Selling Property
Any transaction with property must be handled carefully and competently - it is often the largest asset an individual will ever have! Choosing the right firm to handle your conveyancing can make all the difference.
Our principal focus when acting on your property sale is to:
- ensure that you properly represent to a buyer what it is that you are selling;
- properly inform you as to the impact of taxes and duties, where they apply;
- achieve a quick exchange of contracts so as to "clinch the deal";
- keep you informed of the progress of your sale;
- liaise with your lender to pay out any mortgage;
- ensure you receive the money that you expect from the deal; and
- complete the sale efficiently and in a timely manner.
When do I have to prepare a contract?
Once you have decided to sell your property you should contact us so we can prepare a contract for the sale of your property.
Your real estate agent will be unable to market your residential property without holding a contract of sale. Although the rule generally only applies to residential property, the trend is that a draft contract be prepared for retail, commercial and industrial property sales too.
What is a cooling-off period?
Every purchaser, under a contract for sale of land relating to residential property may end the contract if notice is given to the seller or their solicitor within 5 business days of the date of the contract.
If the buyer does elect to withdraw from the contract within the 5-day period, they forfeit 0.25% of the contract price to the seller as "compensation".
This "cooling off period" can be avoided by:
- requiring a certificate from the purchaser in a required form before the contract is exchanged; or
- selling by auction, provided the contract is dated the same day as the auction.
Do I have to pay land tax?
Land tax is charged on land owned by you as at midnight on 31 December each year but, in most instances, there is no land tax payable on your principal place of residence.
Land tax is payable on your principal place if the land value exceeds the premium threshold value. It is also payable on any property you own, which is not your principal place of residence if the land value of the property (or properties in aggregate) exceed the general threshold value. Current details of the premium threshold value and the general threshold value are available here.
What does "land value" mean for land tax purposes?
In the case of a house or vacant land, 'land value' is the value of the land, ignoring the value of the house. In the case of a unit, 'land value' is the value of the land upon which the building has been erected. That value is then apportioned among the units in the strata scheme using the unit entitlement.
In all cases, the land value is not the purchase price of the property.
I've renovated my property since I bought it. Do I have to disclose anything if I want to sell it?
If you have undertaken any building works to the property over the value of $20,000.00 in the past 6 years, you are required to attach to the contract, a certificate of insurance covering this work.
Normally, this insurance will have been effected by the builder or, if you undertook the work as an owner/builder, a certificate of insurance must be arranged by you.
If a certificate of insurance is not attached to the contract when it should have been, the buyer will have a right to rescind (end) the contract at any time before completion.
Similarly, any breaches of the Local Government Act in respect of any building or structure on your property must also be disclosed to the buyer.
Examples of breaches of the Local Government Act and Regulations are unauthorised building works such as:
- pergolas;
- verandas;
- outbuildings; or
- extensions which have not received formal council approval;
- stormwater downpipes not connected to the drainage system;
- an unauthorised "granny flat"; or
- a kitchenette.
If a breach is not disclosed, the buyer may claim compensation from you to fix up the breach.
Also, a buyer may rescind (or end) a contract if they discover that there are any matters in relation to a building or structure that could justify the making of any upgrading or demolition order by the local council.
Must I get a new survey to put in the contract of sale?
Preferably, an up to date survey should be attached to the contract so that any encroachments are disclosed to the buyer and they are then stopped from making a claim for compensation because of any encroachment. However, it is not currently a requirement to attach a survey to the contract.
If you are selling your property by way of auction, we highly recommend that an accurate, up-to-date survey be available and included in the contract.
Most buyers, and more particularly their lawyer or conveyancer, are wary of bidding at an auction unless there is a current survey. The reason for this is that if there is no survey, the buyer cannot be sure that what they are bidding for properly sits within the boundaries of the land. The concern with this is that if they are the successful bidder, they will be bound to go ahead with the contract.
Does my property sale attract GST?
In certain situations, GST may be payable in relation to the sale of your property.
For instance, if you are in the business of buying, substantially renovating (or demolishing and rebuilding) and then selling property, or if the property is used for non-residential purposes and you are registered for GST, then you may need to allow for GST in the sale price. Our property lawyers will advise you on this and whether it applies.
Will I have to pay capital gains tax on the sale?
Property purchased after 19 September 1985 will, in most circumstances, attract capital gains tax upon the sale, unless the property is your principal place of residence.
The tax is levied on the gain in the value of the property after deduction of the cost base.
The 'cost base' is the actual cost of a capital nature incurred by you; that is, the price which you paid, the stamp duty paid and other disbursements (e.g. enquiries of public authorities, title search and so on) paid on the purchase and the legal costs. Also, if you have made any alteration or addition to the property of a capital nature, then the cost of those alterations or additions is included in the cost base of the property.
How is my loan paid out?
If you have a mortgage on the title to your property, once the contracts for your sale exchange, we will write to your lender requesting that they prepare the discharge of the mortgage which may be registered on the title to your property.
We also ask that you contact your lender directly to confirm whether they require you to sign a formal discharge authority.
In the weeks prior to completion we will receive your lender's advice as to the balance outstanding on the loan. We will then arrange for this amount to be drawn on settlement for your lender in payment of the final amount due to them to pay out the loan in full.