ByLawyers News and Updates

Duty concession – TAS

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A duty concession of 50% is now available to eligible buyers of newly built medium-density housing in Tasmania.

The new measure is intended to encourage the construction of new apartments and units.

The concession applies to certain apartments and off-the-plan or under-construction units, with a dutiable value of up to $750,000.

The 50% duty concession is available for agreements for sale entered into between 1 July 2024 and 30 June 2026 inclusive. The transfer must occur before 30 June 2031.

The duty concession is available to all Tasmanians who meet the eligibility criteria, not just first-home buyers. To be eligible, transferees must be natural persons, not a company or trust, and be over 18 years of age. At least one transferee must be an Australian citizen or a permanent resident at the date of the dutiable transaction. If a first home buyer grant has been made for the same transaction, the 50% duty concession is not available.

An eligible dwelling comprises a lot in a strata scheme or a dwelling conjoined with one or more other dwellings and must not have had an occupancy permit granted when the agreement for sale was executed.

For more details on eligibility criteria and how to apply, see the Property Transfer Duty page on the State Revenue Office of Tasmania website.

Eligible transferees who have already paid full transfer duty on an eligible property can apply for a 50% refund.

The By Lawyers Conveyancing (TAS) publication has been updated accordingly, including the Purchase of Real Property commentary and the Retainer Instructions – Purchase of Real Property precedent.

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.

Inspection – Right to inspect

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By Russell Cocks

First published in the Law Institute Journal

Contracts for the sale of land are known as executory contracts, as there is a time delay between entering into the contract and final performance. Consequently, the condition of the property may change between contract and settlement and the contract will usually give the purchaser the right to inspect the property as settlement approaches.

The right to inspect the property prior to settlement has been General Condition 22 of the LIV. contract of sale since 2008 but is General Condition 29 of the 2019 version of that contract and provides:

The purchaser and/or another person authorised by the purchaser may inspect the property at any reasonable time during the 7 days preceding and including the settlement day.

This General Condition was the subject of close examination in the case of Mediratta v Clark [2019] VSC 685. The purchaser failed to settle and the vendor rescinded. The purchaser claimed that the vendor was not entitled to rescind as the vendor:

  • was in breach of GC 22 by refusing to permit the purchaser and/or a nominee of the purchaser to inspect the property; and
  • was in breach of an implied term by refusing to permit a valuer authorised by the purchaser to inspect the property.

The contract provided for an extended settlement period of 14 months but the purchaser, who had paid a 5% deposit, had not accepted the vendor’s invitation to complete the Duties Online form, had not submitted a Transfer (paper settlement), nor a statement of adjustments. Days from settlement the purchaser requested an extension, which was denied. In those circumstances, the vendor refused to provide the agent with keys to allow the purchaser to inspect the property.

On the day that settlement was due the agent requested keys to allow a valuer to inspect the property. The vendor refused and issued a Default & Rescission Notice alleging failure to deliver the Transfer at least 10 days before settlement (GC 6) and failure to settle (GC 28). The vendor allowed the valuer to inspect within the 14-day default period but settlement did not take place prior to the expiration of the default period and the vendor regarded the contract as terminated. The purchaser requested an inspection after the expiration of the default period, but the vendor refused on the basis that the contract had been terminated and refused subsequent attempts to arrange a settlement.

The court considered the meaning of GC 22. The purchaser argued that the condition was wide enough to allow the purchaser to nominate a valuer to inspect the property for the purpose of obtaining finance. The vendor argued that the purpose of the condition was to allow the purchaser to establish whether the property was in ‘the state commensurate with the Vendor’s contractual obligation’. Derham AsJ traced the history of GC 22 and concluded that its purpose GC 22 is to allow a purchaser who is ready, willing and able to complete the contract to inspect the property for the purpose of being satisfied as to the condition of the property. It is not available to a purchaser who is not in a position to settle on the settlement day, nor for the purpose of valuation, particularly when the contract is not subject to finance.

The purchaser’s alternative argument was that, because it was a fundamental obligation of the purchaser to pay the balance due at settlement, the contract was subject to an implied condition that the vendor would co-operate with the purchaser to allow inspection of the property by a valuer. So much had been held in earlier cases but, as Derham AsJ pointed out, those contracts were subject to finance. Whilst acknowledging that a court might imply a general duty on the vendor to co-operate with the purchaser for the purpose of allowing the purchaser to satisfy the purchaser’s obligations pursuant to the contract, such an implied condition would not be ‘open-ended’. Citing a quote from Simcevski v Dixon [2017] VSC 197 His Honour confirmed that there ‘cannot be a duty to co-operate in bringing about something which a contract does not require to happen’. This contract required the purchaser to settle, it did not require the purchaser to obtain finance. Even if a duty to co-operate by making the property available for valuation were to be implied, it ‘would be limited in time and would not enable inspection at the 12th Hour’.

The purchaser’s final argument was that the vendor’s conduct was unconscientious. This was dismissed on the basis that the vendor was entitled to refuse inspection as the purchaser was in breach of GC 6 and had failed to sign the Duties Online form.

Tip Box

•GC 22 (now 29) entitles the purchaser to a pre-settlement inspection.

•If the contract is subject to finance, the vendor must co operate.

•If not subject to finance, the vendor’s duty is limited.

Mine subsidence certificates – NSW

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Mine subsidence certificates have been abolished in NSW.

From 30 September 2019, certificates of compliance for properties under Section 15 of the former Mine Subsidence Compensation Act 1961 are no longer available from Subsidence Advisory NSW.

Subsidence Advisory NSW’s records indicate the vast majority of developments in mine subsidence districts are approved structures. In the last ten years, only four claims for homes have been refused due to the structure being non-compliant. Due to the extremely low likelihood of a claim being made for a non-compliant property, the significant cost increase to adequately undertake compliance checks prior to issuing certificates was deemed unwarranted.

As a result, the certificates were not carried over to the Coal Mine Subsidence Compensation Act 2017. Property owners are afforded the following alternative protections under the Act:

  • Subsidence Advisory NSW has discretion to pay a claim for subsidence damage to a contravening development in circumstances where the failure to obtain the relevant approvals was not the fault of the property owner or where exceptional circumstances exist.
  • Under Section 23(a) of the Act, buyers have the right to withdraw from a contract of sale for a structure that does not comply with Subsidence Advisory NSW’s development requirements.

Prospective purchasers who wish to ascertain whether a structure is eligible for compensation can do so by obtaining confirmation of development approval through the vendor or council.

Precedent update – Conveyancing – NSW

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A precedent update has followed recent user feedback. Significant amendments have been made to the ‘Letter to purchaser after exchange’ in the Purchase of Real Property Guide.

This useful precedent letter now includes headings and reflects the process of payment of transfer duty where settlement is to occur electronically.

The areas covered, now organised under the new headings are as follows:

  • GST
  • Investigation of title
  • Transfer duty
  • Insurance
  • Pre-settlement

The ‘Letter to purchaser after exchange when no initial letter done’ has also been amended to reflect these changes.

At By Lawyers we love to receive feedback from our users and they are often the reason that we conduct a precedent update.

Transition to E-conveyancing – All states

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The By Lawyers commentary ‘A brief explanation to the transition to E-conveyancing‘ has been updated.

This very practical and topical commentary is available in all By Lawyers Conveyancing & Property Guides, including Sale, Purchase, Mortgages and Leases.  It helps all practitioners to get up to speed on the ever-accelerating transition to E-conveyancing.

The recent updates cover:

Important new industry mandated time frames

NSW – From 1 July 2019, mainstream property dealings including transfers, mortgages and discharges of mortgage, caveats, withdrawals of caveat and transmission applications must be lodged electronically.

VIC – Land Use Victoria has mandated that complex land transfer transactions must be lodged and managed online from 1 August 2019, bringing almost all transactions online. Duties Online enhancements are scheduled to take effect from 17 June 2019.

Details of the new Electronic Lodgement Network Operator, Sympli

The second ELNO, Sympli is coming soon to join PEXA in the e-settlement space. Sympli promises an intuitive and user-friendly platform.

Information regarding the new settlement agent network, SettleIT.

SettleIT, an InfoTrack initiative, is a shared network of specialist settlement agents that handle e-settlement processing on behalf of property practitioners. With one click, a SettleIT agent
can be booked to provide a personalised, fixed-price service to take a conveyancing matter through to settlement.

Keep up to date with By Lawyers

By Lawyers Conveyancing guides provide all the information required to conduct conveyancing, including electronic property transactions, confidently and efficiently.

Sunset clause – Vendor ending a contract – Purchaser’s consent or court order required

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By Russell Cocks, Solicitor

First published in the Law Institute Journal

Retrospective amendments to the Sale of Land Act will substantially limit a vendor’s ability to end a residential off-the-plan contract.

The Sale of Land Amendment Bill 2018 was expected to pass Parliament in late 2018 but was delayed by the Victorian State election. It is expected to be passed early in 2019 and will require vendors who wish to end residential off-the-plan contracts pursuant to sunset clauses to either obtain the purchasers consent, or an order from the Supreme Court.

The changes do not affect the purchaser’s current statutory right to end the contract if the plan of subdivision is not approved by the sunset date. This purchaser right is created by s.9AF (2) Sale of Land Act and allows the purchaser to end what is currently known as a “prescribed contract” (but which will be known as a residential off-the-plan contract when the amending Act is passed) if the plan of subdivision is not approved within 18 months of the contract date. The contract may specify another period, but if no other period is specified, the default period is 18 months.

It is common for vendors to also include a contractual right for the vendor to terminate the contract if approval is not obtained by the sunset date. There has been a perception that vendors were seeking to use this contractual right to unfairly end contracts in a rising market and these changes are designed to prevent such outcomes.

Rescission in accordance with the Act

By s.12(1) of the Amendment Act, new s.10A Sale of Land Act provides that if a sunset clause in a contract allows the vendor to rescind the contract, then rescission must be in accordance with the Act and s.10C overcomes any inconsistent contractual provision. Section 2(1) of the Amendment Act provides that s.12(1) is taken to have come into effect on 23 August 2018.

Purchaser’s consent

Section 12(1) also introduces s.10B Sale of Land Act which prohibits a vendor from relying on a sunset clause unless the vendor obtains the purchaser’s written consent to any such rescission. By virtue of new s.54(1), s.10B applies to all residential off-the-plan contracts entered into and in force before commencement of s.12(1) (23 August 2018) unless proceedings concerning the sunset clause had been commenced before that date.

A vendor seeking to obtain the purchaser’s consent must give the purchaser 28 days notice setting out the reason that the vendor proposes to rescind, the reason for the delay in registration of the plan and advice that the purchaser is not obliged to consent to the proposed rescission.

Court order

By s.12(2) of the Amending Act, new s.10D Sale of Land Act provides that the vendor may apply to the Supreme Court for an order permitting the vendor to rescind a contract pursuant to a sunset clause. By s.2(2) of the Amending Act, s.12(2) comes into operation on the day after the day on which the Amending Act receives Royal Assent. By virtue of new s.54(3), s.10D applies to all residential off-the-plan contracts entered into and in force on the day after the day that the Act receives Royal Assent, unless proceedings concerning the sunset clause had been commenced before that date.

The Court must consider a wide variety of matters relating to the contract and the property, including increase in value and, if an Order is made, may include compensation to the purchaser. The vendor is liable for the purchaser’s costs.

Notice

New s.10E requires residential off-the-plan contracts that include a sunset clause to include a Notice setting out that the:

    • vendor may give a notice proposing to rescind the contract;
    • purchaser may consent to rescission, but is not obliged to consent;
    • vendor may apply to the Court for an order permitting rescission;
    • Court may make such an order.

This requirement applies to all contracts entered into after the day that the Act receives Royal Assent.

Tip Box

•Sunset clauses must be exercised in accordance with the Act.

•Purchaser’s consent or a court order is required.

•Residential off-the-plan contracts need additional disclosure.

Foreign Buyers Duty – Western Australia

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From 1 January 2019 Foreign Buyers Duty applies, being additional duty imposed on certain transactions and acquisitions involving foreign persons or entities acquiring residential property in Western Australia. An additional duty of 7% is imposed on direct acquisitions (foreign transfer duty) and indirect acquisitions (foreign landholder duty) of residential property by foreign persons.

Foreign Buyers Duty will not apply to purchases of commercial, industrial or mixed used properties used primarily for commercial purposes.

An exemption from foreign transfer duty and foreign landholder duty for residential developments applies where certain conditions are met.

A Foreign Transfer Duty Declaration form is used to declare whether each purchaser or transferee is a foreign person. This form must be completed by each person acquiring an interest in any land in Western Australia.

The By Lawyers Purchase of Real Property (WA) guide has been updated as follows:

  • Comprehensive commentary has been added on Foreign Buyers Duty.
  • New forms added to the matter plan include Foreign Transfer Duty Declaration, Foreign Landholder Duty – Developer Exemptions and Foreign Transfer Duty – Developer Exemptions.
  • The To Do List – Purchase of Real Property now includes an item on the obligation to complete a foreign transfer duty declaration form.

By Lawyers keep on top of changes in the law so you can focus on getting the job done.

Cladding rectification agreements – Sale and Purchase – VIC

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Amendments to the Local Government Act 1989 mean that solicitors acting for buyers and sellers of real estate now need to take into account any charges recorded against the property relating to funding for cladding rectification.

Concern about defective cladding used in the construction of high-rise residential buildings has resulted in the government adopting a legislative solution intended to provide some solace to unit owners who are faced with rectification costs, but it also has an impact on third-party purchasers of such properties.

Responsibility for administration of the solution has been allocated to municipal Councils, with a new Part 8B inserted into the Local Government Act 1989, which came into operation on 30 October 2018. This authorises Councils to enter into a ‘cladding rectification agreement’ with the owner of rateable land, or an Owners Corporation, and a lending body – presumably a conventional financier. Council may also be the lending body, but it is difficult to imagine, in the short term at least, that Councils will assume this role. Thus, the standard agreement will be tripartite, between the owner or Owners Corporation, the Council and a lender.

These agreements provide that the lender will advance the funds to pay the rectification works and Council will levy a charge on the land to recover the loan advance, interest and fees associated with the levy by instalments over a period of not less than 10 years.

Adjustment on purchase

In relation to the effect on departing and incoming owners, s 185L treats the cladding rectification levy as a ‘service charge’. Section 162 authorises the imposition of a service charge and s 185L (6) requires a cladding rectification charge to be paid by instalments. A vendor is obliged to disclose statutory charges pursuant to s 32A (b) of the Sale of Land Act 1962 and also charges ‘for which the purchaser will become liable in consequence of the sale’ pursuant to s 32A (c). Disclosure of current charges and any arrears may be achieved by annexing a rate notice, a land information certificate or giving an estimate, but the vendor is also obliged to disclose future liabilities due under the cladding rectification charge and information provided by Council will be crucial in this regard.

Any arrears under the levy will be the vendor’s responsibility, the current instalment will be adjusted between the parties at settlement and the outstanding levy will become the responsibility of the purchaser as a charge on the land: s 156 (6).

Section 175 allows a purchaser to continue to pay charges by instalments. A purchaser will therefore need to adjust the price to take account of the outstanding cladding rectification levy that the purchaser will become liable for and full disclosure in this regard is essential so as to allow the purchaser to set its price.

The Sale and Purchase commentary within the By Lawyers Conveyancing (VIC) Guide has been updated accordingly.

Author review – Conveyancing – Sale and Purchase – SA

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The By Lawyers Conveyancing SA Guide has been reviewed and updated to ensure that the commentaries and precedents are in line with current law and conveyancing practice, including electronic conveyancing.

The extensive review was performed by our author Jess Caire. As with all our authors, Jess takes a practical approach, drawing on her considerable experience to cover all aspects of procedure, with a focus on practical tips that will help solicitors and conveyancers confidently run a sale or purchase matter to completion. The sale and purchase matter plans cater for both ‘sale by agent’ and ‘private sale’ engagements.

We invite you to explore this updated publication and to consider the wealth of assistance the guide offers for solicitors and conveyancers acting in the sale and purchase of residential property in South Australia.

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