Written by Guest Author Chantelle Pymble of Lockett McCullough Lawyers
When you transfer a property from one individual or entity to another, this administrative process is known as conveyancing and needs to be undertaken whenever you buy or sell property. For most of us, property will be the most valuable asset we will ever own, so whether you are buying your first home or are trading up to a larger family residence, buying and selling property can be an overwhelming experience.
As a buyer or a seller, you will go through many emotional roller coasters during the course of your property transaction. The biggest stressor in most transactions is the money you spend as soon as you decide that you want to sell your home or purchase a new one.
As a seller you are spending money on rectification works to ensure the property is ready to sell, marketing fees and agents commission, just to name a few.
As a buyer you have the additional expense of building and pest inspections, local authority searches, bank application fees and stamp duty.
Whether you are a buyer or a seller, by the time you have calculated these expenses most people believe that conveyancing is too expensive and reasonably straightforward. I mean, how hard could it be?
This train of thought tempts some people to do their conveyancing themselves.
Whilst self-acting in your conveyance may save money, it can be extremely risky. If you go through the process incorrectly, the terms of the contract are not met and/or settlement fails, you could forfeit your deposit and you could be sued for damages by the other party. You will end up spending far more in legal and court fees than you would have done by simply instructing a conveyancer.
So let’s discuss the role of a conveyancer. A good conveyancer will clearly explain the meaning and importance of each step during your transaction. Drawing upon your instructions, we will assist you to meet your legal obligations and protect your rights and interests.
Acting for you as a seller, the number one priority of your conveyancer is to ensure that you have a valid title that can be passed to the purchaser on payment of the agreed price. It is important that this process is carried out correctly as only then can the buyer, who has paid for the property, be confident of having a right of ownership that cannot be challenged in the future.
Acting for you as a buyer, your conveyancer will ensure that you are receiving a clear and unencumbered title at settlement and ensure that your pre-settlement rights are protected.
On your behalf, the conveyancer will:
- Provide you with advice on your Contract of Sale and any special conditions prior to signing to ensure that your interests are adequately protected
- Diarise key dates under your Contract of Sale explain each step of the process with a “Next Action Check List”, within the contract time limits e.g. instruct you to apply for finance and/or lodge your Discharge Request with your releasing mortgagee
What is a finance clause?
When signing a contract with a real estate agent you can make the contract “subject to” finance, but what does this mean? Many couples will purchase a property already having pre-approval in place from the bank but not FORMAL approval and there is a difference.
If you are looking to purchase a new property it is advisable to consult your broker and receive pre-approval (up to a certain amount) from your bank. This means that you can safely start looking at properties within that price range. Pre-approval usually lasts around 3 months. If you find a property within this time frame it is always a good idea to purchase the property subject to 14 days finance. Why you may ask when you already have pre-approval in place? Your circumstances may have changed within the 3 month period or the house you are buying may not be valued at the price you are purchasing it at. The bank will only loan you the valued amount of the property; not the purchase price if they do not feel it is worth what you are paying.
If you do not have pre-approval in place a 21 day finance clause is advised so that your broker has time to lodge your loan and obtain approval from the bank.
- Your conveyancer will also help you to initiate building and pest inspections and undertake Certificate of Title searches and searches of government departments and local authorities.Most conveyancers will provide you with copies of these searches and an easy to read and understand Search Report.
- Attend to the removal of any encumbrances on the title such as expired leases, caveats, writs and statutory charges
- Provide on notice periods required for tenanted properties, where the buyer requires vacant possession at settlement
- Peruse your building and pest reports and advise you on your right to have matters rectified or negotiate any reductions in the purchase price on your behalf
- Prepare, clarify, certify and lodge legal documents e.g. Transfer of Land
- Help you to sign any bank documents
- Stamping of required documents for lodgement with the Office of State Revenue (as a self-acting buyer, you would need to pay a settlement agent to undertake this for you anyway)
- Calculation of adjustments of rates and taxes
- Preparation of settlement statements
- Liaison with mortgagors and financiers; and
- Attendance on your behalf at settlement;
- Attendance to post-settlement tasks, such as notifying the body corporate of the change of ownership, paying any overdue rates, water, body corporate or land tax liabilities.
Given the last thing you want when buying or selling property is to encounter costly delays or errors during the settlement period, can you afford not to engage a conveyancer, who specialises in property transfers, to undertake your conveyance for you?
It is a small price to pay to ensure that your property transaction proceeds smoothly. If the conveyance is for an investment property, the legal fees can be used as a tax deduction to offset any capital gain you make on the property when you sell the property.
If you choose to use a conveyancer, make allowances for all the costs in your budget - a good conveyancer will give you these costs upfront upon receiving your initial contact and most mortgage brokers can give you a rough estimate.
For more information on buying or selling property or advice on how we can assist you with your property transaction, please contact us. (http://lockettmccullough.com.au/conveyancing/)
*Please note Lockett McCullough Lawyers were not paid for this article and are not an entity of Hudson Financial Planning but are a preferred supplier for conveyancing for several of our members.
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Edited by Hudson Advisers using up to date government information
Australians who are over the age of 65 and satisfy an income and assets test may be eligible for a full or part Age Pension. The same calculations and assessments apply to individuals on a Disability Pension.
Most of you will already be aware that every person is assessed under both the INCOME and the ASSETS test and which ever test produces the harsher result (for you) is the one that applies.
As of 1 January 2017 the ASSETS TEST thresholds will change. The Income Test will not change. The purpose of this article is to highlight the changes in relation to the Assets Test.
Unfortunately like any changes some will be better off while others will lose a significant part of their annual income.
According to early government reports around 50,000 people are expected to be better off under the government’s changes and receive the full pension. Approximately 120,000 part-pensioners are likely to add around $30 per fortnight to their annual incomes. On the other side of the coin more than 300,000 Age Pensioners will have their Age Pension entitlements cut, with just under 100,000 of those affected Australians losing all Age Pension entitlements.
Introducing the new thresholds
Full pension, home owners
If you own a home, the new assets Lower thresholds are slightly higher and will allow you to hold assessable assets up to $250,000 (singles) and $375,000 (couples) without impacting your full-pension entitlements.
Partial pension, home owners
The new assets Upper thresholds are significantly reduced as of 1 January 2017. If your assessable assets are over $545,600 (singles) or $820,600 (couples) you will no longer qualify for a part pension.
Full pension, non-home owners
The new assets thresholds for those who don’t own a home will be $450,000 (singles) and $575,000 (couples).
Partial pension, non-home owners
The new assets Upper thresholds are significantly reduced as of 1 January 2017. If your assessable assets are over $745,600 (singles) or $1,020,600 (couples) you will no longer qualify for a part pension.
What if you lose your existing Pension ?
For those who are losing their pension entitlements all together you will automatically be entitled to receive a Commonwealth senior’s health card or a low income health card. These cards will provide access to Medicare bulk billing and less expensive pharmaceuticals.
Please be aware that if your current pension payments are based on the INCOME test, the changes to the ASSETS test could still be applicable to you if the changes bring about a harsher outcome than your current ‘Income Test’ calculations.
Below are some comparison tables provide a guideline on the impact of the changes for various levels of assets.
*FIGURES courtesy of Colonial First State Investments Limited
If your are impacted and experience an income drop, you should consult with your adviser for how you can best prepare for these changes, if you have not done so already.
Matters for discussion could include :
- What your assessable assets are?
- If your entitlements are reduced, how will you replace lost income?
- What are the flow on impacts for your asset allocation of your existing investments/super/pension accounts?
- Do you have any large planned expenses, such as a holiday or home repairs for example, that might reduce your assets before the changes come in on 1 January 2017?
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