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]]>If the property is sold with a Fixed Term Lease, it should be noted as a Special Condition that the land is sold subject to the existing Lease and that the Buyer acknowledges that vacant possession will not be granted at settlement.
When a Fixed Term Lease expires, and another Lease agreement is not entered into, the Lease reverts to a Periodic Lease Agreement.
In the case of a Periodic Lease, the Seller must give the tenant a notice of termination with a period usually of not less than (30) days before the date that the tenant must vacate the property. On the other hand, the Tenant may give notice of termination of the agreement without specifying any ground for such notice. The period of notice may vary from state to state, but is usually not less than 21 days before the termination date.
It is important to note the Tenants right’s when it comes to arranging “Home Opens” and viewings of the property. The Tenant must be given reasonable notice of the upcoming viewings which need to be arranged for a reasonable time, which is usually considered to be between 8.00am and 6.00pm on a weekday, or between 9.00am and 5.00pm on a Saturday. The property can be accessed at other times, provided it is agreed between the Tenant and the Seller.
It is important that Sellers are aware of their obligations and responsibilities to the Tenant when selling their property. If you have any queries, your Selling Agent or Managing Agent can assist so you can be prepared well before the sale of your property.
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]]>Inspection Reports
The savvy investor will ensure the Contract for Sale is conditional upon the necessary inspections being carried out prior to settlement to unearth any hidden issues with a property. Commonly requested reports include Termite Inspections and Building Inspections. These reports can disclose issues that may not have been visible when you viewed the property. Ask your Real Estate Agent to include these Reports as conditions of the Contract. It may be important to you that your Inspection reports comply with the Australian Standard. If so, confirm this before you authorise the inspection.
Building insurance
Most Lending Institutes will require you to obtain Building Insurance as a condition of your loan. Your Lender will most probably want to remain sufficiently secured, and know that any damage that may occur from those unexpected tragedies, such as fire or flooding can be repaired and the property returned to its’ original state and value. A prudent property owner would ensure their property is insured to protect their valuable asset.
If you purchase a Strata Titled Property, the Strata Company will obtain a Strata Insurance Policy which will include Building Insurance along with other cover as required under the relevant Act. The costs of this policy will be included in the Administrative Fund that is paid by you by regular periodic contributions.
Lenders Mortgage insurance (LMI)
In instances where you have less that the required deposit which is usually where you wish to borrow in excess of 80% of the value of the property, your Lender will provide finance conditional upon you obtaining Lenders Mortgage Insurance. This insurance protects the Lender should you default on your loan.
Loan application fee
When you take out a home loan, you will need to pay an Application Fee, sometimes also called an Establishment Fee. The Application Fee is charged by your Lender and usually covers preparing the loan application and supporting documents, and completing a property valuation. Costs do vary, and usually range between $600.00 and $1,000.00 depending on the product required
Stamp Duty
This is a state government tax placed on the transfer of property. The Duty payable is based on the dutiable value of the property and is worn by the Buyer. It is one of the largest expenses when purchasing a property. See our stamp duty blog here
Settlement fees
These fees are the costs for a Settlement Agent or Solicitor to complete the processes required to effect the transfer of ownership of the property from the Seller to you. With respect to Settlement Agents, they are permitted to charge for their services to a scale of fees, recover statutory costs such as charges relating to title searches and recover disbursement costs when they are incurred in processing the settlement. Conveyancing is a complex and time consuming business.
Choose your Settlement Agent as you would choose your Accountant, Doctor, Banker, Surgeon or any other professional that you require to look after your individual needs.
Registration Fee on Transfer & Mortgage
All documents that are registered at Landgate (Office of Titles) to effect the change of name incur a Registration Fee. The registration fees on the Transfer of Land document are dependent upon the consideration, whereas the fee payable on the majority of other instruments, including a Discharge of Mortgage and Mortgage documents is $160.00 in Western Australia.
Investing in real estate is an exciting way to diversify your investment portfolio. However, before entering into any agreements, it pays to do the research and know all the costs of buying property.
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]]>A Settlement Agent is a trained and qualified professional who holds a licence under the Settlement Agents Act 1981 and is engaged to facilitate the transfer of legal ownership. This process is known as conveyancing.
In order to carry on business as a Settlement Agent in Western Australia there is a requirement to be licensed and hold a current triennial certificate granted by Consumer Protection. The licensing system administered ensures only suitably qualified people are allowed to operate in the settlement industry.
To be granted a licence, there is a requirement to have met certain qualifications, experience, sufficient material and financial resources and be a person of good character and repute. The licensing framework also includes holding professional indemnity insurance and participate in continuing (annual) Compulsory Professional Development Program.
The CPD program is designed to increase the knowledge, skills and professionalism within the settlement industry and ensures that Settlement Agents are operating in line with the most up to date information and practices. The aim of the program is to increase Consumer Protection and promote consumer confidence in the settlement industry.
You have a choice in the delivery of conveyancing services and there are benefits to be reaped by choosing a specialist.
We welcome you to contact us for further discussion regarding your needs.
Originally published by Kylie Dillon, Vice President of the AICWA
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]]>The information provided here is based on Western Australian legislation.
Stamp Duty is a tax placed on legal documents usually in the transfer of assets or property.
This is a broad overview that has been written to provide a prospective Buyer with some understanding of Stamp Duty as it applies to the transfer of dutiable property.
One of the largest, and sometimes unexpected, costs in purchasing a property is Stamp Duty. In Western Australia it is referred to as Transfer Duty.
The legislation of each State dictates the reductions and concessions in Duty that may apply to the Buyer.
How much Duty do I have to pay?
When dealing with a Contract for Sale for land in Western Australia, the most common rates of Duty are;
General Rate
This rate of Duty applies to most dutiable transactions that the Residential Rate of Duty cannot be applied; e.g. Commercial transactions, industrial and commercial vacant land and residential vacant land where no building contract has been entered into for the construction of a residence on the property.
It should be noted that when residential vacant land is purchased and initially assessed at the General Rate, and building of a residence commences within (5) years of the Contract for Sale, the Duty can be reassessed. It should be noted that the Application for reassessment must be made within 5 years of the purchase, or within 1 year of the date that the building starts, whichever is the later.
Dutiable Value
Residential Rate
This rate of Duty applies to places of residence. It is irrelevant whether the property will be occupied as a principal place of residence or is an investment property.
If you are purchasing vacant land and have entered into a Building Contract for the construction of a dwelling on the land, the Residential Rate of Duty can be applied.
Dutiable Value
First Home Owner Rate
Subject to eligibility, the First Home Owners Rate of Transfer Duty applies if the value of the property is below certain thresholds.
There is a significant reduction in the Duty payable.
To be used as a guide only, below is an indication of the First Home Owner Rate of Duty as at the date specified;
If the property includes a home, as at 3 July 2014
Dutiable Value | Rate of Duty |
$0 – $430,000 | Nil |
$430,001 – $530,000 | $19.19 per $100 or part of $100 above $430,000 |
For vacant land
Dutiable Value | Rate of Duty |
$0 – $300,000 | Nil |
$300,001 – $400,000 | $13.01 per $100 or part of $100 above $300,000 |
When purchasing Vacant Land, Transfer Duty will be charged at the General Rate. When the First Home Owners Grant is issued and a building is completed and ready for occupation, you may make application for a refund of duty. All applications must be made within 12 months of the completion date, or within 3 months of the date the Grant is issued, whichever is the later.
When do I have to pay Transfer Duty on my purchase?
As taken from the Landgate Land Titles Registration Practice Manual;
“1.6.1 General
On July 1 2008 the Duties Act 2008 came into effect replacing the Stamp Act 1921 and provides every person whose duty it is to receive or register any instrument shall ensure that any instrument liable for duty is duly stamped. It is therefore necessary that any document liable for duty must be submitted to the Office of State Revenue (Stamp Duties Division) for assessment of the duty and stamping before being presented for registration. “
Therefore, Transfer Duty must be paid prior to settlement being completed.
In most circumstances payment of Transfer Duty may be made in (2) Ways.
Firstly, Duty can be paid by presenting the Contract for Sale, Transfer of Land document and cheque for the due Duty at the Office of State Revenue prior to settlement, at which time the documents will be duly endorsed. Your Settlement Agent or Solicitor will request the payment of Duty from you prior to the Settlement Date.
Secondly, the transaction can be completed using “Revenue On-Line” which is an electronic window to the services offered by the Office of State Revenue.
Your Settlement Agent or Solicitor must be registered to utilise this service. In effect, the registered person becomes at Tax Agent for the collection and payment of Duty on behalf of the Office of State Revenue.
Once registered, it enables your Settlement Agent or Solicitor to attend to the in-house processing of the Duty on the Contract for Sale.
Put simply, your Settlement Agent is able to assess, endorse and pay monthly returns for Duty online enabling them to collect the due duty at settlement and provide a Duty Certificate which is registered at Landgate with the Transfer of Land document.
Not all dutiable transactions can be endorsed through Revenue Online, however, the majority of them can be. For a breakdown of those transactions which can be assessed using Revenue Online, please refer to the link below;
http://www.finance.wa.gov.au/cms/content.aspx?id=883
Office of State Revenue Lodgement and Payment of Duty requirements
While we all expect to pay Transfer Duty close to, or on settlement, the Office of State Revenue has imposed obligations for the latest date for lodgement and payment of Duty on a dutiable transaction.
Lodgement of Documents for assessment of Duty
All dutiable transactions including a Contract for Sale must be lodged for an assessment of Duty within (2) months of Contract Date. Failure to attend to the lodgement within this time will result in the Office of State Revenue imposing a late lodgement penalty.
Payment of Duty
If settlement has not been completed beforehand, the due date for payment of Duty depends on the type of transaction that has been lodged for assessment.
For further information, you may wish to visit the following link;
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]]>How to prepare your home for sale is another topic altogether, but for now here is a step by step guide to assist you with reaching a successful sale of your property.
It is important to choose an Agent with a wealth of knowledge and experience selling in your area. This is a significant business decision. Make sure you are comfortable with the Agent and feel that you can maintain a strong working relationship with this person. Chances are that you will be working closely together over the coming weeks.
Most Agents are happy to visit you at a suitable time to discuss marketing and selling your home. After the initial meeting, you may receive a Market Appraisal for the house giving you an indication of the expected sale price. Included in the Appraisal may be evidence from real estate data sources of recent sales in your area, the demographic of the region and details of services and schools nearby which make your location a favourable area.
With the information provided to you, you now have a realistic expectation of what you can sell your property for.
Now that you have an idea of what you can expect your property to be marketed for, it comes down to choosing an agent you are comfortable with. Their professionalism, commitment and prioritising your property are important steps towards a successful sale.
You may not be aware that you have the right to select your own settlement agent. At the time of accepting an Offer, your Real Estate Agent should give you the opportunity to nominate a Settlement Agent to represent you.
So, do your research beforehand and select a settlement agent that will act in your best interests throughout the transaction. It’s important that your Settlement Agent is available to discuss all aspects of the settlement with you and offer you guidance with the processes.
Make sure your Settlement Agent knows and settles properties in your area. A Conveyancer that knows your area has a sound knowledge of the region and any legislative changes that may recently have taken effect.
Make the decisions with your agent on how and where to market your property. Take time to weight up the advantages and disadvantages of the different marketing and selling techniques with your Agent. Is this the perfect property to sell by auction? Would it be better to market your property with a specific price range, or market it as a set date sale. Speak to your agent about the benefits of each.
Although your agent is responsible for carrying out your marketing campaign, it is good to know that the marketing strategy to sell your property is a planned and well executed marketing strategy ensuring the best results.
Sometimes, you have fixtures, fittings and chattels that may have sentimental value that you do not wish to be included in the sale and want to take with you when you vacate the property. It is important that you advise your Agent, who can inform the Buyer that these items will not be included in the sale and this can be stated on the Contract.
Another important fact to alert your Agent to is any electrical, gas and plumbing fixtures that are not in working order, and will not be at the time of settlement. Again, your Agent can advise the Buyer of this and state this on the Contract.
Hopefully, after marketing your property for you, your Agent will provide you with an offer to purchase. If more than one offer has been made, your Agent will present these to you together. Your agent can provide you with assistance on whether an offer is fair and should be accepted, but it is your decision to accept, negotiate or reject. It is important to note that you can only negotiate on one Contract at a time when you are provided with multiple Contracts.
You may negotiate the terms of the Contract with a Buyer. Once you are satisfied with the agreed price and any special conditions, you will sign and accept the Buyers offer. The Contract is now accepted and conditional upon the terms and conditions stated such as finance approval, or the sale of the Buyers property.
It is usually between 6 – 8 weeks from acceptance of a Contract to the actual settlement, depending on the complexities of the transaction. During this time you Settlement Agent will keep you updated on the progress of the settlement and guide you through the process.
At settlement, documents and funds will be exchanged between the parties. The documentation will be registered at Landgate and the property transferred into the new owner’s name.
You will be notified by your Real Estate Agent and Settlement Agent that settlement has been completed.
After settlement, the Agents Commission is forwarded to your Real Estate Agent by your Settlement Agent on your behalf.
If you occupy the property as your principal place of residence, you have until 12pm the following date to vacate the property.
Being prepared for the sale of your property can be the difference between a long stressful process and a smooth transaction allowing you to move on to your next home or investment property.
Keep in mind what time of year you are selling your property. Selling in December may see delays to the settlement process over the Christmas and New Year period due to office closures and public holidays. The advantage being that many people have more time to look at properties, ready to move into a new property in the new year.
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]]>When buying a property we are usually prepared with our financial details and a sizeable deposit. You may even have arranged pre-approval through your Lending Institute before you start your search.
Something that you may not be aware are the additional costs associated with your property purchase which many of us are not prepared for.
With any property transaction, there are a number of professionals that you engage with that have of course associated costs.
Transfer Duty
Transfer duty is a general revenue imposed by your State Government that must be paid on dutiable transactions for property. This varies between states and the type of property purchased, and may be reduced by government grants.As a broad example, the Duty payable on a residential property in Western Australia with a consideration of $460,000.00 is $17,765.00. Being eligible for the First Home Owner Grant significantly reduced the rate of duty payable. There is an eligibility criteria that the Applicant must meet to qualify for the Grant.
Lenders Mortgage Insurance
This protects the lender in the unfortunate event that you default on your home loan. This will vary due to the structure of your loan and your deposit. Fees range considerably, so allow 3% of your loan amount. Generally speaking, Your Lending Institute will require you to obtain LMI if you are borrowing greater than 80% of the value of the property.
Settlement costs
Expenses during the settlement of the property, these include adjustment of rates and taxes, enquiry charges to the Local Authority and other government bodies and searches of the Certificate of Title and encumbrances amongst others
Conveyancing Fees
The cost for Conveyancing Services is currently regulated and based on the purchase price.
Mortgage Application fees
This will cover the preparation of the loan and supporting documents, valuations and searches by your financial institute. Fees range up to $2,000.
Building Inspection Report
This is a written account of the property that will give you an indication of any significant defects or problems. Fees range from $300-$900 plus, depending on services.
There are a number of other fees that you may have to cover that can quickly add up. These include utility connections, home and contents (or landlord) insurance and moving services. Some of these can be incorporated into your mortgage, but others will need to be paid in advance.
As a guide, be prepared to put aside 10% of the purchase price to cover the costs involved in buying your property. It is always better to be over prepared than trying to cover the shortfall of property expenses.
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]]>Here is some insight from Fran Andrews, the Principal of Invest Conveyancing;
Conveyancing is the process to effect the transfer of ownership of property from one person to another. The preparation, execution, verification and lodgement of numerous legal documents are important elements of conveyancing.
A good conveyancer will explain clearly the meaning and importance of each process, using plain English (not complicated legal terms) to help you understand exactly what’s involved and what documentation you are signing. Using your instructions, a conveyancer will also assist you to meet your contractual obligations and protect your rights and interests.
In summary, conveyancers offer:
Settlement is the day the representatives of all parties to the transaction meet at a nominated location, usually the offices of the Buyers Mortgagee’s Representative, or Landgate. All documents presented are checked for accuracy and completeness, that they are signed correctly and registrable. The payment of the balance of the purchase price will be made.
FAQ’s for Buyers
FAQ’s for Sellers
If you want to be sure that your interests are looked after, appoint your own conveyancer, whether you’re buying or selling. The earlier you nominate your representative, the sooner they can attend to preliminary searches, discuss your obligations with respect to any special conditions of the Contract and assess any potential risk to you.
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