The Contract for sale stipulates a completion date (settlement date), being the date on which both buyer and seller must settle.
If a buyer does not settle on or before the stipulated completion date, then a buyer may be liable for penalty interest under the contract. A buyer needs to make sure that they are aware of what the penalties are for failure to complete on time. The special conditions of the contract normally provide the penalties for late completion, and on most occasions this can range in penalty interest rates from 5% to 20% per annum (calculated daily) depending on the drafting of the special condition of the contract.
For example, if you still owe the seller $300,000 under the contract and there is a penalty interest rate in the contract for 10% per annum calculated daily, and you delay for 5 days, then the penalty interest would be approx $410.96.
In addition to the possibility of penalty interest, the seller may have the right under the contract to terminate or rescind the contract for the failure of the buyer to settle. There are strict time frames in the contract if the seller wishes to take this course.
Failure to settle by the purchaser, through no fault of the seller, will normally also allow the seller to keep the deposit already paid.
There are also further avenues available to the parties including specific performance, termination and rescisssion. Every contract is unique, and all parties should get proper legal advice during the process.
(Note - these are general comments and parties should always get independent legal advice on their particular situation)
Comments by Dean Carver
Property Lawyer
Australia
Ph: (02) 9773 4550
Thursday, May 27, 2010
Wednesday, May 26, 2010
What is included with the sale of property?
Are you buying a home? How do you know what is included in the sale? Is the dishwasher included? Is the TV antennae included? These and other items are issues that should be specifically addressed in the contract.
The specific details of what is included in the sale is normally contained on the front page of the contract. Buyers should ensure that they properly instruct and discuss with their lawyers as to what they intend including or what they think is included. It is also common for real estate agents to fill out the details of the inclusion. In that case, buyers should ensure that they are aware what inclusions the Agent is marking on the contract before they sign.
Once the Contracts are exchanged and dated, the inclusions cannot be changed unless agreed to by both buyer and seller.
This is also the case with exclusions to the property. For example, if the Vendor does not want his "mounted plasma TV" included in the sale, his lawyer will mark this as an EXCLUSION on the contract. This means that the owner will be taking the TV away from the property at settlement. As a buyer, if you want the TV to remain, make sure that it is marked as an inclusion on the contract.
"pool equipment" is another common area of dispute. If you want the pool equipment to remain on the property, make sure it is marked as an inclusion. Some owners take the pool equipment with them to their new property.
I recently acted for a client that had palm trees on the property (in the ground) that they wanted to take with them. This is uncommon, but was marked as an exclusion on the contract.
Where can you find the list of inclusions on the contract? On the 2005 edition of the contract (as approved by the Law Society of NSW and Real Estate Institute), this is normally found about 1/2 way down the front page in a box.
Before you sign the contract, make sure that you are specifically aware of what comes with the property and what is excluded.
I always suggest that you address the issue of inclusions and exclusions with the Agent at the time of inspection. That way, it is easy to identify what is and what is not included and can be accordingly marked on the contract. You don't want to get to settlement time and find out that the big 50inch TV which you thought would stay mounted in the lounge room has been removed and there are holes left in the wall.
Buyer beware.
(Note - This is general advice only, buyers and sellers should obtain specific legal advice before entering into a contract)
Comments by Dean Carver
Property Lawyer, Sydney NSW
Ph: (02) 9773 4550
The specific details of what is included in the sale is normally contained on the front page of the contract. Buyers should ensure that they properly instruct and discuss with their lawyers as to what they intend including or what they think is included. It is also common for real estate agents to fill out the details of the inclusion. In that case, buyers should ensure that they are aware what inclusions the Agent is marking on the contract before they sign.
Once the Contracts are exchanged and dated, the inclusions cannot be changed unless agreed to by both buyer and seller.
This is also the case with exclusions to the property. For example, if the Vendor does not want his "mounted plasma TV" included in the sale, his lawyer will mark this as an EXCLUSION on the contract. This means that the owner will be taking the TV away from the property at settlement. As a buyer, if you want the TV to remain, make sure that it is marked as an inclusion on the contract.
"pool equipment" is another common area of dispute. If you want the pool equipment to remain on the property, make sure it is marked as an inclusion. Some owners take the pool equipment with them to their new property.
I recently acted for a client that had palm trees on the property (in the ground) that they wanted to take with them. This is uncommon, but was marked as an exclusion on the contract.
Where can you find the list of inclusions on the contract? On the 2005 edition of the contract (as approved by the Law Society of NSW and Real Estate Institute), this is normally found about 1/2 way down the front page in a box.
Before you sign the contract, make sure that you are specifically aware of what comes with the property and what is excluded.
I always suggest that you address the issue of inclusions and exclusions with the Agent at the time of inspection. That way, it is easy to identify what is and what is not included and can be accordingly marked on the contract. You don't want to get to settlement time and find out that the big 50inch TV which you thought would stay mounted in the lounge room has been removed and there are holes left in the wall.
Buyer beware.
(Note - This is general advice only, buyers and sellers should obtain specific legal advice before entering into a contract)
Comments by Dean Carver
Property Lawyer, Sydney NSW
Ph: (02) 9773 4550
Thursday, May 13, 2010
New Property Tax for NSW property
The NSW Government is set to introduce a new property tax on transfers above $500,000. The tax will be added to the existing taxes on transfers and is expected to be 0.2% on property transfers between $500,000 and $1million and will be 0.25% above $1million.
The tax has passed through the NSW upper house late yesterday and it is expected that the new tax will come into effect around July this year.
On a $750,000 purchase or transfer, the new tax will be approx $500 in addition to all other stamp duty and existing charges.
The only positive is that the new tax will not apply to property transfers of value below $500,000. However, with a Sydney medium house price in March 2010 of approx $595,000 according to Australian Property Monitors, it is likely that the new tax will affect many NSW buyers in the future.
For further details, have a look at this recent article
http://www.news.com.au/money/property/premiers-sneaky-tax-on-property/story-e6frfmd0-1225865832122
Stay tuned for the effective commencement date. Buyers should factor these new charges in their own budgets when they look to buy in NSW.
Comments by
Dean Carver - Solicitor
Carver Lawyers (Sydney)
Ph: (02) 9773 4550
The tax has passed through the NSW upper house late yesterday and it is expected that the new tax will come into effect around July this year.
On a $750,000 purchase or transfer, the new tax will be approx $500 in addition to all other stamp duty and existing charges.
The only positive is that the new tax will not apply to property transfers of value below $500,000. However, with a Sydney medium house price in March 2010 of approx $595,000 according to Australian Property Monitors, it is likely that the new tax will affect many NSW buyers in the future.
For further details, have a look at this recent article
http://www.news.com.au/money/property/premiers-sneaky-tax-on-property/story-e6frfmd0-1225865832122
Stay tuned for the effective commencement date. Buyers should factor these new charges in their own budgets when they look to buy in NSW.
Comments by
Dean Carver - Solicitor
Carver Lawyers (Sydney)
Ph: (02) 9773 4550
Tuesday, May 11, 2010
27,000 households have already missed mortgage payments
In a recent article, independent rate monitor, RateCity has indicated that approximately 27,000 households have missed mortgage repayments and this figure is expected to rise.
http://www.news.com.au/money/property/house-prices-set-to-stall-say-experts/story-e6frfmd0-1225864312449
Finally the Reserve Bank looks to have succeeded in slowing the real estate market with its recent rate rise.....only time will tell.
Rising interest rates, increasing unemployment, and rising mortgage defaults can only lead to a slowdown in the real estate market. Good for some, but bad for others.
If you are a buyer, make sure that you allow at least a further 2-3% increase in rates and that you can afford loan repayments at an approximate standard variable rate of 9%.. I would even go as far to say that you should commence making your mortgage repayments at a level much higher than required so that you have an adequate buffer for unforeseen circumstances in the future. For example, if your current rate is 7.5%, why not make repayments equivalent to 9%. Not only will this give you the opportunity to pay off your loan quicker, it should allow you a good buffer if other expenses or repairs come up in the future. Talk to your mortgage broker to make sure you can pay the additional amounts.
With the scenario that sellers are defaulting on mortgage payments, this has allowed the buyer to take advantage of that situation to buy well. Ensure that you have a good negotiator on your side when you go to buy. Remember, you make your money when you buy. So buy right at the beginning.
If you are looking for a professional real estate negotiator to help you with a purchase or help you when you sell, please do not hesitate to contact me.
Dean Carver, Solicitor
Real estate lawyer & Negotiator
Carver Lawyers - Sydney
Ph: (02) 9773 4550
http://www.news.com.au/money/property/house-prices-set-to-stall-say-experts/story-e6frfmd0-1225864312449
Finally the Reserve Bank looks to have succeeded in slowing the real estate market with its recent rate rise.....only time will tell.
Rising interest rates, increasing unemployment, and rising mortgage defaults can only lead to a slowdown in the real estate market. Good for some, but bad for others.
If you are a buyer, make sure that you allow at least a further 2-3% increase in rates and that you can afford loan repayments at an approximate standard variable rate of 9%.. I would even go as far to say that you should commence making your mortgage repayments at a level much higher than required so that you have an adequate buffer for unforeseen circumstances in the future. For example, if your current rate is 7.5%, why not make repayments equivalent to 9%. Not only will this give you the opportunity to pay off your loan quicker, it should allow you a good buffer if other expenses or repairs come up in the future. Talk to your mortgage broker to make sure you can pay the additional amounts.
With the scenario that sellers are defaulting on mortgage payments, this has allowed the buyer to take advantage of that situation to buy well. Ensure that you have a good negotiator on your side when you go to buy. Remember, you make your money when you buy. So buy right at the beginning.
If you are looking for a professional real estate negotiator to help you with a purchase or help you when you sell, please do not hesitate to contact me.
Dean Carver, Solicitor
Real estate lawyer & Negotiator
Carver Lawyers - Sydney
Ph: (02) 9773 4550
Thursday, May 6, 2010
Bank Customers are being ripped off
Recently the Westpac Bank announced a net cash profit of nearly $3 billion in its half yearly results. Great for shareholders but is it good for the bank customer.
Whilst the Bank is making huge profits, it has been brought to my attention that the Banks are paying customers minimal interest for the use of their money. Take for example, Stgeorge Bank which is currently offering an interest rate of 0.01% per annum for your money in a freedom account. That means the Bank pays you 0.01%p.a and lends other people money at an interest rate of approx 7.0%+. Its clear why the Banks are making huge profits.
For example, if you had $50,000 in your transaction account and the Bank paid you 0.01% then you would receive $5 for the year in interest. If the Bank lent that same money at 7%, they would get $3,500 per year in interest. Its clear who is making the "big bucks"
Whilst there is available the option to customers of putting their money in a fixed term deposit at a better rate, say 5%, this means that the customers money is tied up for a fixed period and cannot be withdrawn without penalty. Many consumers are just leaving their money in a transaction account to which the Bank has access for a small interest payment of 0.01%.
The cash economy is virtually gone and everybody needs a Bank Account, whether it is to electronically pay bills or an Account in which to receive their salary. Employers do not pay cash to employees anymore. Australians are now forced to have some sort of account. Banks use that money and pay you virtually nothing for it/. Is this robbery? You be the judge.
I guess, on a question of law, the Bank needs to give some sort of consideration to use your money. Thats why they give you 0.01%.
Australians should keep an eye on where their money is and what they are getting in interest for that money.
Comments by Dean Carver
Solicitor
Carver Lawyers - Sydney
Whilst the Bank is making huge profits, it has been brought to my attention that the Banks are paying customers minimal interest for the use of their money. Take for example, Stgeorge Bank which is currently offering an interest rate of 0.01% per annum for your money in a freedom account. That means the Bank pays you 0.01%p.a and lends other people money at an interest rate of approx 7.0%+. Its clear why the Banks are making huge profits.
For example, if you had $50,000 in your transaction account and the Bank paid you 0.01% then you would receive $5 for the year in interest. If the Bank lent that same money at 7%, they would get $3,500 per year in interest. Its clear who is making the "big bucks"
Whilst there is available the option to customers of putting their money in a fixed term deposit at a better rate, say 5%, this means that the customers money is tied up for a fixed period and cannot be withdrawn without penalty. Many consumers are just leaving their money in a transaction account to which the Bank has access for a small interest payment of 0.01%.
The cash economy is virtually gone and everybody needs a Bank Account, whether it is to electronically pay bills or an Account in which to receive their salary. Employers do not pay cash to employees anymore. Australians are now forced to have some sort of account. Banks use that money and pay you virtually nothing for it/. Is this robbery? You be the judge.
I guess, on a question of law, the Bank needs to give some sort of consideration to use your money. Thats why they give you 0.01%.
Australians should keep an eye on where their money is and what they are getting in interest for that money.
Comments by Dean Carver
Solicitor
Carver Lawyers - Sydney
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