Comments Off on How does Covid-19 impact on legal services and the law
How does Covid-19 impact on legal services and the law
Although undoubtedly, the present restrictions on human contact and movement are having an unpresented impact upon Australia’s economic prosperity and these same factors are undoubtedly impacting also on many people from a mental health perspective. For the most part, none of these restrictions should effect the way the law or the delivery of legal services have operated and/or apply.
Family Law Cases
The Chief Justice of the Family Court has issued a public announcement that unless a particular family is actually suffering a Covid-19 infection, the Court expects that pre-existing arrangements for the share of care and decisions making for the children should continue on unaffected. The existing family law principles already are flexible enough to adapt to a world where the value of businesses, stock market investments, superannuation and/or Real Estate are undergoing dramatic fluctuations as a consequence of broad base external factors as was previously seen with events such as the property boom in the late 90’s early 2000’s and the consequent global financial crisis of 2008. Otherwise, the Family Court itself is still very much open for business and is presently running all of its cases via telephone and video link. All court documents are now being filed via the Court’s online portal, a system which has been up and running now for several years. There are some disruptions and delays, but by enlarge the court is still functioning as normal.
Buying and Selling Real Estate
Although worries over job security and the potential for a dramatic drop in real estate prices are undoubtedly impacting on confidence and the consequent willingness of parties to enter into and/or proceed to complete real estate deals, the terms of the standard REIQ real estate contracts and the overall structure of the conveyancing process are both well capable of adapting to Covid-19 issues. Under the standard REIQ contract, there are already specific clauses that will suspend the operation of a contract should events such as a Covid lockdown occur. Under those same terms, the seller is also given the right to terminate the arrangement if government restrictions are to continue for an extended period. House inspections can still legally occur and the only events which are currently not possible are the group gatherings associated with auctions and open houses. In terms of the conveyancing process, the innovation of e conveyancing which has now been in operation for some time, now permits every task of the conveyancing exercise to be conducted online with the one exception of witnessing of signatures but this task can still be easily completed in face to face meetings provided social distancing is used.
Preparation of Wills and Enduring Powers of Attorney and the administration of Deceased Estates
Although much of these tasks have historically been conducted through face to face meetings, all of the required tasks to prepare and sign a will, an enduring power of attorney or attend to the administration of a deceased estate, can be conducted via use of telephone or video conferencing and in extreme cases this too can extend the execution of wills and enduring power of attorneys documents although most law firms preference is to continue to have these documents executed in face to face meeting which are all still perfectly doable provided everybody respects social distancing and hand sanitising.
General Legal Business and Consultations
Again with the ability to conduct business via telephone or video conferencing and also via the use of email and online document sharing platforms such as drop box, the business of providing and receiving general legal services is well capable of continuing to be conducted amidst a Covid lockdown environment.
So, the message generally from Zande Law and indeed the legal industry at large is that we are still open for business and do not foresee that any developments associated with Covid-19 will impact on our ability to provide services for you.
Comments Off on The Conveyancing Process For Buyers
THE CONVEYANCING PROCESS FOR BUYERS
Conveyancing (that is transferring) land in Queensland is a process that actually differs significantly from the practices conducted in other States of Australia, such as New South Wales and Victoria and dramatically from the process followed in other foreign countries like the United Kingdom.
Under Queensland legislation, the professional service to assist a Buyer or a Seller in the conveyance process can only be done for a fee by a law firm or other organisation which has a practicing Lawyer as its nominee for professional indemnity insurance purposes.
Some important features of a standard contract are:
A standard contract term in Queensland requires a conveyance within 30 days with conditions such as finance and building and pest to be complied with in 14 days. These timetables are doable but require swift action and co-operation if they are to be met.
The standard contract states that “time is to be of the essence”. This means that any deadlines contained in the contract are critical and if not completed will give the innocent party rights of termination commonly also with the right to demand compensation.
If a Buyer defaults, compensation for a Seller typically involves:
forfeiture of the deposit – note agents are entitled to claim commission against this;
recovery of the difference between the contract price and any price at which the property is subsequently sold (if lower) provided reasonable efforts on resale are made.
It is important to note that Contracts in Queensland are routinely prepared by licensed Real Estate Agents without assistance or intervention from a Solicitor and are only delivered to the Solicitor after the Contracts are signed by both parties. If the client wishes to receive legal advice upon the Contract before committing to it, it is critical that the Contract be provided to the Solicitor for advice before it is signed.
Otherwise the Solicitor is usually named on the contract and receives a copy of the contract direct from the Agent once signed.
Under Queensland law a Buyer is afforded a cooling off period of 5 business days from date of signing contract within which the Buyer can terminate and walk away from the deal. There is however, a penalty of 0.25% of the contract price.
The conveyancing process for a Buyer falls into a number of distinct tasks:
Step 1 – Review of Contract and advice on its terms:
Usually, the Solicitor will send out to the client an introductory letter which summarises the salient points of the contract which are typically:
the settlement date;
the deadline for completion of any conditions such as the obtaining of finance or a satisfactory building and pest report and/or the payment of the balance of a split deposit.
The introductory letter will normally have a client questionnaire to be completed by which the client confirms their names and contact details, their intentions concerning occupancy of the property, searches that they wish to perform or not perform and the timing for delivery of those searches. That letter will also contain an authority to act form that must be signed and returned or the Solicitor cannot act.
Step 2 – Satisfying Special Conditions:
The Solicitor will need to monitor and clear off of the contract’s special conditions such as:
the obtaining of finance approval; and
satisfactory building and pest report; and
any other special conditions.
The Lawyers keep “bring up” diaries which prompt them to chase clients for the answers to these conditions if not communicated however, ultimately the Buyer must take responsibility for satisfying the condition or suffering the consequences of termination of the contract.
In working through these special conditions it is important to note the Buyer is responsible to seek out and engage their own chosen financier/contractor although some Solicitors maintain referral lists for these service providers.
Step 3 – Conduct of Searches:
The Solicitor performs searches which are intended to confirm that free and clear title to the property can be conveyed to the Buyer so that the Buyer obtains outright ownership and rights of enjoyment and use within the restrictions of the “present use” described in the contract or otherwise relevant Council’s zoning. If the searches reveal any impediments on the property (for example, an easement or other liability to a third party that would pass with the property or a right given to a third party to make some use of the property) then the discovery of these issues may entitle the Buyer to terminate the contract with full deposit refund, the right to demand that the Seller remove the impediment before or at settlement and/or the right to demand financial compensation.
The cost of the searches vary depending upon the relevant authorities. Generally speaking though they pitch in the range of $850.00 for a dwelling or unimproved land.
On receipt of the searches, the Solicitor is then able to calculate the final settlement price. Adjustments are made in the purchase price to, for example, ensure that the Seller’s responsibility for payment of council rates up to the day of settlement and/or land tax are met. This is important because these liabilities stay with the land and consequently pass to the Buyer after settlement if not paid.
At about this point, the Buyer’s Solicitor should lodge a Settlement Notice with the Queensland Department of Natural Resources. This notifies any persons who might seek to take an interest in the property that the property is presently under contract for sale and protects the Buyer from the Seller attempting to give some other interest in the property to another person.
Step 4 – Preparation of Transfer Documents:
Transfer documents are technical forms that must be completed in strict compliance with regulation and the Buyers’ names as they appear on the contract. Failure to do this will result in a number of serious problems including a liability for double the cost in stamp duty, settlement being unable to be completed due to rejection of the transfer document by the Buyer’s Financier and/or the inability to actually become registered on the Title Deed even though the full purchase price has been paid over to the Seller. Transfer documents need to be sent out to the Seller for execution and return with careful attention to timetables to ensure that they are back with sufficient time before settlement to satisfy the Financier’s requirements for prior review and approval. On the return of the transfer, the transfer is then counter-signed by either the Buyers or (more commonly) the Buyer’s Solicitor as being correct for the purposes of registration. Note: The transfer document is customarily only returned by a Seller to a Buyer before settlement if the Buyer is being represented by a licensed legal practitioner by virtue of an undertaking (promise) given by the Solicitor to hold the transfer and not attempt to register or deal with it until the full purchase price is paid over at settlement. This is essential to enable the stamping of the transfer before settlement which will be a requirement of any Financier.
Step 5 – Stamping:
Stamping is the process by which the State Government Tax “Stamp Duty” is assessed and paid. Stamp duty is calculated according to the consideration paid under the Contract unless the transaction is not at “arms length” in which case independent valuation evidence for the property must be produced and stamp duty is paid upon the consideration expressed in the contract or that valuation whichever is the higher. Most Solicitors have the ability to stamp a contract “inhouse”. This means that the Solicitor can certify that the appropriate amount of stamp duty has been collected from the client and is being held in the Solicitor’s trust account in readiness to pay to the Office of State Revenue. If inhouse stamping through the Solicitor is not available, the Contract and transfer documents must be lodged directly with the Office of State Revenue, either through the post or possibly through a direct “online” facility. These tasks however, may take several days to complete. If stamping is being done inhouse with a Solicitor, the Solicitor will require the Buyer to have deposited the required stamp duty amount as cleared funds into the trust account before the contract is stamped. Stamp duty must be assessed on the contract within 30 days of the contract becoming unconditional and then paid within 14 days of assessment.
Step 6 – Settlement:
Settlement is the process by which the Seller, the Buyer and the entering and exiting financiers (where applicable) meet to hand over the money in exchange for title and transfer documents. Part of this exercise involves reaching agreement on a venue and time for settlement between the Seller’s Solicitor, the Buyer’s Financier (if applicable) and the Buyer’s Solicitor. If agreement can not be reached, then the Contract usually dictates a default time and venue at which all parties must attend. The default arrangement however can only be a last resort because the outgoing (ie: the Seller’s Bank or other Financier) and incoming (ie: the Buyer’s Bank or other Financier) tend to dictate terms on where they will or will not attend for settlement and impasses between the two organisations regularly occur requiring special intervention negotiation from the Buyer’s and Seller’s Solicitors. In the lead up to settlement, the Seller’s Solicitor notifies the Buyer’s Solicitor as to how the cheque(s) adding up to the purchase price are to be drawn. This will include a cheque to the existing mortgagee for the payout of that mortgage debt. The Buyer’s Solicitor then takes that information to instruct their Bank on the amounts and payee for the funds they are to provide. If the Buyer is also providing personal funds, then the Solicitor will have either arranged for these funds to be received in and cleared into their trust account or otherwise provided to the financing bank in sufficient time before settlement to be drawn upon as clear funds.
The Buyer’s Solicitor attends and ensures that the correct purchase price is paid over and will ensure that critical documents, such as a release of the Seller’s mortgage are received at settlement again to ensure that the Buyer receives free and clear title in exchange for the contract price.
If there is no Financier, the Buyer’s Solicitor will then take the transfer documents from settlement and attend to registration of the transfer in the following days. If a Financier is involved, the Financier will take the transfer and register it together with a following mortgage encumbrance which secures the advance amounts and gives to the Financier the ability to sell the property should the Buyer fail to meet the required repayments.
Step 7 – Registration of Change of Ownership:
The transfer document is lodged for registration at the Department of Natural Resources who controls the registration of ownership of land under a guaranteed title system in Queensland. This guaranteed system means that the person shown by the department as the owner of the property is guaranteed by the Government as the true owner such that the Government will actually pay compensation to an affected party if their registration details prove incorrect and someone relying upon those details loses money. For example, buying a property from a person who is not actually the owner or advancing money under a mortgage.
At the same time that the registration of change of ownership is recorded at the Department of Natural Resources, an accompanying form (currently a Form 24) is sent on to the Local Municipal Authority who will then correct it’s records to reflect the new owner so that all future rates (and other) notices affecting the property are addressed to the correct person.
If the Buyer purchased the property with borrowed monies provided by a financier (such as a Bank) the financier will usually take the transfer at settlement and attend to lodgement of the transfer for registration along with the accompanying mortgage.
Step 8 – Delivery of Settlement Letter and Statement:
Once registration of the transfer is complete, a Certificate to confirm this is issued from the Department of Natural Resources and this along with a settlement letter confirming the full settlement figures that were used to calculate the monies paid over at settlement, a copy of the searches and a copy of the contract and/or transfer (with notation showing payment of stamp duty marked on it) are provided out to the Buyer usually with the Solicitor’s invoice (if not already delivered).
The Buyer’s Solicitor will usually request that there fees be deposited into their trust account before settlement is completed and may request payment up front of the anticipated search fees before the searches are ordered.
Michael Zande is the Principal of Zande Law Solicitors, with 25 years experience in practice. Michael and his team have had extensive experience in conveyancing matters. Please feel free to review our firm and staff profiles at www.zandelaw.com.au
The information in this article is merely a guide and is not a full explanation of the law. This firm cannot take responsibility for any action readers take based on this information. When making decisions that could affect your legal rights, please contact us for professional advice.
Typically in Queensland most construction of residential dwellings is done by a licenced commercial builder who holds registration with the Queensland Building Services Authority and whose registration credentials can be checked publicly. However, the actual building work can also be legally done by a person who does not hold this registration, so long as that person is an “Owner Builder” under the Queensland Building Services Authority Act 1991 (QBSA Act). An Owner Builder is entitled to construct a new home or alter/renovate an existing home but is prohibited from construction of commercial or multi occupancy residential dwellings and if the project is worth under $11,000.00 there is no regulation at all.
As a condition to this however, the owner builder must:
obtain an Owner Builder’s permit from QBSA;
adhere to all of the Building Code and Council Regulation as if they were a licenced builder; and
lodge a notice with the Queensland Titles Office declaring the performance of building works as an Owner Builder to facilitate registration of a notice on the Title to this effect.
Should the Owner Builder then seek to sell the property at some stage, the Owner Builder is then obligated under the QBSAAct to provide a Notice to any person who may seek to purchase the property within a period of 6 years from the date the works were undertaken as to the following:
That works as specified were performed by the Seller as “Owner Builder”.
That as a consequence no insurance is provided under the QBSA Scheme.
If the Seller fails to provide this notice then any purchaser of the property is deemed to have received a warranty from the Seller that the works have been completed to a reasonable tradesman standard and as a consequence is entitled to sue the Seller for any rectification works required should the works become defective within the 6 year period from original construction.
At the expiration of 7 years from the date of performance of the works, the Owner Builder is entitled to apply to the Queensland Titles Office to have the notice removed from the registration details on the property and after this time, the Seller is under no obligation to inform any perspective purchaser of the “Owner Builder” works in any subsequent sales.
The reason for all of this regulation is that if the works were done by a registered builder, any owner of the property or any subsequent purchaser of the property would be entitled to demand that the builder attend and rectify any defects on the property which materialise within 6 years from the date of construction of the work and if the builder does not comply then under the compulsory insurance scheme for which the builder has paid an insurance premium as part of the condition for approval of the plans in the first place, the QBSA will make an alternate builder available to perform the work at his expense. Beyond the warranty issues, it is also recommended that the standard REIQ Contract also be modified to insert special clauses concerning confirmation of Council approvals for all works and heighten scrutiny on the building and pest inspection.
Consequently, it is always recommended that any Seller or Buyer of an “Owner Builder home” inside the 6 year period should seek legal advice from an appropriately qualified Solicitor before signing any contracts.
Jenny Zande is a Solicitor of Zande Law Solicitors, with 20 years experience in practice. Jenny has extensive experience in conveyancing matters. We also acknowledge Matt Hannam from our office as co-author. Please feel free to review our firm and staff profiles.
The information in this article is merely a guide and is not a full explanation of the law. This firm cannot take responsibility for any action readers take based on this information. When making decisions that could affect your legal rights, please contact us for professional advice.
