Legal Options for Jointly Owned Property

When purchasing property jointly with another person or entity it is important to consider how the ownership of the property will be held. Multiple parties involved in the purchase of a property can be listed as joint tenants or tenants in common.
 

Joint tenants all have an equal interest in the property with no party having a specific share. The advantage of joint tenants is simplicity. Where one party dies, the whole of the land automatically passes into the ownership of the surviving joint tenant. The surviving tenant does not need probate of a Will to transfer the title. However, there are also potential disadvantages of being a joint tenant. The surviving party may lose an income tax advantage when obtaining the deceased party’s share of the property which they may have been entitled to previously. Additionally, the deceased party has no control over what the surviving party does with the property and is unable to pass on any of their property rights. A property owned as joint tenants does not form part of an estate and is not dealt with by a Will.

Alternatively, parties may own property as tenants in common in equal or unequal shares, depending on the contributions of the respective parties towards the purchase of the property. The main advantage of being tenants in common is that in the event of death a party can pass on their property rights pursuant to their will with respect to the share they hold. Another advantage is co-owners can take out separate loans to cover individual parts of the property, rather than a single mortgage which a co-owner may become solely responsible for if a party dies.

Where parties make unequal contributions to the property as tenants in common, it is a frequent request that a co-ownership agreement be prepared and executed to determine the dealing of the property in the event it is sold, particularly where there is a relationship breakdown. This agreement will not be binding or enforceable in the absence of a Financial Agreement complying with the Family Law Act 1975 (Cth). It is merely an indication of the intent of the parties and the Family Court retains jurisdiction in how the property will be divided if the property is owned by a married or defacto couple.

Generally, it is common for married or de facto couples to own property as joint tenants. A joint tenancy can be easily converted into a tenancy in common if the parties agree to amend their interests for ownership in the property. In cases where there are children from previous relationships, owning property as tenants in common may be more suitable. This is because children may benefit from the property as part of the deceased’s estate.

Announced BCIPA Reforms

The Queensland Government has recently announced reforms to the Building and Construction Industry Payments Act (2004) (‘BICPA’) following a review in 2012. The amendments will come into effect later this year with legislation still being finalised. The announced reforms include:

·         The Queensland Building and Construction Commission will appoint adjudicators to particular cases instead of claimants nominating adjudicators.

·         The time for serving a payment claim will reduce from 12 to six months after the construction work was carried out or the goods and services supplied, unless there is provision in the contract lengthening this time.

·         The time to serve a claim will vary depending on the value of the claim. For claims greater than $750,000 the respondent will have:

o   15 business days (increased from 10) to provide a payment schedule or 30 business days if the claim was served more than 91 days after the reference date of the contract.

o   15 business days to provide an adjudication response which the adjudicator can increase by a further 15 days.

·         For claims under $750,000 the respondent has:

o   10 business days to provide a payment schedule  (increased from 5)

o   10 business days to provide an adjudication response

·         In their adjudication response, respondents will be able to include all relevant reasons for withholding payment and claimants will have a right to reply.

The Queensland government has proposed that contracts entered into before September 1^st 2014 will remain unaffected by the changes, while contracts entered into post September 1^st will be subject to the reforms. 

Due to the changes in time frames and implications for contracts, industry participants will need to consider what changes should be made to their contracts in conjunction with legal advice.

The reforms remain the subject of parliamentary debate with a possibility of further changes.

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).