Instalment Contracts - Applying for the First Home Owner Grant

 

At Aylward Game Solicitors we offer experienced advice and tailored document preparation in relation to Instalment Contracts and various types of Option Agreements.

Unlike standard REIQ contracts for the sale of residential houses, units or land where settlement generally occurs within a short period of time and occupation is taken on completion of the contract, Instalment Contracts generally run for an extended period of time and occupation is taken at the start of the contract with an agreed amount of instalments made to the owner over the life of the contract to pay the balance of the purchase price.

Once an Instalment Contract has been signed and been in existence for approximately one year, many sellers and buyers start to ask the common question:  Can I receive the First Home Owner Grant (“FHOG”) yet and how do I apply for it?

There is no standard answer to this question as the time when a buyer can apply for and receive the FHOG varies and is different with each Instalment Contract. The public OSR ruling for claiming the FHOG under Instalment Contracts sets out the requirements which a buyer must meet in order to be eligible to apply for (and subsequently receive) the grant prior to completion of the contract. An extract we have taken from that OSR ruling sets out the following:-

“  a.    The contract has been in existence for at least one year.

b.    The purchaser is not in default under the contract so that the vendor has no right to cancel the contract.

c.    The purchaser has occupied the home as their principal place of residence under the contract.

d.    The purchaser has paid to the vendor an amount of not less than the amount of the grant or an amount which is equal to at least 10% of the purchase price, whichever is the greater. In calculating the amount paid to the vendor, any of the following can be taken into account:

                       i.       any deposit paid by the purchaser to the vendor

                      ii.       any interest paid by the purchaser to the vendor

                     iii.       any other amounts which have been paid and deducted from the balance of the purchase price”.

Furthermore, the public OSR ruling sets out that a grant paid prior to completion of an Instalment Contract will be paid subject to certain conditions being met.  An extract of those conditions of payment are as follows:-

“  a.    The contract will be completed and will not be cancelled or terminated.

b.      Following payment of the grant, the purchaser will meet the residence conditions:

                       i.       For contracts entered into before 1 January 2004, the residence condition is that the purchaser will remain in possession of the home as their principal place of residence and will continue in possession following completion of the contract.⁷

                      ii.       For contracts entered into on or after 1 January 2004, the residence conditions are that the purchaser will remain in possession of the home as their principal place of residence and will continue in possession following completion of the contract for a continuous period of at least 6 months.⁸

c.      Within 14 days of non-compliance with conditions (a) or (b), the purchaser will notify the Commissioner of non-compliance and will repay the grant”.

Once a buyer has satisfied all requirements set by the Commissioner they will either apply for the FHOG themselves or have their solicitor assist in the application, then once successful in receiving the grant funds it will be paid to the relevant party/s in accordance with the terms of their respective Instalment Contract.

There are many factors and conditions which apply to claiming the FHOG under an Instalment Contract, and we advise not all of those conditions are covered in this Article. Determining an individual’s eligibility to receive the FHOG requires a full review and assessment of each individual contract document together with assessment of the supporting evidence (as applicable) and ultimately the Commissioner will make a final assessment as to whether or not an application is approved. Full details of OSR’s public ruling can be found on the Office of State Revenue website (for convenience we include the following direct link):

http://www.osr.qld.gov.au/legislation-rulings/public-rulings/fhog/fhoga019-1.shtml

If you wish to discuss or require assistance in applying for a First Home Owners Grant, then please contact our conveyancing manager Libby Dessaix or our Solicitor Mark Game on (07) 3236 0001.

This information contained in this article is correct as at publication date 13 March 2014. The information is a guide only and is not to be taken as legal advice and at all times we recommend you seek independent legal advice regarding your own individual circumstances from your legal representative.

 

Claiming the Great Start Grant when buying or building a new home

 

You may recall in September 2012 the $7,000.00 First Home Owners Grant was discontinued. In its place, the Queensland Government is currently offering the $15,000.00 Great Start Grant to help home owners who are purchasing or building a brand new house, unit, or townhouse (provided it is valued at less than $750,000.00).

We have received several client enquiries recently in relation to the Great Start Grant and either (a) how to apply for one or (b) what to do if the grant has been received but due to changed circumstances you have not been able to comply with the original conditions to receive the grant)

Once you receive the $15,000.00 grant there are certain conditions which must be complied with in order to retain it, and as a consequence if they are not complied with the full grant amount must be paid back by you in full.

The compliance conditions are as follows:-

·                You must either complete the transaction of the purchase of your new home or complete the construction of your new home;

·                You are required to move into your new home within one (1) year of becoming the registered owner of the property; and

·                You are required to live in the home for a continuous period of 6 months from the original date you commenced occupation.

If you have received the Great Start Grant and your personal circumstances have changed which now affect your compliance requirements then we recommend you contact the Office of State Revenue (“OSR”) to notify them of your changed circumstances. 

Penalties apply if you fail to notify OSR within 14 days of finding out that you are unable to meet the above conditions, with such penalties being paid in addition to repayment of the $15,000.00 grant.

If you wish to discuss the Great Start Grant or any compliance concerns we invite you to contact our solicitor Mark Game or our conveyancing manager Libby Dessaix on (07) 3236 0001.

This information contained in this article is correct as at publication date 25 March 2014. The information is a guide only and is not to be taken as legal advice and at all times we recommend you seek independent legal advice regarding your own individual circumstances from your legal representative.

 

Landlords Beware

Residential Landlord’s will need to think carefully about their Tenants and how much they should tolerate breaches of Tenancy Agreements following the decision in Southport Realty Pty Ltd Trading as Shores Realty -v- Rostas in QCAT recently. 

 

A residential Tenant was persistently late in paying their rent and the Landlord, through the Real Estate Agent, had issued 8 Notices to Remedy the Breach. As the Real Estate Agent had issued eight (8) Notices to Remedy the Breach without proceeding to issue a Notice to Leave QCAT held:

 

 “Shores Realty was signalling to Mr. Rostas, perhaps unintentionally, that it was not serious about enforcing the terms of the Tenancy Agreement”. 

 

As a consequence the Tenant was successful in opposing the termination of the Lease which was eventually applied for by the Landlord.

 

Landlords should therefore think carefully about how much they are prepared to tolerate breaches of Tenancy Agreements by Tenants before deciding to proceed with action to terminate Tenancy Agreements.

Conveyancing - The importance of property searches

When purchasing your property it is important that searches are carried out to check that the seller has met their disclosure obligations, that warranties in the contract are correct and to obtain the information required to assist in your conveyance. It is important to ensure that all searches relevant to the purchase have been considered, and that the appropriate searches are conducted at the correct stage of the conveyancing transaction.  

 

Ideally you should consider conducting searches in advance of signing your purchase contract or prior to the contract becoming unconditional to ensure the best understanding of the property you are signing up to purchase before being ‘locked in’ to settle.   

 

Certain searches should be conducted at the start of your conveyance and others will be conducted over the course and at the end of the conveyance. Although it is ultimately your decision as to when to conduct the searches, we recommend you have us carry out searches as soon as possible so that you are aware of your legal obligations and rights before they possibly expire and are well informed of the condition of the property.  

 

Common points to consider about your property purchase (although not limited to those listed) are the accuracy of the lot’s position, investigating the actual and surrounding location and whether there are any current or future developments planned, and investigating any illegal or incomplete building or extension works to ensure final approvals are in order.  

 

You should speak to your solicitor to start to look at which search options are necessary for you and discuss any property concerns or enquiries you wish to make to ensure that the results will not affect your purchase and any current or future plans you have for the property.   

 

As your solicitor we will conduct all initial searches on your behalf and then carry out further searches during the course of the conveyance. 

 

If you wish to obtain a copy of our Search Cost Matrix prior to signing your contract to start looking at which property investigations are available and recommended to be made then please contact Libby Dessaix on (07) 3236 0001 for a FREE complimentary copy of the Matrix relevant to the area your property is located in (applies for all suburbs located within Queensland).

Moving into your new home? 5 Top Tips for moving with ease.

1)                Arrange for your insurance cover over the property.

Most contracts for the sale of residential property include terms that the Buyer is responsible for taking out sufficient insurance cover over the property, with the insurance policy to commence from the Contract Date.  Although this step may seem like common sense, occasionally this will be forgotten about or delayed.  If you are a buyer reading this and have not yet taken out sufficient building insurance cover over the property then
do so immediately.  You should add contents insurance cover from the date you take possession of the property.

2)               When buying your new property remember to book your pre-settlement inspection in with the real estate agent.

This step can easily be forgotten leading up to settlement and we recommend that a pre-settlement inspection of the property is always conducted, even if you have inspected the property at the start of the matter and were satisfied with the condition of the property at that time. Common things to keep an eye out for: large unwanted items of furniture from the previous owner being left behind or abandoned when not agreed or expected, severe furniture removal damage may be evident, severe property damage due to bad weather, general vandalism, or any other form of damage as inspected.

 

3)               Contact all important people relevant to you who will need your new home address details.

An example of important people to consider giving your new home address details to includes (but is not limited to):  family and friends, your employer, the electoral roll and tax office, your bank(s), your GP and all medical/insurance covers, your children’s school/day care etc, the details listed on your pets micro-chipping, your drivers and work licenses, and of course all companies where you receive regular or periodic bills and tax invoices from.  Finally, don’t forget to disconnect and reconnect all your utilities such as electric, gas, home phone and internet etc.

4)               Don’t forget to contact your post office and organise for mail forwarding/redirecting. 

When you start to arrange for all your contact details to be updated, there will usually be that one company where you can’t update your home address on the database until AFTER settlement due to expecting upcoming or regular bills etc.  Once settlement time approaches, and once you start moving into your new home, life suddenly gets very busy and it is easy to forget to arrange for those final companies to be updated with your new home address details.  Mail redirection will prompt a self-reminder to make these final changes  and also saves running the risk of losing important mail due to the new owners or tenants accidentally  throwing out your mail or not being thoughtful to alert the sender and mark your mail as ‘no longer at address - return to sender’.

 

5)              Strategic packing - Start to pack in advance

When packing, begin with room culling to dispose of all items you no longer need or use to minimise what will eventually be packed and unpacked by you.  Pack by importance and level of use, and label all boxes – the more detail the better.  Book removalists in advance and consider reserving time off work if your settlement falls on a weekday to ensure you transfer the bulk of your belongings into your new home where it will be most importantly locked up and safe.

 

 

 

Electronic Communication - have you kept the appropriate records

The use of Email in particular has become a common practice for parties to a contract to communicate. Just because you have saved the email that you have sent, if it comes to litigation, have you kept the necessary records?

 In the Electronic Transactions Act (Qld) 2001 it provides that you must keep, in electronic form –

 

·         The origin of the electronic communications;

·         The destination of the electronic communication;

·         When the electronic communication was sent;

·         When the electronic communication was received.

We find that people tend to dispute whether they have received a certain email, and when they received it. To make it easy for people to determine this, there are a few rules set out in the Electronic Transactions Act 2001. We have briefly summarised these for you. These rules will apply unless your contract says something different.

·         The time of receipt of the electronic communication is the time the electronic communication becomes capable of being retrieved by the addressee (that is the recipient) at an electronic address designated by the addressee; or

·         The time of receipt of the electronic communication at another electronic address of the addressee is the time when both -

o   The electronic communication has become capable of being retrieved by the addressee at that address and the addressee has become aware that the electronic communication has been sent to that address.

For more information refer to the Electronic Transactions Act (Qld) 2001 or speak to us.

A Good Conveyancer Can Save You Many Thousands of Dollars

Two recent cases which came before the Queensland Courts illustrate very well the vital importance of ensuring that the Conveyancer that you appoint to handle your property sale or purchase is an experienced and high quality practitioner. In the case of Filmana Pty Ltd & Ors –v- Tynan and Anor, at the heart of the dispute was the question of whether the contract for the sale of the property in St Lucia in Brisbane was still on foot or whether negotiations about the possibility of a Deed of Rescission and a replacement Contract, which were inconclusive, had affected the validity of the Contract. The Court found that the original Contract remained on foot, and the Sellers obtained judgement against the Buyers for 2.8 million dollars.

In another case known as Petersen & Anor –v- Corby, the Court was again asked to make decisions in relation to a Contract which has not settled. In this case the Sellers asked the Court to give summary judgment on their Application but the Court has decided not to because of the uncertainty surrounding the Contract and whether or not, and if so in what way, it had been amended or changed. The situation in this case is made more complicated because the proposed Buyers Solicitors in the conveyancing transaction were New South Wales Solicitors who appeared not to be familiar with the intricacies of Queensland Conveyancing Practice. The Sellers claim for damages for breach of Contract against the Buyer will therefore proceed to a Trial, with all of the delay and legal expense that goes with that.

These cases highlight very clearly the need to ensure that you appoint a Conveyancer who has the skills and experience to deal with your transaction, but also the time that they need to be able to devote to ensuring it is done properly.

A View On Property

Anyone buying or selling property in Queensland needs to be aware of the provisions of the Neighbourhood Disputes (Dividing Fences and Trees) Act. The affect of this Act is that anyone who owns a property is entitled to retain the view that exists at the time that they buy it. If that view subsequently becomes obstructed by a tree, on another property (which is more than 2.5 meters tall), then this Act of the Queensland Parliament enables the property owner whose view has been lost to take action to have the trees pruned or if necessary removed, in order to preserve their view.

A recent decision of the Queensland Civil and Administrative Tribunal has confirmed that this possibility exists, even for properties that were purchased many years ago, and long before this statute was passed. The recent case decided by the Tribunal dealt with one property purchased in the 1980’s and a neighbouring property upon which the trees had grown that was purchased in 2001.

A vital point to understand is that a Buyer is only entitled to the view that exists at the time that they buy the property. We can see this leading potential Buyers of property requiring the Sellers to enforce their rights to a view, to improve the outlook, before a prospective buyer signs the Contract.

Would you go Guarantor for your son or daughter?

Congratulations you paid off your home loan! Your children or child has all grown up and moved out. Now your looking forward to your retirement.

Now its time for your son or daughter to buy their first home or business or real expensive car and the bank will not lend them the money. They say they will not lend them the money unless they have a guarantor. Your son or daughter has promised that they can meet the repayments between themselves and their partner. Please mum and dad can you go guarantor for us.

The first thing that could happen is you could lose your own home and maybe even find yourself living on the street. As harsh as that sounds, unfortunately it happens. Your son or daughter may lose their job or become ill and not be able to make the loan repayments.

If you become a guarantor, what does it mean for you? A guarantor allows the equity in their home to be used as additional security for the Borrower’s loan. This can happen in a few different ways. All the equity in your home could be used as security or only a set amount could be used. Check the contract and ensure you fully understand what is required by you if your son or daughter can not make the repayments, for example if you have to repay the loan in full or only in part.

We know they may be family but it is essential that you get independent legal advice before signing anything. Never agree to any loan that is not scheduled to be repaid back by a certain date such as overdrafts or lines of credit. Do your checks and don’t get caught.

Your own solicitor for life or a one time offer

When you have decided to buy a home or a house for investment purposes, you will need a conveyancing solicitor. Many people will simply google “Conveyancer” or “Conveyancing solicitor” which will see a large variety in the quality of results that this produces. 

There are solicitors who as well as attending to your conveyancing can also support you in a range of other legal areas. It can be a concern, if your conveyancer only deals in conveyancing, as moving into a new home can potentially include a variety of areas of law. Should you need assistance in preparing new Wills, family advice, company advice, employment advice etc then you would want to have a solicitor that can support you in all your needs, not only during the purchase of your home, but for life. It would make sense that after spending many weeks with your solicitor and building a relationship with them that your lawyer deals with future requirements that you might have.

Otherwise, how does a simple, ‘cheap’ high volume conveyancer sound to you, where your matter is churned out as one amongst many and one has to hope that it was still completed correctly. Or would you prefer to build a long term relationship with a lawyer who is committed to ensuring that they provide you with a high quality personalised service as the foundation of a long term, ongoing relationship?