by By Lawyers
From 1 January 2018 priority notices will replace settlement notices.
Settlement notices will not be accepted at the titles Registry after 4.30 pm on 22 December 2017. If lodgement is anticipated after this date prepare a priority notice. Priority notices may be signed prior to 1 January 2018.
The publication has been updated to include precedents and commentary on priority notices.
by By Lawyers
Clearance certificates will not be issued during the ATO’s Christmas closure – 22/12/17 to 2/1/18.
by By Lawyers
The ability of a person (the donor) to delegate power to another (the attorney) has been recognised by the law for centuries. A common law form of Power of Attorney would be in the form of a deed and would recite the appointment by the donor of the attorney and confer power on the attorney. Traditionally such documents would run for many pages and would enumerate extensive powers that the attorney was authorised to exercise on behalf of the donor. Alternatively, the document could be limited in scope, authorising the attorney to exercise specific powers for a specific purpose.
The significance of the power conferred on the attorney was recognised as a reason for government supervision and a system of registration of powers was established. But the cost of this supervisory role was deemed excessive and the registration of powers ceased in the late 20th. century, although a limited registration process is available at the Land Titles Office for ‘heavy users’. The wheel turns in such matters and there are presently calls for law reform to again invoke a registration process.
The form of a power of attorney was governed by the Instruments Act 1958 until the Powers of Attorney Act 2014. This Act sets out in detail the requirements relating to the creation, use and revocation of powers of attorney and recognises various types of powers, the most important of which is the Enduring Power of Attorney. This is so as the common law took the view that the attorney loses power if the donor loses legal capacity and, given the importance of powers for the management of the affairs of the elderly who are susceptible to losing capacity, such a restriction undermines the effectiveness of the power. The Act therefore perpetuates the Enduring power beyond loss of capacity of the donor.
Perhaps the most important aspect of a power of attorney is the fiduciary duty owed by the attorney to the donor. This is a common law concept and is not mentioned in the Act, although the Act does have a prohibition on the attorney entering into any transaction that may create a conflict between the interests of the donor and the interests of the attorney (s 64) and specifically prohibits the attorney from using the position to make a profit (s 63). These are the two fundamental elements of the common law fiduciary duty and to that extent the Act confirms that duty.
A recent case that considered a breach of the common law duty is Ash v Ash [2017] VSC 577. The donor appointed his daughter (who was a solicitor) as attorney in 2012. By 2014 the donor had lost capacity and the attorney made a number of transfers of the donor’s assets, including superannuation, that resulted in the donor’s assets being substantially diminished. These transfers were to entities associated with the attorney and the attorney directly benefited from these transactions.
The attorney sought to explain the transactions as flowing from previous instructions given by the donor and as a result of the attorney using her ‘signing authority’ at the donor’s bank but the court dismissed these suggestions as a ‘fiction’ and to accept that argument would be to ‘undermine the protective role inherent in the appointment of an attorney’.
The court did not suggest that an attorney can never enter into a transaction creating conflict between the interests of the donor and the attorney and recognised that ‘fully informed consent’ of the donor would justify an attorney entering into such a ‘conflict’ transaction, however the attorney failed to discharge the onus of proving that such consent had been given by the donor.
The donor was represented by a VCAT appointed administrator who successfully sought judgment against the attorney for all losses suffered as a result of the attorney’s breach of fiduciary duty and also judgment against entities associated with the attorney who had been ‘knowing assistants’ in this breach.
Had these actions taken place after 2015 the attorney may well have also been charged under s 135(3) Power of Attorney Act with committing an offence of using a power of attorney to gain financial advantage for the attorney or another person, with a possible penalty of 5 years imprisonment.
•Powers of Attorney create fiduciary obligations that the attorney must honour
•These obligations include a duty to avoid conflicts of interest
•Criminal penalties may apply to breach of these obligations
•Whilst written for Victoria this article has interest and relevance for practitioners in all states
by By Lawyers
From 1 December 2017 Land and Property Information (LPI) will be renamed Land Registry Services (LRS). Their logo, website domains and email address are changing. Full details available in this announcement from LPI.
by By Lawyers
Vacant residential land tax applies from 1 January 2018 to homes in inner and middle Melbourne that are vacant for more than six months in the preceding calendar year. See the Vacant residential land tax commentary in our sale and purchase guides.
by By Lawyers
The Retirement Villages commentary has been updated to reflect the current cap for legal fees recoverable by the operator from a resident for preparation of a village contract.
by By Lawyers
From 1 December 2017 – Any lodgement case consisting of eligible discharges, transfers, mortgages, caveats and withdrawal of caveats must be lodged electronically. Are you E-Conveyancing ready? See our paper E-Conveyancing – Get Connected for information and implementation timelines
by By Lawyers
Imposition of duty on transfer of land in Victoria is a significant source of revenue for the State government. It is also a significant source of angst for taxpayers and people involved in the real estate industry. Changes to the duty regime are often seen as levers for economic development and as such those changes are usually designed to achieve a politically beneficial outcome for the government.
The issue of housing affordability, particularly for first home buyers, is a hot button political issue and the duty changes are targeted at that demographic. The changes apply to contracts of sale after 1 July 2017, which may mean that the months of May and June will be ‘slow’ in this marketplace, followed by substantial uplift from July onwards.
Traditionally a first home buyer needs a minimum of the 10% deposit. Given that duty on a purchase of $500,000 is in the range of 5% the government impost is half of that hard fought for deposit. Granting an exemption or concession in relation to duty should therefore provide a substantial impetus for sales. The contrary argument is that it will simply bring more people into the market and effectively increase the price of housing by the amount of the benefit. This dispute between supply/demand will no doubt continue to occupy the attention of economists but we lawyers will move on to the practical consequences of the changes.
Full exemption for purchase price up to $600,000.
Reducing concession between $600,000 and $750,000 (no concession at $750,000).
Importantly in the new home market, the ‘dutiable amount’ is calculated after taking into account deductions relating to the cost of construction post-contract.
One segment of the new home market is based on the first home buyer purchasing the land and then entering into a separate building contract for construction. In this case the dutiable value is based on the land contract and will normally come within the full exemption available up to $600,000. However another method has the first home buyer enter into a land and building contract for the total value of the land and construction. This may have a contract price above the $600,000 threshold but the exemption is available if the value of the land as at the date of the contract is below $600,000. Adopting the Fixed Percentage Method of allocating value in such cases will mean that the full exemption will be available so long as an amount equal to 55% of the contract price is below $600.000, allowing for total contract prices of well over $1m.
This takes us into the realms of:
Substantial duty concessions have always been available in Victoria in relation to off the plan sales. The availability of this concession is to be limited after 1 July 2017 to properties to be used by the purchaser as their principal place of residence.
The concession is available where the dutiable value of the property is less than $550,000. Importantly, the calculation of dutiable value allows for deduction from the contract price of an amount that represents the value of construction to be undertaken after the date of the contract and prior to settlement. The Fixed Percentage Method of calculation of post-contract construction cost allocates cost as follows:
If a purchaser signs a contract before any construction commences the dutiable value will be below the $550,000 threshold provided that the contact price is less than:
and duty will be calculated at the concession rate available to purchasers who intend to occupy the property as their principal place of residence.
The concession that was previously available for investment properties and commercial developments will cease as at 30 June 2017 and the concession will only apply to owner-occupied properties.
by By Lawyers
LPI fees increase from 1 July 2017
Retail Leases
Major changes include abolition of the 5 year minimum term, the inability to claim outgoings not disclosed, and the introduction of penalties for failing to comply with key aspects of the legislation.
By Lawyers Contract for the sale of land
by By Lawyers
From 1 July 2017:
Land Tax
From 1 January 2018, vacant residential properties in the inner and middle ring of Melbourne will be subject to a vacant residential land tax of 1 per cent of the property’s capital improved value. A property will be considered vacant if it is unoccupied for six months or more in a calendar year. The six months does not need to be continuous. There are exemptions for many properties including for vacant land.