ByLawyers News and Updates

First home buyers – NSW

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Eligible first home buyers who exchanged contracts from 11 November 2022 on properties valued up to $1.5 million can now choose to pay an annual property tax instead of transfer duty.

For properties settling on or before 15 January 2023, purchasers pay transfer duty and apply for a refund after 16 January 2023.

Settlements occurring after 16 January 2023 do not require transfer duty to be paid if the property tax option is chosen.

The Property Tax (First Home Buyer Choice) Act 2022 (NSW) received assent on 11 November 2022.

The existing first home buyer duty concessions still apply.

The property tax is indexed annually, capped at 4% per year.

Eligible first home buyers who are not Australian citizens can still be liable for surcharge purchaser duty, even after opting into the property tax.

A residence requirement of 6 continuous months within the 12 months after settlement applies. Purchasers who then use the property as an investment face a higher rate of property tax.

See the By Lawyers Conveyancing (NSW) guides and the Revenue NSW website for more information.

Common seals – NSW

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Some common seals are not only back, they are here to stay!

From 30 September 2022, owners corporations and community associations can no longer execute documents by signing. Instead, owners corporations and community associations can now only execute documents using either a physical or an electronic form of their common seal.

These new requirements allowing execution via electronic seals replace the previous temporary COVID-19 measures which have applied to both strata and community schemes since June 2020.

Documents that now need to be executed under the entity’s common seals include NSW Land Registry Services instruments and dealings.

There are also new requirements relating to electronic voting at meetings for strata and community schemes. Voting can be done by electronic means and physical attendance is no longer required. However, this only applies if the notice of the meeting specifies an alternate means of voting. If votes can be cast other than in person, then the secretary of the owners corporation, the secretary of the association, or the managing agent must take reasonable steps to ensure each person entitled to vote can in fact vote and participate in the meeting.

The By Lawyers Conveyancing and Property publications, including 1001 Conveyancing Answers (NSW), have been updated accordingly.

Conveyancing regulation – NSW

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The new Conveyancing (Sale of Land) Regulation 2022 commenced on 1 September 2022. It replaces the Conveyancing (Sale of Land) Regulation 2017. No new disclosure requirements arise from the 2022 regulations. Generally the 2022 regulations adopt simple and modern language, removing outdated legislative references.

The 2022 regulations maintain the objectives of the 2017 regulations. Small amendments clarify the disclosure requirements for contracts arising from options. Other minor insertions confirm that cooling off periods do not apply to put options. Part 5 of the regulations consolidates the circumstances entitling a purchaser to rescind a contract or option deed.

Off the plan contract disclosure requirements

Schedule 1 contains a new Part 2 listing additional disclosure requirements for off the plan contracts. Regulation 13(1) states that the documents listed in Part 2 of Schedule 1 are prescribed, and must be included in a disclosure statement for an off the plan contract. These prescribed documents relate to the land to be subdivided, and the development of the land. Examples include:

  • a proposed schedule of finishes;
  • draft by-laws for a strata scheme;
  • draft section 88B instrument;
  • draft building management statement;
  • draft strata management statement.

Cooling off periods for options

Regulation 17(3) confirms that cooling off periods do not apply to contracts arising from a put option. Call options have always been exempt from cooling off periods under section 66T of the Conveyancing Act 1919. In BP7 Pty Ltd v Gavancorp Pty Ltd [2021] NSWSC 265, a purchaser resisted the exercise of a put option against them. Section 66T gave no cooling off rights to options able to be taken to purchase certain property. The court found a put option to be an option to compel the purchase of land, and not in the same character as an option exempted under section 66T. Regulation 17(3) now extends the section 66T exemption to both put and call options.

When purchasers may rescind

Part 5 sets out when a purchaser may rescind a contract or option, and the conditions required for a valid rescission in certain circumstances.

Transition period

Under regulation 26, the transition period runs from 1 September 2022 to 1 March 2023. Anything done in compliance with the 2017 regulations before 28 February 2023 will be taken to comply with the 2022 regulations.

The By Lawyers Purchase of Real Property, Sale of Real Property, and 1001 Conveyancing Answers (NSW) guides have been updated to reflect the new regulations.

1 July updates – All states

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1 July updates are always a big focus for By Lawyers. Many Commonwealth and state legislative instruments provide for the scheduled indexing of relevant monetary amounts and adjustments – usually increases – in government fees and charges. These regular updates occur at the start of every financial year impacting many different areas of law, and therefore numerous By Lawyers publications.

These updates include court filing fees, lodgment fees for property dealings, land tax thresholds, minimum weekly compensation amounts for Workers Compensation, and penalty units for fines for various criminal offences and civil penalty provisions.

By Lawyers always monitor and apply these changes for our subscribers. Each year we ensure our publications are amended where necessary to reflect 1 July updates.

We also monitor and update for similar legislative indexing and increases which occur regularly at other times of the year. These include 1 January changes and other specific dates for various areas of law as prescribed by some statutes.

The 1 July updates have been applied this year, or are in the process of being applied as they get released, to the following By Lawyers publications:

  • Conveyancing and Property;
  • Business and Franchise;
  • Criminal;
  • Litigation;
  • Estates;
  • Injuries; and
  • Employment.

Quite separately, there is also usually a raft of new and amending legislation from both Commonwealth and state parliaments which is set to commence on 1 July. This year is no different in that regard. By Lawyers have made various substantive amendments to a number of publications to account for the commencement of such legislation. Please see the various other By Lawyers News and Updates posts dealing with those updates.

By Lawyers always keep our content – and our subscribers – up to date!

Retirement villages – VIC

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By Lawyers are pleased to announce the publication of a new guide: Retirement Villages – Victoria.

With a separate matter plan, commentary, and precedents, the new guide is now available as part of Conveyancing – VIC on the By Lawyers website, or as a related guide to conveyancing for LEAP users with the exclusive By Lawyers companion product.

The Retirement Villages – Victoria guide focuses on the types of residency rights available. It assists practitioners acting for residents, prospective residents, and village operators.

The commentary discusses all relevant considerations and necessary steps in entering into a retirement village contract, the obligations of residents and operators, ending a contract, and resolution of village disputes. The commentary includes tribunal cases dealing with disputes.

Other commentary highlights include:

• Registered and non-registered residency rights, paying for the retirement village interest, pension considerations and rent assistance for prospective residents.
• The standard form retirement village contract and mandatory documents, including disclosure statements and village rules.
• Stamp duty, goods and services tax (GST), capital gains tax implications, and outgoings.
• Taking occupation, and charges and financial considerations during residency.
• Ending a residency and termination of retirement village contracts, including departure fees, capital sharing, mediation of disputes and Victoria Civil and Administrative Tribunal (VCAT) procedures, cases and appeals processes.

Helpful new precedents, include:

  • Retainer instructions.
  • To do list.
  • Letter to client providing advice on a retirement village contract.
  • Checklist of important considerations for retirement villages.

Practitioners using the Retirement Villages – Victoria guide will also benefit from the By Lawyers conveyancing and property publications: Purchase of Real Property (VIC) and Leases (VIC).

Revenue – NSW

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Recent duty and other revenue amendments impacting conveyancing, trusts, and family law have been incorporated as applicable into the relevant By Lawyers publications.

Legislation

The State Revenue and Fines Legislation Amendment (Miscellaneous) Act 2022 (NSW) amended various revenue Acts with effect from 19 May 2022, including:

These revenue amendments touch on various areas of practice.

Conveyancing

Options

Ad valorem stamp duty is payable on option fees under put and call option deeds. New section 8 (1)(b)(ix) of the Duties Act 1997 provides that duty is payable by the grantee within three months of an option being granted. This changes the previous position where duty was only payable on an option fee if the option was exercised.

Duty is assessed on the option fee, not including security deposits, performance payments, and legal costs.

The grantee is not entitled to claim a refund for any stamp duty paid, regardless of whether the call option is exercised. Also duty paid on the option fee is not credited toward the duty payable on the property when the option is exercised and the contract completed.

The changes do not apply to option agreements entered into before 19 May 2022.

Off the plan

A new section 49A (1D) of the Duties Act 1997 provides that to qualify for a 12-month deferral of stamp duty on off-the-plan purchases, a residence requirement must be met. At least one of the purchasers must use and occupy the property as their principal place of residence for at least 6 months, within 12 months of completion. Australian Defence Force personnel are exempted from the residency requirement. A new version of the Revenue NSW purchaser declaration form is available. Part 6 of the form relates to off-the-plan purchases and provides for the nomination of ADF personnel.

Surcharge duty

A new s 104ZJA(1) (c) of the Duties Act 1997 provides that an Australian-based developer which pays surcharge purchaser duty on a transfer of residential land may have it refunded they later change the use of the land to wholly or predominantly commercial or industrial.

The application for a refund must be lodged online using the application type Australian Based Developer Application for Exemption & Reassessment.

First home owners

Section 13A (3) of the First Home Owner Grant (New Homes) Act 2000 has been amended to include a new definition of the eligibility cap, including how to calculate the total value of the transaction based on the type of transaction and when it occurs.

Land tax

New sections 5B(2A) and 5B(2B) of the Land Tax Act 1956 provide for a discretionary exemption allowing those who do not occupy their principal place of residence for 200 days continuously in a year to remain exempt from land tax. This allows owners to, for example, live and work overseas for a period without losing the exemption.

The By Lawyers Sale of real property (NSW), Purchase of real property (NSW) and 1001 Conveyancing Answers (NSW) publications have been updated accordingly.

Trusts

The amending Act broadens the scope of dutiable transactions under s 8(1)(b)(ix) of the Duties Act 1997 by introducing duty on transactions that result in a change in beneficial ownership and acknowledgement of trust. 

Under s 8(3), the definition of change in beneficial ownership has been extended to include the creation and extinguishment of dutiable property, a change in equitable interests in dutiable property, and dutiable property becoming and ceasing to be subject to a trust.

This amendment directly arises from the case of Benidorm Pty Ltd v Chief Commissioner of Revenue [2020] NSWSC 471 where the Supreme Court held that the definition of declaration of trust in s 8(3) of the Duties Act 1997  as it then was must have a legal consequence, or consequences, beyond merely acknowledging that which already exists. The taxpayer in that case held real property and shares on trust for a beneficiary. When the beneficiary died his sole beneficiary and executor made a declaration of trust substantially the same as the original trust. On appeal the taxpayer was successful and was able to avoid paying duty on the second declaration, which acknowledged and evidenced a trust that was already in place. Such an acknowledgment of trust will now be caught by the Act.

The By Lawyers Trusts publication has been updated accordingly.

Family Law

A new s 68 (1A)(b)(iia) of the Duties Act 1997 means that for de facto relationships transfers of property effected by an agreement made to divide relationship property due to the breakdown of a relationship will be exempt from duty. Previously, to be exempt from duty the transfer had to be effected by a binding financial agreement, court order, or purchase at a public auction. This brings the exemption for de facto couples into line with that for married couples. These exemptions are discretionary and depend on sufficient evidence being supplied in support of the application.

A new version of the form Revenue NSW ODA 069 – Application for Exemption or Refund – Break up of marriage or De facto Relationship is available and needs to be completed.

The By Lawyers 101 Family Law Answers publication has been updated accordingly.

Leasing precedents – QLD

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New and updated leasing precedents have been added to the By Lawyers Leases QLD publication.

Queensland practitioners will find these leasing precedents helpful with a range of common transactions in retail and commercial leases.

The new and updated precedents include:

  • Assignment deed.
  • Guarantee document.
  • Variation deed.
  • Deed of surrender.
  • Deed of variation of lease – deferral of rental payments. This deals with rental relief prompted by the economic impacts of COVID-19 in accordance with the National Cabinet Mandatory Code of Conduct.

The new and updated leasing precedents include clauses addressing common leasing scenarios such as:

  • First right of refusal.
  • Demolition and relocation.
  • Covenants protecting mortgagee’s interests.
  • Liquor licencing requirements such as transfer of licence, and consent to licence.
  • Execution clauses for individuals and corporations tailored for use in deeds, agreements, and contracts.

Also included are precedent letters for standard lease transactions such as:

  • Covering letters to lessee’s solicitor submitting a lease, deed of surrender, deed of assignment, or deed of variation. These precedent letters include execution instructions and a checklist of items to be returned to a lessor before a tenant is allowed to take possession of the premises.
  • Letter to a lessor client enclosing a lease with instructions on how to sign.
  • Letter to titles office enclosing a lease for registration.

The full commentary in the Leases QLD publication covers key practical issues and considerations for landlords and tenants. These include renewals, subleases, interruptions, and outgoings. The specific legislative requirements under the Retail Shop Leases Act are also addressed extensively.

Strata schemes – NSW

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Amendments to the Strata Schemes Management Act 2015 have commenced. They make permanent the previous COVID-related changes which permit procedural and service requirements to be met electronically.

Section 263 as amended allows owners corporations and strata managers to serve documents on owners and occupiers in strata schemes via electronic transmission.

The seal of an owners corporation can be kept and affixed electronically. The regulations can prescribe the requirements for storing the seal in electronic form, affixing the seal, and record keeping.

Owners corporations and strata committees are able to meet and vote in ways other than by physical attendance. The amendments enable the regulations to govern how voting is conducted, voting procedures and reasonable steps taken to allow participation and voting at meetings.

The amending Act provides for these arrangements to be reviewed after 18 months to assess whether the amendments assist strata schemes to operate effectively and efficiently.

The By Lawyers 1001 Conveyancing Answers publication been amended to reflect these changes, with updated links to the new legislative sections.

Retail leases – NSW

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Certain COVID-19 related arrangements for retail leases have been made permanent.

The COVID-19 and Other Legislation Amendment (Regulatory Reforms) Act 2022 No 5 preserves temporary protections for certain lessees impacted by COVID-19. This is achieved by inserting a savings provision, s 88(1A), into the Retail Leases Act 1994. This has the effect of retaining the relevant provisions of the Retail and Other Commercial Leases (COVID-19) Regulation 2022 even though it is to be otherwise automatically repealed on 14 July 2022.

The COVID-19 protections in question include:

  • Landlords cannot act against an impacted lessee failing to pay rent, failing to pay outgoings, or not being open for business during the hours required under the lease;
  • Rents cannot be increased, except for parts of rents that are calculated based on turnover;
  • Any breaches of a lease which are caused by the tenants’ compliance with Commonwealth or State COVID-19 laws are excused;
  • An obligation on both parties to retail leases to renegotiate in good faith the rent payable under the lease, based on the economic impacts of COVID-19.

The protections reflect those of the National Code of Conduct’s leasing principles. Impacted lessees are generally those who have received government assistance during COVID-19.

The amending Act also creates a new s 89, generally empowering creation of savings or transitional regulations on leases in response to COVID-19.

The commentary in the By Lawyers Leases guide and the relevant section of the 1001 Conveyancing Answers (NSW) publication has been amended to reflect these arrangements, including links to these new sections.

Retirement village meetings – NSW

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New arrangements for retirement village meetings and voting procedures have been legislated as part of the ongoing process of COVID-19 provisions being made permanent in various areas of law.

The Retirement Villages Act 1999 has been amended to allow operators to hold meetings of residents and annual management meetings using electronic means.

The amendments also expand the existing voting procedures under the Act to allow for ballot voting by residents to be conducted by electronic means in addition to voting in person.

For all retirement village meetings and voting ballots the operator or the convener of the meeting is required to take reasonable steps to ensure each and every resident is able to participate and vote at the meeting using electronic means.

The commentary in the By Lawyers Retirement Villages (NSW) publication has been updated accordingly. It summarises the meeting and voting procedures and contains links to the new legislative provisions.

The By Lawyers Retirement Villages guide is part of the NSW Conveyancing publication. The matter plan contains many helpful precedents, including the standard retirement village contract, general inquiry document, disclosure statement, lease agreement, and the Model Rules. The full commentary assists practitioners to understand, and to advise their clients about, the standard contract, the mandatory documents, and the legislative requirements.

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