Our dedicated conveyancing team has extensive experience when it comes to acting for buyers and sellers of residential property. We understand that buying or selling (whether it is your home or an investment property) is not only an important financial commitment but it can also be an emotional and stressful time for you. Don’t forget we do know what you are going through. All of us at RBF Law have at some point bought or sold property and we understand that the process can be overwhelming.
The RBF Law team will be there to protect your interests and to guide you through every stage of the conveyancing process. We aim to make it as ‘stress-free’ as possible for you.
What is conveyancing?
Conveyancing is basically the legal process of transferring ownership of property from a seller to a buyer.
How does the conveyancing process work in Queensland?
The conveyancing process starts from the time you enter into a contract (whether buying or selling) and usually ends shortly after settlement when the property transfer from the seller to the buyer is registered in the Land Titles Office.
During this process it is usual for contract conditions such as cooling off, pest and building inspections and finance to be satisfied as well as any special conditions which have been included in the contract.
Once all contract conditions are satisfied, then the conveyancing process proceeds to settlement.
Can I have my lawyer review the contract before I sign it?
Yes – we strongly recommend that we be given the opportunity to check the contract before you sign it. We will then discuss the terms of the contract with you to ensure that any specific requirements are correctly shown in the contract which could include special conditions.
What are usual contract conditions?
A buyer usually has a contract subject to building and pest inspections and finance. The contract is also subject to the buyer having a 5 business day statutory cooling off period (unless waived).
Building and Pest
The buyer must arrange for a licensed building and pest inspector to attend at the property and provide written reports.
The buyer must then decide whether they are satisfied with the reports and provide written notice to the seller by 5pm on the building and pest inspection date noted in the contract. A buyer must act honestly when deciding if the reports are satisfactory.
If the buyer is not satisfied with the building and pest inspection reports then they may be able to terminate the contract provided they have acted reasonably (there must be some real defect with the property).
The seller will also have a right to terminate the contract if the buyer does not notify the seller of the outcome of the building and pest inspection condition by 5pm on the due date.
Buyers should be aware that sellers are not obliged to fix any issue raised in the building and pest inspection reports nor is the seller required to make allowance for a reduction in the purchase price for those issues.
A buyer must apply for finance as soon as possible after the contract is entered into and take all reasonable steps to obtain finance approval by the finance date noted in the contract.
All decisions relating to the acceptability of any finance approval condition rests with the buyer.
The buyer must give written notice to the seller by 5pm on the finance date whether or not they have obtained satisfactory finance approval.
The seller will also have a right to terminate the contract if the buyer does not notify the seller of the outcome of the finance condition by 5pm on the due date.
What are special conditions?
Sometimes a buyer or a seller may need a special condition to be included in a contract to deal with a particular issue which is not covered by a standard contract term such as:
- where the property is contaminated;
- the buyer is purchasing the property ‘as is’;
- the buyer needs foreign investment review board approval;
- the buyer is selling their property so therefore a prior sale contract is required to be completed so the funds from that sale can then be applied towards the purchase;
- the seller already has a sale contract but that prior contract is needed to be terminated;
- the buyer requires a due diligence condition;
- the buyer requires the seller to provide copies of final building certificates;
- the seller is waiting on final certificates for the improvements to be issued; or
- vacant land is being purchased so a soil test is required.
A special condition needs to be included in the contract at the time of negotiations and before the contract is signed by the buyer and the seller. You should contact our experienced team to provide you with advice and guidance on the conditions best suited to your transaction.
Why do I have to undertake searches if I am buying a property?
A buyer should undertake searches as part of the conveyancing process to identify:
- the property under contract is in fact the property which was inspected and for which an offer was made;
- the legal ownership of the property;
- whether there are any encumbrances on title to the property (such as mortgages, easements, covenants, caveats or any other administrative advices);
- whether there are any adverse property issues (which may give rise to termination of the contract or a claim for compensation from the seller);
- whether there are any restrictions on the use of the property;
- so that the required adjustments can be calculated;
- that the seller has met their disclosure obligations; and
- that warranties in the contract are correct.
We will contact you and let you know if there are issues with any of the search results received and we will give you advice on your rights under the contract and any options you may have.
Do I need to arrange insurance if I am buying a property?
Yes - both the REIQ and ADL contracts provide that the property is at the buyer’s risk from 5pm on the next business day after the contract date (unless a special condition is inserted into the contract stating that the property is to remain the risk of the seller until settlement). This is why it is important for a buyer to take out the appropriate insurance as soon as a contract has been signed.
Here are the different types of insurances which should be considered depending on whether the property being purchased is vacant land, a house, a high-rise unit, a townhouse or a house in a gated community.
|Property||Type of Insurance|
|Vacant Land||Public liability insurance|
|House||Replacement value, contents and public liability insurance|
|Unit - with common walls||The body corporate is responsible for insuring the building (replacement value) and public liability for the common property and any relevant body corporate assets. A buyer is required to insure the contents such as carpets, curtains, internal blinds, whitegoods, window breakage, etc, as well as arrange public liability insurance for the interior as well as for any exclusive use areas.|
|Unit, Townhouse, House in a gated community - with no common walls||The body corporate is responsible for public liability insurance for the common property and any relevant body corporate assets. The body corporate may insure the building with the agreement of all lot owners. A buyer should insure the building for replacement value and insure the contents such as carpets, curtains, internal blinds, whitegoods, window breakage, etc, as well as arrange public liability insurance.|
|If property tenanted||Landlord protection insurance|
What happens on a settlement?
Settlement is the day noted in the contract when all of the parties’ legal and financial representatives meet at a prearranged place and time. All of the required legal documents are exchanged for payment of the purchase price and possession of the property is then given to the buyer.
I am buying in a community titles scheme - what are my maintenance obligations?
The maintenance responsibilities for the body corporate and the lot owners will vary depending on the type of format plan applicable to the community titles scheme.
Properties in a community titles scheme such as units, duplexes or townhouses are either registered under a building format plan or a standard format plan.
A building format plan usually applies to a high-rise apartment complex but it can, in some cases, also apply to a townhouse development. This type of plan defines the land using the structural elements of a building including floors, walls and ceilings.
On the other hand, a standard format plan includes townhouses and villas where each lot has a building and a yard. The boundaries of those lots are defined by the measurements shown on the survey plan and any marks on the ground.
|Building Format Plan
Body Corporate Maintenance Responsibilities:
Lot Owner Maintenance Responsibilities:
|Standard Format Plan
Body Corporate Maintenance Responsibilities:
Lot Owner Maintenance Responsibilities:
What is transfer duty and do I need to pay it?
Transfer duty (also referred to as stamp duty) is a tax charged by the State Government on a purchase contract and is payable by the buyer. Transfer duty is calculated on the purchase price and different rates apply depending on whether the property is being purchased as a principal place of residence, for investment purposes or by a company or trust. The buyer will need to have documents stamped and pay the transfer duty either 30 days from when the contract becomes unconditional or on settlement, whichever occurs first. If the contract is not stamped and transfer duty is not paid on time then penalty interest can be imposed.
I am a foreign buyer so do I have to pay additional transfer duty?
A foreign buyer or entity who is purchasing residential property in Queensland will be required to pay a 3% Additional Foreign Acquirer Duty. This duty is an extra amount payable in addition to normal transfer duty, landholder duty or corporate trustee duty which is payable in a particular transaction.
This additional duty will apply to purchases by individuals (who are not Australian citizens or permanent residents); companies incorporated outside of Australia; companies incorporated in Australia in which foreign persons have a 50% interest or more; and a trust where 50% of the trust interests are held by foreign persons (such as unitholders or beneficiaries).
'Residential land' for the purpose of the 3% Additional Foreign Acquirer Duty includes established homes and apartments; vacant land on which a home or apartment will be built; land for residential development; and buildings refurbished, renovated or extended for residential use, but does not include land used for hotels and motels purposes.
A transaction which is exempt from transfer duty, landholder duty or corporate trustee duty will also be exempt from the Additional Foreign Acquirer Duty.
If this applies to you, then you should contact us for an estimate of the transfer duty payable on your transaction.
What happens if the sale price (or market value) of a property is $750,000.00 or more?
The Foreign Resident Capital Gains Withholding Tax Regime will affect real property if the sale price (or market value) is $750,000.00 or more where contracts are entered into on or after 1 July 2017. Despite the regime referring to ‘foreign residents’, it is important to note that it will apply to all sellers (whether a foreign resident or an Australian tax resident). It is important to understand that this regime is different to the requirements of the Foreign Investment Review Board where foreign persons generally need to apply for approval or obtain a no objection notice before purchasing property in Australia.
An Australian tax resident selling real property with a market value of $750,000.00 or more will need to obtain a clearance certificate from the ATO prior to settlement to ensure they do not incur the 12.5% withholding tax which is to apply from 1 July 2017.
A foreign resident seller can apply for a variation of the withholding tax rate or make a declaration that a membership interest is not an indirect Australian real property interest and therefore not subject to withholding tax.
If a clearance certificate or a variation notice is not provided by the seller at settlement then the buyer must retain 12.5% of the purchase price and pay this amount to the ATO as a withholding tax following settlement. Penalties may apply if a buyer does not comply.
The existing threshold of $2million or more and a 10% withholding tax rate will apply for all contracts entered into before 1 July 2017, even if they do not settle until after 1 July 2017.
A clearance certificate is valid for 12 months and is specific to a particular entity (i.e. the registered owner recorded on title) and not linked to a particular property.
This new regime applies to a range of transactions beyond the sale of taxable Australian real property. You should contact us if you think this regime may apply to your sale.
What happens if a legal problem occurs with my contract?
The RBF Law team will be there to provide you with comprehensive legal advice when legal problems arise. Our conveyancing matters are managed by our conveyancers but our Legal Practitioner Director maintains a high level of involvement and supervision at all stages of the transaction. At RBF Law we will protect your interests and guide you through every step of the conveyancing process. We aim to make it as 'stress-free' as possible for you.
Disclaimer: This information is a guide only and is not a detailed explanation of the law. This information should not be used, treated or relied upon as proper legal advice and you should contact a solicitor before making any decisions concerning your requirements.