Changes made to Contract for the Sale and Purchase of Land
The law is always changing, and on 1 September 2017, the Government will be passing new laws that will be affecting buyers and sellers in many ways.
So if you are planning on buying or selling a property on or after 1 September 2017, then this article is for you.
The new laws that are being passed may or may not affect you as a buyer or seller, so it is in your best interest to seek legal advice from your solicitor or conveyancer and confirm whether these changes apply to you or not.
Change 1
A Contract for the Sale and Purchase of Land is now required to include “prescribed” documents.
Your solicitor or conveyancer will know what these documents are, but for your records, they are:
- Sewerage Authority;
- Any by-laws in force for the relevant strata scheme; and
- Loose-fill asbestos insulation warning notice;
If your Contract for the Sale and Purchase of Land fails to include any of the above prescribed documents, then the purchaser will be able to back out of the contract within fourteen (14) days from the date the Contract is exchanged.
Change 2
There now exists a warning in the Contract for the Sale and Purchase of Land which serves to remind purchasers of the potential liability for surcharge purchaser duty.
It would be in your best interest to seek legal advice from your solicitor or conveyancer, especially if you are a purchaser, to clarify what this means for you, if anything.
Change 3
The Foreign Resident Capital Gains Withholding Measure Payments has also been amended to move the threshold down from $2 million to $750,000 with a 12.5% withholding tax rate. This of all changes we believe is most significant, for both buyers and sellers.
What this means for purchasers is that where a foreign resident disposes of Australian real property with a market value of $750,000 or above, the purchaser will be required to withhold 12.5% of the purchase price, and pay this sum to the Australian Taxation Office.
Whereas for sellers, where an Australian resident disposes of Australian real property with a market value of $750,000 or above, they will need to apply for a clearance certificate from the Australian Taxation Office to ensure amounts are not withheld from their sale proceeds.
Change 4
Surcharge land tax is now excluded from any adjustment of land tax.
What this means is that whenever a Contract for the Sale and Purchase of Land specifies that land tax will be adjusted, then any amount payable by a seller for surcharge land tax will be excluded from an adjustment of land tax.
When preparing the Contract for the Sale and Purchase of Land, your agents, solicitors or conveyancers should take into consideration this new change.
Change 5
Reference to work having started before the contract date is also no longer required in the Contract for Sale and Purchase of Land involving a Strata property.
What this means is that if the non-regular periodic contribution is not disclosed in the Contract for the Sale and Purchase of Land, but was determined on or before the contract date, then the seller will be liable for the contribution.
Change 7
General changes have lastly been made to the wording of specific clauses of the Contract for the Sale and Purchase of Land. Reason for this is for clarity and the smoother operation of the process for buying and selling property, so that you as a purchaser or seller can relax while your solicitors and conveyancers do most of the work for you.
Conclusion
It is important to remain up to date with legislative changes so that you are aware of how your property transaction runs and what may be required of you upon settlement of the property.
Of course, it is in your best interest to be aware that changes will be made on 1 September 2017.
So if you are thinking of buying or selling a property on or after 1 September 2017, you should consult with your solicitor or conveyancer about all these changes to see if they apply to you.
