. If the price is getting too high, you need to be able to walk away. This may be one of your biggest decisions, so it is worth making the right one, and being as well prepared and informed as possible about buying property.

If you have any questions about this type of purchase – please contact Select Conveyancing Lane Cove

Are you hoping to buy or build your 1st property?

First home buyers can still get grants when they meet certain criteria in N.S.W. It is an N.S.W. government initiative which provides exemptions or concessions on transfer duty for eligible NSW first home buyers. This includes vacant land on which you intend to build your first home.

The First Home Buyers Assistance scheme has Proof of Identity requirements, the details of which are contained in the Application and Lodgement Guide.

About the First Home Buyers Assistance Scheme

The First Home Buyers Assistance scheme provides eligible purchasers with exemptions on transfer duty on new and existing homes valued up to $650,000 and concessions on duty for new and existing homes valued between $650,000 and $800,000.

Eligible purchasers buying a vacant block of residential land to build their home on will pay no duty on vacant land valued up to $350,000, and will receive concessions on duty for vacant land valued between $350,000 and $450,000.

To qualify for First Home Buyers Assistance, you must meet the criteria listed below:

• The contract and the transfer must be for the purchase of the whole of the property.
• All purchasers must be ‘eligible purchasers’.
• An ‘eligible purchaser’ is a natural person (i.e. not a company or trust) at least 18 years of age who has not, and whose spouse/de facto has not:
  • at any time owned (either solely or with someone else) residential property in Australia other than property owned solely as trustee or executor
  • previously received an exemption or concession under First Home—New Home.
• At least 1 eligible purchaser must occupy the home as their principal place of residence for a continuous period of 6 months, commencing within 12 months of completion of the agreement. (Where an eligible purchaser was a member of the permanent forces of the Australian Defence Force and all purchasers were enrolled on the NSW electoral roll, as at the transaction date, then all purchasers are exempt from the residence requirement).

Calculating the concessions on duty

You can calculate the exact amount of your concession for new and existing homes, vacant land and shared equity arrangements using the First Home Buyers Assistance calculator.

Shared Equity Arrangements under First Home Buyers Assistance

First Home Buyers Assistance shared equity arrangements allow eligible purchasers to buy property with other parties and still receives a concession. To qualify, the eligible purchasers must buy at least 50 percent of the property. The value limits and other eligibility criteria for First Home Buyers Assistance apply.

Transfer duty is calculated with reference to the proportion of the property purchased by other parties. However, this interest is disregarded if it is not more than 5%.

You can calculate the exact amount of your concession using the First Home Buyers Assistance calculator. First Home Buyers Assistance calculator 

Strata scheme

 A strata scheme is a building or collection of buildings that has been divided into ‘lots’. Lots can be individual units/apartments, townhouses or houses. When a person buys a lot, they own the individual lot and also share the ownership of common property with other lot owners. Common property generally includes things like gardens, external walls, roofs, driveways and stairwells.

Strata living can provide a friendly community-style environment but differs from living in a freestanding house.

It is important for you to be aware of the additional and different responsibilities and responsibilities that apply to living in a strata schemes if you are considering purchasing a lot in a strata scheme. Some activities may be more restricted than if you were living in a freestanding house – for example, where you can park your car or how you can renovate your lot.

Community schemes 

The property you are looking at may actually be within a community scheme. Generally, community schemes support a variety of different land uses (houses, apartments, gym, shops, golf course) within the one complex. Community schemes operate in much the same way as strata schemes, having lot owners, common property, owners corporations and by-laws.

What would I actually own in a strata scheme? 

One major difference between owning a house and a unit in a strata scheme (or ‘lot’) is that the external walls, the floor and roof do not usually belong to the lot owner. These areas are usually common property, which means that the maintenance and repair of these parts of the building are the responsibility of the owners’ corporation. As it is common property, the lot owner cannot alter or renovate these areas without permission from the owners’ corporation. Lot owners may need permission to do things such as install services (eg. cable television, phone or internet), knock down walls or replace locks on doors or windows.

Before buying into a strata scheme, you should be clear on the common property boundaries. For a definitive answer on the common property, refer to the strata plan for your individual strata scheme from Land and Property Information NSW. The strata plan shows the layout of the strata scheme and the common property details. Pay close attention to items such as sliding doors leading to balconies, garage doors and balcony railings, as strata plans may differ on whether these are common property. You can also obtain expert advice if you are uncertain about the common property boundaries.

In most strata schemes, the lot owner owns the inside of the unit but not the main structure of the building. Usually, the four main walls, the ceiling, roof and the floor are common property. The internal walls within the lot (e.g. the wall between the kitchen and lounge room), floor coverings such as carpet and fixtures such as baths, toilet bowls and bench tops are all the property of the lot owner. Effectively, a lot owner generally owns the ‘airspace’ (and anything included in the airspace) inside the boundary walls, floor and ceiling of the lot.

Airspace can also extend to balconies and courtyards. You should get proper advice about ownership of such things as a tree in the courtyard or the responsibility to maintain a pergola covering a balcony or courtyard. They could be in your airspace and, therefore, would be maintained at your cost. You should also check whether things like car spaces or gardens are part of your lot. If they are, you will be responsible for their maintenance.

Owners corporation and executive committee 

The owners’ corporation is an incorporated body, and all lot owners in a strata scheme are automatically part of the owners’ corporation (sometimes referred to as the ‘body corporate’) and have a right to take part in the decision making.

The owners’ corporation is usually responsible for maintenance and repair of common property. The owners’ corporation should hold regular meetings to decide the issues of the scheme and has responsibility for the overall management of the scheme.

The owners’ corporation also has an elected strata committee able to make certain decisions on its behalf. The strata committee is in place to enable quicker decision making on many of the day-to-day decisions about running the scheme.  The strata committee members are obligated under the law to act with due care and diligence and must adhere to strict disclosure requirements.

Unit entitlement 

The strata scheme plan determines the unit entitlement for each lot. It is important for lot owners to know their unit entitlement, as this is what is used to work out the overall interest (part-ownership) in the common property, and to calculate the levies payable, and voting entitlements. Not all lot owners have the same unit entitlement, as this can vary for each unit in a scheme.

Levies 

Lot owners need to make regular contributions to the owners’ corporation to cover the maintenance and administration of the strata scheme and help maintain the life of the building.

The owners’ corporation looks after the management of the strata scheme. It must set up and keep an administrative fund (for day-to-day operational expenses) and a capital works fund (for short and long-term future expenditure of a capital nature).

The owners’ corporation must estimate how much money is needed each year for the funds to cover all the expenses and needs of the strata scheme. An owners corporation must take into account anticipated major expenditure identified in the 10-year plan for the capital works fund. The levy amount to be paid by owners is decided at each annual general meeting (AGM) by a majority vote. All levies must be worked out based on the unit entitlements of each lot. Levies are usually paid every 3 months.

What do levies pay for? 

An owners corporation has the same type of expenditure as a conventional householder. There are council rates, water and electricity charges for common areas, building and public liability insurance and repairs and maintenance of common areas, such as painting or re-painting parts of the common property, or renewing or replacing fixtures or fittings. In a strata scheme, there can also be additional costs such as workers compensation insurance, building valuations, and the resolution of any disputes arising within the scheme.

Owners should pay close attention to the quality and finishes of a building as everything the scheme has to offer must be maintained eg. swimming pools, lifts, tennis courts, saunas etc.

Special levies 

Owners corporations can vote to introduce a ‘special levy’ where there are insufficient funds to cover expenses such as large capital works or unforeseen work.

Difficulty in paying levies 

If you are experiencing difficulties in paying your levies the first step is to contact your strata committee or the strata managing agent to discuss the issue. You may be able to negotiate an agreement with your owners’ corporation to ensure these obligations are met.

If levies continue to be unpaid the owners’ corporation can take civil action through the Local Court to recover unpaid levies. This can include garnishee of your wages or rental money from your real estate agent.

Are there any meetings I would have to attend? 

It is not compulsory for a lot owner to attend owners corporation meetings. However, a strata scheme operates better if you take an interest in its affairs. It helps if people are willing to make themselves available for election to the strata committee. The owners’ corporation usually meets several times each year, although the AGM (when levies are set for the coming year and the strata committee is elected) is the only meeting required by law. The strata committee would usually meet more often than the owners’ corporation, as the owners’ corporation delegates some decision-making to the committee.

The owners’ corporation can use electronic voting or other means to maximise participation in the scheme and involve owners in making decisions on how it operates. You should ask your solicitor to check what type of voting and attendance is permitted at meetings of the scheme.

Strata managing agents  

The owners’ corporation can manage the strata scheme itself, or it can engage a strata managing agent to work on behalf of all owners to help manage the scheme. If it engages a strata managing agent, the owners’ corporation enters into a contract with the agent, which outlines their duties and responsibilities. The owners’ corporation has the power to instruct the agent to do certain works and if necessary, they can overrule the agent.

The appointment of a managing agent can only be decided by a majority vote at a general meeting. Only a person who holds a strata managing agent’s licence under the Property Stock and Business Agents Act 2002 can be appointed. Owners corporations should periodically check the licence is current by doing a licence check of the property licence register at www.fairtrading.nsw.gov.au

Agents can carry out some or all of the functions, duties or powers of the owners’ corporation including administrative matters such as calling meetings and collecting levies. The owners’ corporation decides what duties and functions it wishes to give to the strata managing agent. Agents should also give advice and guidance about legislative requirements.

By-laws 

By-laws are a set of rules that all people living in a strata scheme must follow. By-laws are made on issues such as safety and security measures, floor coverings, pets etc. Strata schemes can adopt model by-laws that are set out in the Strata Schemes Management Act 2015, they can amend and adopt these model by-laws, or they can make their own.

Before buying, it is advisable to check the schemes by-laws as they will affect the way you will live in a scheme. Of particular importance is whether you would like to bring your pet into your lot and whether the by-laws will permit this. Just because you see other lot owners with pets in your scheme does not necessarily mean they are allowed under the by-laws. You need to check before you make your decision.

In some instances, a breach of a by-law can attract a penalty.

Before signing a contract 

Seek professional advice about the complexities involved in buying a strata unit. Look at the records of the owners’ corporation. Know as much as you can about the maintenance of the building and the related costs, and look for any signs that money may need to be spent soon.

There are companies that specialise in inspecting the records. Sometimes your solicitor will arrange this for you. You can also inspect the records yourself. The owners’ corporation must make their records available following payment of the necessary fees (usually done through the strata manager). You can access the following records:

• the strata roll (this shows who owns each unit, mortgagees and others who have an interest in lots, general information about the strata scheme, the name of the managing agent, insurance details, the by-laws and the unit entitlements for the scheme and each lot)

• general records, such as notices served about disputes or required by legislation, orders, minutes of meetings, accounting records, financial statements, correspondence received and sent, notices of meetings, details of proxies, voting papers

• plans, specifications, certificates, diagrams and other documents if supplied by the original builder at the first annual general meeting

• the certificate of title for the common property

• the last financial statements

• current insurance policies and the receipt of the last premium paid

• other records held by the owners’ corporation, and

• records or books of account kept by a strata managing agent.

Getting a Section 184 certificate 

If you are an owner, or you have an owner’s, mortgagee’s or covenant chargee’s written permission, you may write to the owners’ corporation and ask for a section 184 certificate. A member of the strata committee or the strata managing agent must give the certificate under the owners’ corporation seal. The certificate must be on the set form used in the Strata Schemes Management Regulation 2016 – Schedule 1. There is a fee payable.

A Section 184 certificate will give information about the strata scheme including:

• the names and addresses of the strata committee members, the managing agent and building manager (if applicable)

• the levies to be paid by the owners

• any outstanding levies

• any outstanding levies for the owner of the lot you are interested in

• the proposals for funding the matters set out in the 10-year capital works plan

• the address where the records and financial statements can be viewed

• details of any by-laws made by the owners’ corporation within 6 months before the date of the certificate that has not been lodged at NSW Land Registry Services as at that date

• whether or not a strata renewal committee has been established in relation to the strata scheme under the Strata Schemes Development Act 2015.

If a levy is outstanding before the certificate is given and it is not shown on the certificate, the purchaser is not responsible for the payment.

Buying off the plan 

Sometimes strata units are advertised for sale even before the building has been constructed. The design of the building and sketches of its final appearance may be included in advertising well before occupation is possible. Buying such a strata unit is known as ‘buying off the plan’.

Usually, a contract of sale is signed, but the date for completion of the contract will not be until the building is completed and the strata plan is registered. The buyer usually pays a deposit (typically ten percent of the agreed price of the unit) and the balance is paid when the contract is ‘settled’ upon the building’s completion.

There are several issues to be aware of when buying off the plan, as you may be entering into a contract without having first seen and assessed the finished product.

Content produced from fairtrading.gov.au

If you have further questions about Buying into a Strata Scheme, please contact Select Conveyancing.