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Buying and Selling Property

Buying or selling property can be complicated.

The first thing you should do is consult a lawyer. Your lawyer can explain the process and guide you through the stresses involved in transferring real estate.

  • As a vendor, what do I need to consider?

    The process for selling residential property is involved and you must be aware of the things you will need to do, as well as the things you cannot do. For example:

    • Presenting your property for sale - While you can present your property in a good light, you cannot cover up, misrepresent or in any way mislead a purchaser about its true condition. Your lawyer can advise you of the difference.
    • Open for inspection/open houses - Remember to lock your valuables away during open inspections. Your agent may ask anyone entering the property for proof of identity and contact details as a security measure.
    • Selling an owner-built house - Specific legal requirements apply to selling a property you built yourself or managed a contractor to build. Consult your lawyer if this is your situation.
    • Method of sale - You can sell your property via private sale or public auction. Your agent will recommend a method of sale, based on your circumstances.

    Your lawyer can also explain other aspects relating to the sale process, including

    • What happens if the contract conditions are not met
    • What to do if the purchaser defaults on the contract of sale or the agreed deposit
    • Insurance
    • Pre-settlement inspections
    • Settlement
    • Any documentation you will be required to sign (eg a transfer of land)

    If you do not engage a lawyer from the outset, you may find yourself in legal or financial difficulty during or after the sale.

  • As a purchaser, what do I need to consider?

    Buying a house is not as simple as working out your budget and making an offer on your chosen property. You must also be aware of the costs involved and you must ensure that your budget takes any ‘extra’ costs into account. For example, you should factor in things like loan establishment fees and any government charges or duties. Your lawyer can review these with you. Also, be aware of any concessions you may be eligible for (e.g. grants and duty reductions). Your lawyer can apply for any relevant grants or reductions on your behalf.

    Also, be aware that many terms and conditions with vendors, agents and lenders are negotiable. Your lawyer can negotiate these for you.

    As a purchaser, you must also consider:

    • Building and pest inspections - These can determine whether the building is in good condition. Your lawyer can obtain any inspections on your behalf.
    • Strata inspections - When buying a unit, townhouse or villa, you are buying into a strata scheme. You should obtain an inspection of the books and records of the owners corporation, which will explain, for example, the financial position of the scheme. Your lawyer can obtain these for you.
    • Finance - Before you apply for a loan, prepare a budget so you know what you can afford to borrow. You will also need to decide what kind of loan you want and where you will obtain it from (eg a bank, credit union, mortgage lender or finance broker).
    • Cooling off period - Does a cooling off period apply to your contract? Your lawyer can explain this to you, so you know whether or not you can withdraw from the contract after you have signed it.
    • Payment of deposit - The deposit must be paid on or before the date of the contract. The deposit can vary but it is usually 10% of the sale price.

    Your lawyer can also explain other aspects relating to the purchase process, including

    • What happens if the contract conditions are not met
    • Insuranc
    • Stamp duty
    • Pre-settlement inspections
    • Settlemen
    • Council rates, water rates and strata levies
    • Any documentation you will be required to sign (e.g. a transfer of land)

    Note: not all things affecting the sale will be written into the contract (e.g. matters contained in legislation). This is why you must engage a lawyer before you sign anything, so that all matters can be explained to you.

  • What if I want to buy or sell property through a self-managed superannuation fund (SMSF)?

    A self-managed superannuation fund (SMSF) is a trust structure that is used to manage retirement savings on behalf of the fund’s members. Investing in property as part of an SMSF is a popular superannuation strategy because it is tax-effective and provides good financial benefits, plus it allows members to take personal control of the assets invested.  

    However, while SMSFs can borrow funds to purchase assets, the borrowing must satisfy certain requirements set out in superannuation legislation. It is also important to understand that the system leaves little room for error. This means it is essential to engage a lawyer from the beginning, who can negotiate the terrain and ensure that your transaction is compliant.

    What do I need to consider?

    Various rules are attached to buying and selling property through an SMSF. The kinds of things your lawyer can advise you on include:

    • What is an ‘acquirable asset’? That is, what kind of property are you allowed to acquire
    • Repairs vs improvements - That is, what will constitute ‘repair’ (which is allowed) and what will constitute ‘improvement’ (which is not)?
    • Beneficial ownership - How can the asset be held (ie what kind of trust can hold it)?
    • Legal ownership - Who can the actual beneficial owner be and when (ie, the trustee of SMSF)?
    • Default - What recourse does the lender have in the event of default?
    • Restriction on replacement assets - What happens if, for example, the asset is destroyed by a fire? What restrictions apply when you want to replace it?
    • What exemptions apply to any restrictions?
    • What funding options are available?

    What is the process?

    Various steps are involved in the process of buying property through an SMSF. These include:

    • Collating financial data (eg your superannuation balances and contributions)
    • Applying for a loan
    • Ensuring you have the necessary powers under your trust deed and amending this if required
    • Considering any risks of the investment and how these can be minimised
    • Establishing a separate corporate trustee of the holding trust, to protect against risk and higher fees, and preparing any necessary associated documentation
    • Negotiating with the vendor
    • Structuring the transaction to avoid a higher rate of stamp duty
    • Ensuring all payments relating to the purchase are paid from the right account
    • Ensuring any rental income is paid into the right account
    • Registering the SMSF trustee for land tax
    • Registering the SMSF for GST, if necessary
    • After payment of the loan, transferring the asset from the holding trustee to the SMSF trustee

    Be aware that this process is complicated and it should not be undertaken without legal assistance. Otherwise you risk exposing yourself to higher fees, or financial and legal problems either now or in the future. Also be aware that every transaction is different and may require a different process (particularly because the rules are not the same in each state): this is why your lawyer must be experienced in this field.

    What are the risks?

    Some of the most common errors we see in SMSF transactions include:

    • Using out-of-date SMSF trust deeds, which do not contain the necessary powers of the trustee
    • Not seeking pre-approval of loans and/or not understanding a lender’s requirements, and therefore incurring costs
    • Buying a property before the SMSF is established or the holding trustee is registered (in which case you face double stamp duty and capital gains tax issues)
    • Not establishing the SMSF and holding trust correctly (this can lead to finance delay/refusal and also exposure to litigation)
    • Failure to implement any rules under relevant legislation or guidelines (eg relating to ‘single acquirable assets’)
    • Signing up the wrong trustee as the borrower
    • Paying any amounts related to settlement of the property from the wrong account

    Any mistakes could have financial consequences for the fund (ranging from double stamp duty, to capital gains, GST and land tax consequences). They can also weaken the ‘absolute entitlement’ of the SMSF to the asset. This is why you need to engage an experienced lawyer who can guide you through the process.

Why choose Slater and Gordon?

We are experienced in acting for both vendors and purchasers in residential property transactions, and our aim is always to ensure your rights are protected and that we have negotiated the best possible terms on your behalf.

We are also across the specific issues and rules relating to buying and selling property through SMSFs, and aim to ensure that your transaction leaves you in the best possible financial position, while minimising your risk.

By choosing us, we promise to:

  • Minimise stress
  • Negotiate on your behalf
  • Prepare or review all necessary documentation
  • Ensure that your interests are protected and your risks minimised
  • Aim to ensure that the transaction will leave you in the best possible position, financial or otherwise
  • Guide you through the process and make sure you understand your rights and obligations throughout

Make an enquiry

If you have a question, want some more information or would just like to speak to someone, make an enquiry now and we’ll be in touch with you very soon.

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