Selling or buying a home is one of the biggest financial decisions you will make. Disputes in relation to both seller and buyer’s rights under land contracts and the effects of breach of those rights has been a fruitful source of litigation for lawyers in Queensland for many years. Recent changes to legislation, in particular the Property and Motor Dealers Act (PAMD Act) which (along with other legislation) regulates land and house property contracts, mean that all parties, sellers, buyers, real estate agents and lawyers must be even more diligent to ensure that obligations under the relevant legislation and the common law with respect to contract formation and completion are met.
It is for these reasons that both sellers and buyers of property should consult with their solicitor prior to the signing of any documentation for property transactions. Some points which the seller and buyer should consider are listed below. Bear in mind it is not an exhaustive list but is given to illustrate the complexity of what many consider to be a simple or routine transaction.
The Seller
• Engages the real estate agent as agent for the seller and agrees to pay the agent commission. The terms of the appointment are subject to negotiation between the seller and agent and care should be taken to clearly define:
(a) the amount of commission, fees and charges e.g. advertising fees that the agent is to be paid;
(b) the term of the appointment;
(c) the circumstances under which the agent is entitled to commission if the contract does not complete e.g. the contract is terminated by the seller due to default by the buyer;
(d) the circumstances under which the seller can terminate the appointment and not incur a penalty;
(e) whether the agent is to be appointed sole agent for the sale.
- Must disclose to the buyer defects in title.
- Is responsible for Legislative disclosure under PAMDA, Queensland Building Services Authority Act (owner builders), Environmental Protection Act, Land Sales Act (subdivisions), Electrical Safety Regulation, Fire and Rescue Services Act (compliant smoke alarms) and the Body Corporate Community Management Act.
- Must provide a sustainability declaration.
- Ensure that the seller’s statements and warranties made under the contract are true and correct.
- Clearly stipulate what is included in the sale.
- Conduct a title search to ensure that the registered owner is the seller nominated in the contract and that any encumbrances such as easements or leases are disclosed. It may be necessary to make provision in the contract for the registration of prior documents such as a transfer or Request to Record Death or Transmission Application in estate administration.
- Immediately contact the holder of any security or other encumbrance such as mortgages, caveats or warrants of execution to ensure that these are released or removed from the title registration at or before settlement.
The Buyer
- Should shop around for both the property and finance and budget for costs which may include:
– conveyancing (legal) fees;
– loan application fees;
– government stamp duty;
– council rates and transfer fees;
– building inspection costs;
– removalist charges;
– connecting electricity, gas and telephone;
– insurance on the home; and
– adjustments to be paid on completion of the contract.
- Should consider whether the property is to be purchased by individuals, corporations or the trustee of a trust. This is particularly relevant if the property is purchased as an investment and you may need to consult your accountant. If the buyer is changed after the parties are bound by the contract, you may incur double stamp duty or penalties.
- Should consider whether you are eligible for stamp duty concession e.g. vacant land on which a first principal place of residence is to be constructed, first principal place of residence or principal place of residence and the First Home Owners Grant.
- List all chattels included in the sale e.g. pool equipment, demountable garden shed, dishwasher.
- Bear in mind that the contract terms and searches conducted may only give you rights to terminate if the property purchased is affected by such things as road or rail resumptions. If you are concerned with future infrastructure development of the general area which may affect your interest in the property, special due diligence conditions will need to be drafted and inserted in the contract.
- If improvements such as extensions, decks, pergolas, pools and garages have been constructed, special due diligence conditions will need to be drafted and inserted in the contract.
- You must obtain building and pest inspection reports and financial approvals within the time limits prescribed by the contract.
- You must be in a position to complete the contract by the due date.
- Failure to comply with your obligations may mean that you lose the benefits of the protections given to you under the contract or the seller may have rights to terminate the contract which, in turn, means you will suffer the penalties of default. As indicated above, this is not an exhaustive list but illustrates the importance of seeking legal advice before embarking on the sale/purchase process. Should you wish to discuss any matters relating to conveyancing of property (land, residential houses or units, industrial or commercial) do not hesitate to contact our Property team on (07) 3014 6583.