obiter | ByLawyers News and Updates

Contracts subject to finance – Conveyancing – NSW

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New commentary and precedents for Contracts subject to finance have been added to the By Lawyers New South Wales Conveyancing Purchase of Real Property publication.

As a result of a suggestion from a By Lawyers user, we have updated the Purchase of Real Property (NSW) Guide with a new section of commentary and a folder of precedent letters.

The commentary now includes a section titled Contracts subject to finance, which discusses the increasingly common situation where a purchaser has not secured unconditional finance approval before exchange. Practical information is included on:

  • negotiating the inclusion into the contract of a special condition making completion subject to finance;
  • the effect of unsuccessful finance applications;
  • seeking an extension of time from the vendor where necessary;
  • serving written notice where finance falls through;
  • the requirement of the purchaser to not otherwise be in default when ending a contract;
  • continuing without unconditional approval;
  • forfeiture of deposit and damages – including negotiating a reduced amount.

The following new precedents to assist with contracts subject to finance have been added to Folder C. NEGOTIATIONS & EXCHANGE > IF REQUIRED – UNCONDITIONAL CONTRACTS:

  • Letter to vendor’s solicitor confirming contract unconditional;
  • Letter to vendor’s solicitor requesting extension of time; and
  • Letter to vendor ending contract.

At By Lawyers we pride ourselves on the cooperative and collegiate relationship we have with the many firms using our commentary and precedents daily. We value the feedback that we receive as it helps us continue to improve our publications, as in this instance. We love to hear from you!

Retirement villages – NSW

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Following recent changes to the Act, the Retirement Villages Amendment (Asset Management Plans) Regulation 2021 and the Retirement Villages Amendment (Exit Entitlement) Regulation 2021 have now commenced.

Asset management plans

The regulations require operators to maintain an asset management plan for each village they manage or operate. They must have a copy available for inspection at all reasonable times by a resident, prospective resident or a person acting on their behalf.

Operators must also prepare a 3-year report for capital maintenance, extracted from the asset management plan, to inform expenditure for major items of capital in the annual budget.

Exit entitlements, recurrent charges and right of entry

The regulations also affect exit entitlements and recurrent charges. They provide that an operator may enter premises in certain circumstances to facilitate the sale of the premises.

By Lawyers keeps you up to date

The By Lawyers Retirement Villages (NSW) guide has been updated accordingly. The effect of the new regulations is detailed in the commentary. There is also a new precedent ‘Letter to client providing advice on village contract’ which has been added to Folder B on the matter plan. The Retirement Villages (NSW) guide is included in our Conveyancing (NSW) publication.

See our related Obiter post Retirement Villages (NSW) – Amendments concerning the recent amendments to the Act.

Build-to-rent – NSW

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The New South Wales Government has introduced tax concessions for new build-to-rent housing projects. These potentially valuable concessions will remain applicable until 2040.

The term build-to-rent applies to large-scale residential unit developments constructed with the intent of being kept long-term and rented out to lower-income families at affordable prices. The build-to-rent model has been successful overseas and is now being encouraged in New South Wales.

Eligible developments will receive:

  • a 50 per cent reduction in land value for land tax purposes; and
  • an exemption from foreign investor duty and land tax surcharges – or a refund of any surcharges already paid.

The concessions are expected to encourage and support the supply of large-scale rental housing that is professionally owned and managed. The rationale is that such accommodation provides tenants with security of tenure and quality rental services. For a developer to qualify for the scheme, each tenant must be provided with a range of lease term choices, including the option of entering into a fixed term lease of at least 3 years.

These concessions only apply to housing developments that contain at least 50 self-contained dwellings, where construction commenced after 1 July 2020. The dwellings must be used specifically for the purpose of build-to-rent.

See the Treasurer’s guidelines for further information including full eligibility requirements.

The By Lawyers 1001 Conveyancing Answers (NSW) guide has been updated accordingly. This  comprehensive resource is located in the Reference materials folder at the top of the matter plan in every By Lawyers New South Wales conveyancing publication.

Certificates of title – NSW

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The NSW Government has approved the cancellation of all remaining paper certificates of title as part of the implementation of electronic conveyancing. All remaining paper certificates of title are expected to be cancelled in April 2021. Certificates of title will then no longer be evidence of indefeasible title. The By Lawyers Conveyancing and Property guides will be amended accordingly at that point.

Implications

  • For solicitors and conveyancers any lien held over a certificate of title as a form of security for payment of costs will become ineffective.
  • Equitable mortgagees holding certificates of title as security will need to make alternative security arrangements.

Alternative security for professional costs 

  • A solicitor’s lien over all client documents created or obtained in the matter.
  • Creating a charge for the repayment of costs over the client’s real property which entitles the firm to lodge a caveat on title until all costs are paid.
  • Authority to pay professional fees and disbursements from client funds held in the trust account.
  • Guarantee clause for the performance of the agreement by a guarantor, and creating a charge over the guarantor’s real property.

All By Lawyers Costs Agreements provide for these methods of security.

Alternative protection for lenders 

  • Lien over other documents or assets held by the borrower to secure the repayment of the loan.
  • Ensuring that loan agreements contain a right to register a mortgage.
  • Lodging a caveat.

The By Lawyers Mortgages (NSW) Guide contain a ‘Mortgage Linked Loan Agreement’ that is linked to the mortgage and incorporates the provisions found in the By Lawyers ‘Registered Memorandum AJ843928’. A copy of the memorandum of common provisions is recorded at NSW Land Registry Services and can be used at no additional cost by our users.

The By Lawyers Mortgages (NSW) Guide also covers caveats and contains an ‘Acknowledgement of debt – Caveatable Interest’ that creates an interest in the borrower’s real property entitling the lender to register a caveat on the property to secure repayments.

Cancellation of ALL certificates of title

Keep an eye out for the upcoming cancellation of ALL certificates of title, paper and electronic, in NSW. This will see the removal of the requirement to lodge consents and changes to the requirements relating to verification of identity, right to deal and retention of proper evidence.

There will be another Obiter post from By Lawyers when our guides are updated for these developments.

Purchase of real property – TAS

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The By Lawyers Purchase of real property guide for Tasmania has been reviewed and enhanced.

Enhancements resulting from this extensive review, which will assist Tasmanian property practitioners, include:

  • Various sections of commentary have been revised and re-ordered, to better reflect the usual flow of the purchase process.
  • The Matter plan now includes a separate section for Property Transfer Duty.
  • There are new and amended commentary headings, for improved searchability.
  • The commentary under the Property heading has been expanded to include a discussion of the various types of title.
  • Commentary under the Price and Taxes headings has been re-organised and expanded.
  • The coverage of Disclosure and Property Transfer Duty has been enhanced with references to the standard contract and common practice.
  • There is new commentary on the Submission of Transfer and Notice of Sale.
  • New commentary has been added on the specific stages of the settlement process for purchase of property.
  • All precedents have been reviewed and enhanced where necessary to reflect current practice.

Practitioners are also reminded of the Library of special conditions located on both the Sale of real property and Purchase of real property matter plans. These useful precedent clauses are located in Folder C. Contract and Folder D. Negotiations and exchange, respectively. This extensive library contains eighty drafted special conditions which can be cut and paste into the contract, either directly or with bespoke amendments, to suit the specific requirements of almost any transactions and circumstances.

This review is part of the continuing commitment of By Lawyers to updating and enhancing our publications to help our subscribers enjoy practice more.

A full description – Conveyancing – NSW

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The popular By Lawyers resources A full description of the purchase process in NSW and A full description of the sale process in NSW have recently been reviewed.

As a result of the review a new active hyperlink has been included in the sale version, leading to the Revenue NSW land tax page. This helps practitioners easily access the current threshold for the unimproved value of the land, to determine whether a client is liable for land tax. Land tax is generally only payable on investment properties, as there is a primary residence exemption.

These two helpful resources can be found in the Reference materials folder located at the top of the Sale of Real Property (NSW) and Purchase of Real Property (NSW) matter plans.  They provide a detailed summary of the typical progression of residential sale or purchase matter. Also available in the Reference materials folder is A brief explanation of the transition to E-conveyancing and how to get connected.

These resources, especially the two A full description… summaries, can provide valuable practical assistance for anyone new to conveyancing transactions, for practitioners and support staff  who only conduct conveyancing matters occasionally, or for team members inexperienced in conveyancing who have to step in at short notice in the unexpected absence of a colleague to look after a conveyancing file which is already on foot.

This review is part of by Lawyers continuing commitment to updating and enhancing our publications. All By Lawyers content is kept up to date by our dedicated editorial team and our specialist authors.

Land transfer duty waiver – VIC

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The Victorian Government has announced a land transfer duty waiver for purchases of Victorian residential property with a dutiable value of up to $1 million.

For new residential properties, a 50% duty waiver applies. For existing residential properties and vacant residential land, a 25% duty waiver applies.

The applicable waiver is applied to the duty otherwise payable after all other eligible benefits, such as the first home buyer duty concession, the principal place of residence concession and the pensioner concession, have been taken into account.

The waiver can apply to the purchase of an investment property. There is no requirement to live in the property.

The waiver can be applied for more than once.

While a foreign person can obtain the waiver, it does not apply to foreign purchaser additional duty.

To be eligible for this waiver:

  • the purchase must be of residential property;
  • dutiable value must be $1 million or less;
  • the contract must be signed on or after 25 November 2020 and before 1 July 2021; and
  • the arrangement must be a bona fide purchase for adequate consideration i.e. not a gift.

The State Revenue Office will apply the waiver automatically if all eligibility criteria are met based on the information provided in the Digital Duties Form.

For further information, see the State Revenue Office page Land transfer duty waiver for residential property transactions of up to $1 million.

The By Lawyers Conveyancing – Purchase of real property (VIC) Guide has been updated accordingly.

1 January updates – All states

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The By Lawyers has attended to the following 1 January updates required by legislation and practice in all relevant jurisdictions:

Land tax – Increases to threshold values – NSW

Land tax thresholds in NSW are indexed to rise on 1 January each year.

The 2021 threshold combined land value has increased to $755,000 for all liable land. Special trusts and non-concessional companies are excepted.

A marginal tax rate of 1.6% of the aggregate taxable value above the tax-free threshold plus $100 applies.

If the aggregate taxable value exceeds the premium rate threshold of $4,616,000 then $60,164 is payable plus a marginal tax rate of 2% over that amount.

All relevant commentary and precedents in the By Lawyers Conveyancing & Property and Trusts guides have been updated accordingly.

By Lawyers Contract for sale of land

The 2021 edition is now available on the Sale of real property matter plan in the Contract section.

Leases and subleases – NSW, VIC, QLD, SA and WA

The 2021 editions are now available on the Leases – Act for Lessor matter plan for each jurisdiction.

These additions form part of our continuing commitment to enhancing our content and helping our subscribers enjoy practice more.

Bankruptcy

In response to the COVID-19 pandemic temporary changes were made to bankruptcy law, increasing the debt threshold to $20,000 from $5,000 and increasing the time frame for a debtor to respond to a bankruptcy notice to 6 months from 21 days.

As of 1 January 2021 these changes have ceased and a new permanent bankruptcy threshold has been implemented.

The current debt requirement for bankruptcy is a minimum debt of $10,000 and the current time to respond to a bankruptcy notice is 21 days.

The By Lawyers Insolvency – Bankruptcy of individuals publication has been updated accordingly.

Always up to date

In addition to our annual 1 January updates, By Lawyers ensures our publications are updated for 1 June and any other statutory or regulated adjustments where necessary. We also promptly  update our content for all relevant legislative amendments and other legal developments throughout the year, in all jurisdictions.

The team at By Lawyers wishes everyone a prosperous and safe 2021.

Retirement Villages (NSW) – Amendments

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Retirement Villages Amendment Act 2020

The Retirement Villages Amendment Act 2020 has introduced significant changes to exit entitlements, recurrent charges and has enhanced the rights and safeguards of registered interest holders.

Recognising that more than 60% of retirement village residents directly transition into aged care accommodation and that the average age of a person entering a retirement village is 75 and the average age of residents is 81 and more people will be moving into aged care accommodation, the Retirement Villages Amendment Act 2020 address the easing of the financing of the transition.

Most notably, the Act has amended the Retirement Villages Act 1999:

  • to enable the Secretary of the Department of Customer Services to make an order requiring an operator to pay a resident the amount the resident will be entitled to once their residential premises are sold – the exit entitlement – in circumstances where the resident has moved out or intends to move out, and the premises have not yet been sold.
  • To require an operator to pay part of the resident’s exit entitlement directly to an aged care facility in which the resident resides or proposes to reside as payment for accommodation in the facility, instead of paying the exit entitlement to the resident, in circumstances where the premises in the retirement village have not yet been sold.
  • To provide that a former resident of residential premises in a retirement village is not required to pay recurrent charges to the operator of the retirement village once 42 days have passed since the former resident permanently vacated the premises.

The By Lawyers Retirement Villages (NSW) Guide has been updated accordingly. This guide is available within the Conveyancing (NSW) publication.

Contract of sale of land – By Lawyers VIC 2021 version

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Conveyancing practitioners should be aware that the Contract of sale of land – By Lawyers VIC 2021 version has now been published.

The contract is available to LEAP users with the By Lawyers integration and to non-LEAP users by subscription to the Conveyancing (VIC) publication. The contract can be found in the Sale of Real Property (VIC) guide. The contract is also available for purchase through InfoTrack.

The contract was co-authored by Victorian property law guru and long-time By Lawyers author Russell Cocks. For more information about the By Lawyers contract listen to the podcast Seven reasons to use the By Lawyers Contract of sale of land.

The By Lawyers Contract of sale of land for Victoria was introduced on 1 March 2018 and its use has been increasing steadily among Victorian legal practitioners and conveyancers. The contract removes the need for special conditions other than those covering special circumstances and has a number of other advantages over the LIV contract which further simplify the conveyancing process.

Additions to the Contract of sale of land – Parts 1 and 2 – By Lawyers VIC 2021 version

  • GST provisions in the Particulars section of Part 1 have been amended for clarity.
  • An option of 14 OR 21 days has been added in relation to the loan approval period.
  • Clause 14 of the General Conditions has been amended to provide the purchaser with the ability to request an extension of time to obtain loan approval, sets out the corresponding options for the vendor, and provides for the outcome where the vendor fails to respond to the extension request in time.
  • Clause 15 has been amended to provide for the rectification of any error made in the calculation of adjustments that is discovered after completion.
  • Clause 22 clarifies that where the property is subject to the Retail Leases Act 2003, the vendor must provide the purchaser with a copy of the disclosure statement.

Rest assured that the By Lawyers contract is immediately brought up to date with any changes in law or practice.

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