Conveyancing & property

The big issue in your purchase of property is “caveat emptor” – this means “buyers beware” – you buy what you see. As the Purchaser you have the entire responsibility to work out exactly the condition of the property that you are buying and any problems that may come up which you would have to deal with.

Before you purchase a property you should:

1. Obtain your Lender’s pre-approval for your loan so that you are quite sure as to your purchase price limits;
2. Ensure that you do not waive your Cooling Off rights of 5 business days (or 10 business days if you are purchasing off the plan) to change your mind on the property purchase; and,
3. Check the contract. We are happy to check a contract with you. Kindly ask your real estate agent to forward the contract to our email address info@jlesolicitors.com.au and we can give you our advice by email or in person.

How to check a property contract:

• A description of the property on the front page with inclusions and exclusions on the front page.
• Confirmation whether GST is payable on the contract and whether you have to contribute to land tax.
• Title particulars: This allows you to check that the Vendor is the correct persons selling you the property and also provides a check on any interests in the property e.g. caveat, easement, covenant etc.
• Deposited plan or strata plan: This shows the dimension of the property. In a Strata Plan it also identifies whether your property has a separate title for a garage space. In strata plans, do check where the garbage disposal unit is so that it is not too close to your unit.
• Drainage diagram: This shows the major Sydney Water drains and also domestic drains. Where a building is built over large drainage pipes you would need to check that the Vendor has the consent from Sydney Water for this purpose.
• Section 10.7 Council zoning certificate: The information provided includes zoning requirements and Council records applicable to your property e.g. road widening, flood warnings, contaminated land.
• Where there is a swimming pool or spa the Vendor needs to confirm that the swimming pool or spa it is registered with the Local Council and provide a valid certificate of compliance (or non-compliance) or have a valid occupation certificate less than 3 years old.
• Where you are purchasing off the plan, check the Vendor disclosure statement in the contract which should include: details of sunset clauses, conditional events, a proposed schedule of finishes, draft strata plan, and draft by-laws. It would also be useful to have the floor plan in the contract to check with the final build. Also check if there is a clause in the contract that allows you to rescind the contract where the dimensions of the property do not comply with the original draft plans.
• Where the property is tenanted, a copy of the residential lease should be included in the contract.

•  Whether there are any problems with the property that they know of.
• Whether the Vendor or predecessors have conducted any building works on the Property after the original building was built, and if so, did they get Council consent for the new building work.

This report provides you with the details as to the structural situation of the property – whether there are major or minor cracks in the property, whether there is any leaking in the showers, laundry areas. You should then get a general estimate cost in repairing the damage noted in the report.

This report provides you with the details as to termites and borers. This report is essential as you do not want to hear termites eating away on your floorboards in the quiet of the night.

A survey will tell you exactly the dimensions of the land and whether your property is fully built on your land and is not part on someone else’s property. You also do not wish to have a situation where your neighbour’s property is partly on your land.  

This involves a Council inspection of the property to state that it fully complies with Council requirements. Where there have been additions to the property, the Council inspector has the option of stating (a) that the additions are OK and meet the Council requirements, or (b) they are not OK and need further work done, or (c) they are definitely not OK and must be pulled down. The Council will require a survey to be attached to the request for a Council building certificate. It can take 2-3 weeks to get the Council building certificate.  

Council rates, Water rates: These are standard searches to help organise settlement figures as the Vendor has to pay for his share of the Council rates, Water rates until the settlement date. You can also do additional searches from government authorities to check if they have an interest in your land e.g. outstanding health and building notice.  

Clear Land Tax certificate

• Clear Foreign Resident Capital Gains Withholding Payments Certificate – This is mandatory for all property over $750,000. If the Certificate is not provided then the Purchaser must withhold 12.5% of the purchase price and forward this payment to the ATO.
• If you are buying off the plan, check the contract that the Vendor is required to give you an occupation certificate prior to or on settlement 

A purchase by 2 or more persons as joint tenants indicate that:

• All parties own the property in equal shares; and,
• There is a right of survivorship in that if one person passes away the property automatically belongs to the surviving party and if more than one in equal shares.

• The property is owned separately by each party to the contract. The shareholding of each party can vary and be equal or unequal; and,
• Where one party passes away their share of the property is distributed according to their Will.

A change of ownership from joints tenants to tenants-in-common in equal shares between spouses and vice versa is stamp duty exempt.

The Vendor can rely on the contract for all matters regarding the sale. There is generally a clause in the contract that states that the Purchaser is not able to rely on any representations by the Vendor or their Agent in the sale and can only rely on the Contract.

The property details are indicated on the front page of the contract including all inclusions and exclusions for the property. Land tax and GST adjustments are listed on page 2 of the Contract. In addition, the Contract should include:

• Certificate of Title search. For Strata also includes the Certificate of Title for Common Property and a copy of the current by-laws. For Strata property also provides for any Community Title interests on the property
• Searches for all easements, and covenants affecting the land.
• Deposited Plan/Strata Plan.
• Drainage diagrams (x2): This should include the drainage diagram for the property and a second drainage diagram for the local area.
• Section 10.7 Council zoning certificate
• Where there is a swimming pool or spa, the Vendor needs to provide confirmation that the pool or spa is registered with Local Council, and provide a valid certificate of compliance (or non-compliance) or have a valid occupation certificate less than 3 years old.
• Where the property is tenanted, a copy of the residential lease should be included in the contract.
• Vendors who sell property off the plan need to attach a disclosure statement to the contract that outlines key information such as sunset dates, conditional events, and provide draft strata plan, proposed schedule of finishes and draft by-laws.

Prior to settlement, the Vendor is required to provide the Purchaser with:

• a clear Land Tax certificate
• a clear Foreign Resident Capital Gains Withholding Payments Certificate – This is mandatory for all property over $750,000. If the clearance certificate is not provided then the Purchaser must withhold 12.5% of the purchase price and forward this payment to the ATO.
• Where GST is required to be paid by the Vendor then the Purchaser needs to withhold the GST payment from the purchase funds and pay this to the ATO.

The sale of commercial property should be carefully considered for GST considerations.

The ABN of the Vendor and Purchaser must be identified on the front page of the contract. If there is a tenant, a current lease should be included in the contract.

We will depend on your Accountant’s advice for whether the sale is liable to GST or is GST free. Where the commercial property attracts GST, then the Purchaser must provide the 10% GST payment on settlement and the Vendor has to provide the tax invoice for this purpose.

 We are not financial advisers and you should check with your accountant on the following taxation issues in your property purchase:

• Concessions for first home owners
• Land tax issues for residential and non-residential properties
• Tax benefits and also capital gains tax implications where you use part of your home as a home office
• Capital gains tax where you are purchasing/selling a residential property for investment or it is a commercial property
• Purchase/sale as a foreign investor - additional costs and also initial requirement for approval from the Foreign Investment Review Board for the purchase of property.
• GST payments for off the plan purchases
• GST payments for sale of commercial properties - Where the commercial property attracts GST, then the Purchaser must provide the 10% GST payment on settlement to the ATO and the Vendor has to provide the tax invoice for this purpose.
• Purchase of property as joint tenants or as tenants in common and taxation implications