Information for Sellers

Agent’s Commission

It is usual practice for the Agent to hold the deposit in their trust account and following settlement the Agent will pay their commission from the deposit and then transfer the balance of the deposit to you.

In the event that the deposit is not sufficient to cover the Agent’s commission, a cheque will be drawn at settlement to cover the balance.

We will notify the Agent once settlement has been effected and authorise them to release the keys to the Buyer, and as noted above, any balance of the deposit, after the commission is paid, will be released to you.

Building and Pest Inspections

If the contract is subject to building and pest inspections, the Buyer must obtain at least one of the reports.

The Buyer must:

  • use licenced inspectors; and
  • obtain written reports.

The Buyer must notify the Seller before 5:00pm on the due date whether the inspections are satisfactory. If the Buyer doesn’t notify the Seller by 5:00pm on the due date, the contract remains on foot and either party may terminate the contract.

If the Buyer elects to terminate the contract, we will request a copy of the inspection reports to ensure the Buyer is ‘acting reasonably’ by terminating.

The information in the reports may assist in negotiating to keep the current Buyer, or, to rectify the issues before entering into another contract.

Buying and Selling at the same time

If you are buying and selling at the same time (simultaneously), a special condition should be inserted into your purchase contract (prior to signing) so your purchase is conditional on your sale settling. If funds are being used from the sale to facilitate the purchase, the two settlements can be conducted on the same day, with the funds from the sale being used for the purchase.

Failure to include this Special Condition may mean that you must proceed with your purchase without your sale contract settling, which may not be financially possible without the proceeds of your sale.

Please contact us to discuss your specific requirements before entering into a contract.

Capital Gains Tax Withholding Payments

Whilst the Capital Gains Tax Withholding payments were initially designed to ensure that foreign residents met their liability when selling land in Australia, it now applies to all property sales where the purchase price is $750,000.00 or more.

If the purchase price is $750,000.00 or more, you are required to produce a valid clearance or variation certificate for each Seller from the A.T.O.

You can apply for the clearance or variation certificate by following this link:

Foreign Resident Capital Gains Withholding Clearance Certificate Application for Australian Residents

The issuing of a clearance certificate by the A.T.O. to the Seller is confirmation that the Buyer is not required to pay any part of the purchase price to the A.T.O. at settlement.

A clearance certificate is usually issued where the Seller is an Australian Resident.

If a clearance certificate is not obtained, the Buyer is required to withhold 12.5% of the purchase price and pay that amount to the A.T.O.

Please contact us immediately if you think this may present an issue for you.

If you are a foreign resident Seller, an application can be made to the A.T.O. for a variation notice to be issued to lower the amount of the CGT withholding.

If a CGT withholding is made, you will need to lodge an income tax return declaring any capital gain and the CGT withholding credit. You should obtain financial advice in this regard as it is outside the scope of a conveyance.

Chattels

Before settlement, you must remove all chattels not included in the sale along with any rubbish on the property. You should ensure this is done prior to the Buyer conducting their pre-settlement inspection.

The Agent will be able to advise you of the time and date that the Buyer has scheduled the pre-settlement inspection.

You should also ensure that any excluded fixtures noted in the contract are also removed.

Cooling Off Period

The contract is subject to a 5 business day cooling off period (unless sold at auction or the cooling off period has been waived).

The cooling off period starts on the day the Buyer receives a copy of the fully signed contract (if the Buyer receives the contract on a day that isn’t a business day, then the cooling off period commences on the next business day).

The cooling off period ends at 5:00pm on the 5th business day, i.e. the buyer receives the Contract at any time on a Monday (that isn’t a public holiday). The cooling off period ends at 5:00pm on the Friday.

If the Buyer terminates the contract under the cooling off period, you are entitled to retain 0.25% of the purchase price from the deposit paid (if the Buyer has not paid the deposit then you cannot retain the penalty.

Deposit

The deposit is usually held by the Real Estate Agent, in their trust account (and if there is no Real Estate Agent then the deposit will be held in the Seller’s Solicitor trust account).

The deposit can be an amount up to 10% of the purchase price but not more than 10% otherwise this may become an ‘instalment contract’.

Payment of the deposit is a sign of the Buyer’s intention to proceed with the contract and is usually paid in two instalments:

  • the initial deposit which is usually payable within a few days of the Contract Date; and
  • the balance deposit which is usually payable when the Contract becomes unconditional.

If the Buyer terminates the Contract, because they are unable to satisfy a condition (i.e. finance approval, due diligence or an unsatisfactory building and pest inspection) then the deposit should be refunded to the Buyer.

Early Possession

There are a range of issues which must be considered before agreeing to early possession, such as:

  • land tax liability;
  • recovering possession; and
  • general damage to the property.

The standard REIQ contract does allow the following terms if you do agree to the Buyer obtaining early possession:

  • the Buyer must insure the Property to the Seller’s satisfaction;
  • the Buyer must maintain the Property in substantially ‘its condition at the date of possession, fair wear and tear excepted’;
  • the Buyer takes possession under a personal licence that the Seller can revoke at any time (i.e. not a general tenancy agreement);
  • the Buyer indemnifies the Seller against any expense or damages incurred as a result of the Buyer’s possession of the property.

There are other conditions which can be imposed on the Buyer and we will discuss those with you should the need arise.

There is a significant risk to you if you allow the Buyer early possession. You may incur expenses or suffer a loss if:

  • the Buyer does not settle and has not maintained the property;
  • the Buyer does not settle and has improved the property in any way – although you are not required to compensate them for any improvements they have made, the Buyer may commence court action against you to seek compensation, which can be a costly exercise; or
  • you decide to revoke the Buyer’s licence to possession (which the Seller can do at any time for any reasonable reason). The Buyer may resist eviction from the property and you will not be able to rent or sell the property and you may not be successful in claiming compensation from the Buyer.

In some circumstances, it may be beneficial to you to grant the Buyer early possession (i.e. you need an extension but the Buyer is ready to settle and may terminate if the property does not settle).

Electrical Safety Switch

You must ensure that the contract is completed accurately in this regard.

If you are unsure if the property has a safety switch, you should engage an electrician to confirm that for you.

Eligibility for grants

If you obtained the First Home Owners Grant (or a similar grant) when purchasing the property you now wish to sell, and no longer satisfy the eligibility requirements of the grant i.e. ‘all applicants will reside in the new home as their principal place of residence for a continuous period of at least 6 months commencing within 12 months of completion of the eligible transaction’, you should contact the department that administers the grant to see whether you are required to repay some or all of the grant money.

We do not check whether you have an obligation to repay some or all of the grant money.

Fraud, Identity Theft and Hacking

In recent times, there has been an increase in the number of attempted frauds relating to real estate.

It is essential throughout the process that you provide us with a range of private information.

Much of that information can be obtained by fraudsters and identity thieves from publicly available records or by hacking, phishing or trolling through unsecure email transmissions.

Parties to a conveyance are commonly targeted as the nature of the transaction means there is often a requirement to transfer large sums of money.

We will take steps, such as obtaining personal identification from you, to minimise the risk of fraud.

We will ask you to either:

1. Attend at an Australia Post outlet to complete your verification of identity; or
2. Complete your verification of identity online, by way of a secure link through a text message; or
3. Another means which we will discuss with you at the time.

For more information on how the Australia Post Verification of Identity process works, please refer to the following links:

We recommend that you also take steps to minimise the risk that your personal information is fraudulently obtained by being cautious about all communication. This could include:

  • double checking all money transfer requests whether from us, the real estate agent or your financier, despite how legitimate the request may appear;
  • do not transfer any money to any account other than to our trust account without first checking with us, by telephone, that the transaction is necessary; and
  • avoid sending personal and sensitive information via email.
GST Withholding

GST Withholding laws apply when selling new residential premises or potential residential land and require the Buyer to withhold at settlement any GST payable.

New Residential Premises:

Generally, a property will be treated as a new residential premise if it has not been previously sold as a residential premise or is built to replace a demolished premise on the same land.

Potential Residential Land:

Land will be potential residential land when all of the following apply:

  • The land is permissible to use for residential purposes, but does not contain any buildings that are residential premises;
  • The land is included on a property subdivision plan;
  • The land does not contain any building that is in use for a commercial purpose;
  • The following exclusions do not apply:
    • The recipient is registered for GST; and
    • The recipient acquires the land for a creditable purpose.

The amount to be withheld is usually 1/11th of the purchase price, or if the Margin Scheme applies, 7% of the purchase price.

If GST withholding applies, and you think it may affect your ability to pay out any mortgage over the property, please contact us to discuss your options.

Insurance

The property is at the risk of the Buyer from 5:00pm on the first business day after the contract date.

You should keep your insurance policy in place until we confirm with you that settlement has been effected.

Keys and Codes

You will need to deliver all keys, codes and devices for all locks and security systems to the Agent on the day of settlement.

You should make a written record of all codes and combinations necessary to lock or unlock any locks or electronic devices.

In some situations, the Buyer may provide us with 2 business days’ notice that all keys and codes are to be handed over at settlement. In this case, you would deliver all keys and codes to our office no later than midday on the day of settlement.

Land Tax

If entering into a standard contract to sell your house, you are responsible for all land tax, for the current land tax year, as at the settlement date.

The contract will need to be amended if you require an adjustment of land tax at settlement.

PEXA

PEXA (“Property Exchange Australia”) is a recently introduced system which allows for an “electronic” settlement of a conveyancing transaction online.

We are subscribers to PEXA and where able, we will complete a conveyance electronically.

There are many benefits to transacting by PEXA, such as:

  • Manual processes are minimised reducing the risk of human error and delays through pre-checking of documentation by multiple parties prior to settlement;
  • Greater certainty of a successful, on time settlement as no party needs to physically attend a settlement location to swap cheques, transfer documents and mortgage releases; and
  • Funds arrive in your account faster without having to wait for bank cheque clearances.
Pre-Settlement Inspection

The Buyer is entitled to enter the property once for the purpose of conducting a ‘pre-settlement inspection’ to check the condition of the property.

The Agent will usually arrange this with you.

Rates, Water & Body Corporate Notices

We ask that you forward your rates and water notices (if applicable, your body corporate notices) to us to assist in our settlement calculations.

If any of the notices are still outstanding you should advise us as to whether you intend to make payment before settlement. If you do, we suggest that you make any payment at least 7 days prior to settlement to ensure the payment is recorded by the relevant authority.

If you have made payment, please provide us with a copy of the receipt.

Settlement

At settlement, the Buyer will pay the balance purchase price by bank cheque.

If the settlement is an electronic transaction, we will settle the matter using PEXA (Property Exchange Australia electronic platform) and the balance purchase price will be transferred to your bank account electronically as cleared funds on the day of settlement.

Prior to settlement, we will provide you with draft settlement figures, which include adjustments for rates, water and if applicable, body corporate levies. Making these adjustments mean you will have no further obligation for payment to these authorities and will be reimbursed by the Buyers for any fees you have paid in advance.

You are not required to attend settlement. However, you are required to ensure that you have vacated the property prior to the time we arrange for settlement (usually between 2pm-4pm) and provide the keys, locks, garage door openers, remote controls, and any codes required to operate any fixture, fitting, or chattel to the Real Estate Agent (if there is no Agent we will make alternative arrangements with you).

Settlement Adjustments

We make adjustments for the following in the settlement figures:

  • rates;
  • water and sewerage access charges;
  • water consumption;
  • body corporate administration levy, sinking fund and insurance; and
  • rent (usually only if there is no managing agent).

We do not make adjustments for:

  • electricity;
  • pay T.V.;
  • gas;
  • internet; and
  • telephone services.

We recommend that you contact the above service providers and arrange for disconnection of these services on the proposed settlement date so that reading and charges only up to the proposed settlement date are billed to you.

Smoke Alarms

Failure to install and maintain smoke alarms is an offence under the Fire and Emergency Services Act 1990 (Qld).

If the property does not have compliant smoke alarms installed, you should arrange for that to be done immediately.

If you are unsure whether the property is compliant, we suggest you contact an electrician for advice.

Tenancies

Tenancy noted in contract

Usually a tenancy is only recorded on title where the length of the tenancy is more than 3 years.

In some circumstances the potential Buyer of your property may request that you provide vacant possession to them at settlement.

The notice period required will depend on the type of tenancy.

Fixed Term Agreement

A tenant under a fixed term agreement must be provided a minimum of 2 months’ notice. The tenancy only ends on the end date of the general tenancy agreement or the end date of the notice period, whichever is later.

You may be able to end the agreement earlier if the tenant agrees, but you cannot make the tenant leave because you have decided to sell the property.

We strongly suggest you contact us for advice prior to signing the contract.

Periodic Agreement

Under a periodic agreement the tenant must be given 4 weeks’ notice from the signing of the contract of sale.

Again, we strongly suggest you contact us for advice prior to signing the contract.

Transfer Documents

The transfer documents are signed by the Seller and provided to the Buyer at settlement to enable ownership of the property to transfer from the Seller to the Buyer.

If signing in Australia

Individual

You must sign the transfers in the presence of:

  • a Justice of the Peace;
  • a Commissioner for Declarations;
  • an Australian Lawyer;
  • a Notary Public;
  • a licenced conveyancer from another state; or
  • another person approved by the Registrar of Titles.

You will be required to prove your identity along with your entitlement to sign the transfer.

We recommend that you present as many relevant documents to the witness as possible to assist them in complying with their obligations.

The witness is required to take reasonable steps to ensure that the person signing the form is entitled to do so.

If you fail to provide adequate evidence of your identity or entitlement to sign, they may decline to witness your signature.

You will be required to show the following to the witness:

  • a current rates notice;
  • a current title search; or
  • a current land tax assessment notice.
FOR PERSONS WHO ARE AUSTRALIAN CITIZENS OR RESIDENTS
CategoryMinimum document requirements
Category 1

Australian Passport or foreign passport or Australian Evidence of Immigration Status ImmiCard or Australian Migration Status ImmiCard

AND Australian drivers licence OR Photo card

AND if name has changed Marriage certificate OR Change of name certificate

Category 2

Australian Passport or foreign passport or Australian Evidence of Immigration Status ImmiCard or Australian Migration Status ImmiCard

AND Full birth certificate OR Citizenship certificate OR Descent certificate

AND Medicare card OR Centrelink card OR Dept. Veterans’ Affairs card

AND if name has changed Marriage certificate OR Change of name certificate

Category 3

Australian drivers licence OR Photo card

AND Full birth certificate OR Citizenship certificate OR Descent certificate

AND Medicare card OR Centrelink card OR Dept. Veterans’ Affairs card

AND if name has changed Marriage certificate OR Change of name certificate

Category 4(a)

Australian Passport or foreign passport or Australian Evidence of Immigration Status ImmiCard or Australian Migration Status ImmiCard

AND Another form of government issued photographic identity document

AND if name has changed Marriage certificate OR Change of name certificate

Category 4(b)

Australian Passport or foreign passport or Australian Evidence of Immigration Status ImmiCard or Australian Migration Status ImmiCard

AND Full birth certificate

AND Another form of government issued identity document

AND if name has changed Marriage certificate OR Change of name certificate

Category 5(a)

Identifier Declaration

AND Full birth certificate OR Citizenship certificate OR Descent certificate

AND Medicare card OR Centrelink card OR Dept. Veterans’ Affairs card

AND if name has changed Marriage certificate OR Change of name certificate

Category 5(b)

Identifier Declaration by a person specified in Verification of Identity Standard paragraph 4.4(e)

AND Medicare card OR Centrelink card OR Dept. Veterans’ Affairs card

AND if name has changed Marriage certificate OR Change of name certificate

FOR PERSONS WHO ARE NOT AUSTRALIAN CITIZENS OR RESIDENTS
Category 6(a)

Foreign passport

AND Another form of government issued photographic identity document

AND if name has changed Marriage certificate OR Change of name certificate

Category 6(b)

Foreign passport

AND Full birth certificate

AND Another form of government issued identity document

AND if name has changed Marriage certificate OR Change of name certificate

Power of Attorney

An attorney for a person or corporation can sign the transfer under the authority of a Power of Attorney.

You will need to produce the original, or certified copy of the Power of Attorney to the witness as your entitlement to sign.

The Power of Attorney is required to be registered with the Titles Office. It is not required to be registered prior to you signing the document, however you will need to provide the original or certified copy of the Power of Attorney with the signed transfer so we can attend to registration on your behalf.

A signing clause must be inserted adjacent to the signature of the attorney stating the following:

“ ‘Name of Principal’ by their duly constituted attorney ‘Name of Attorney’ under Power of Attorney ‘Dealing number of registered power of attorney’.”

Company

A corporation can execute the transfer document without the requirement for the signature to be witnessed. The following information must be adjacent to the signature:

  • full name of company;
  • A.C.N and
  • designation of signatory (i.e. Director).

If signing outside Australia

We suggest that you contact our office to discuss your options for having documents witnessed outside of Australia.

Understanding your Settlement Statement

The settlement statement is the document prepared by us which sets out the financial information of your sale including the adjustments which are required to be made under the contact.

The following information will assist you in understanding the information contained in the statement:

Purchase Price:

This is the price that you have agreed to sell the property.

Deposit:

This is the total deposit that the Buyer has paid as per the terms of the contract. The Agent usually holds this amount in their trust account.

The Agent will usually deduct their commission from the deposit and any balance remaining is refunded to the Seller.

In the event the deposit does not cover the Agent’s commission, a cheque for the balance will be drawn at settlement.

Release of Mortgage:

It is the Seller’s responsibility to ensure that all mortgages registered over the property are released on or before settlement and this includes the cost of registering the release document with the Titles Office. The Titles Office registration fee is noted on your settlement statement as a deduction from the purchase price as the Buyer will attend to the lodgement of the release when they register the transfer following settlement.

Water Consumption:

Water consumption is billed in arrears. This means that when the Buyer receives their 1st bill for water, it will include a portion of water usage from when you owned the property up to the settlement date.

The Buyer will order a ‘special water meter read’ for the property at their expense to establish the status of water usage and account balance prior to the settlement date.

An adjustment is made in the Buyer’s favour (a reduction of the purchase price) for your water consumption – from the date the water usage has been paid to – (i.e. the last water meter read done on the property) up until the settlement date.

The water consumption charges up to and including the settlement date will appear on the next water bill and will be the Buyer’s responsibility to pay in full.

Water and Sewerage Access Charges:

If the charges have been paid by you, prior to settlement, an adjustment will be made in your favour from the settlement to the end of the current period that the charges relate to.

For example:

Water and sewerage access charges total $200 for the period from 1 Jan 2020 to 31 March 2020. The settlement date is 1 February 2020.

We calculate this by:

1. Calculating the number of days from 1 January 2020 to 31 March 2020; equals 91 days.
2. Calculating the number of days from settlement date to 31 March 2020; equals 59 days (attributable to the Seller).
3. ($200/91 days) = $2.197 per day x 59 days = $129.67

$129.67 will be added to the funds required from the Buyer to cover your pre-payment of the access charges.

If the charges remain outstanding, we will attend to payment of the outstanding account with your Utilities provider (on your behalf) from the settlement funds and make an adjustment in your favour for the Buyer’s share as we would have if the charges had been paid by you prior to settlement. We do this so the charges are paid in full at the time of settlement and there can be no dispute over who is responsible for the payment once settlement has taken place.

Occasionally, settlement may occur at a time that the charges have not yet been issued by the authority. In these circumstances, we make an adjustment in the Buyer’s favour for your share of the charges from the start of the period until the settlement date.

The Buyer will be issued with a bill for those charges and it will be the Buyer’s responsibility to pay the charges in full.

Rates

If the rates have been paid by you, prior to settlement, an adjustment will be made in your favour from the settlement to the end of the current period that the charges relate to.

For example:

Rates charges total $200 for the period from 1 Jan 2020 to 31 March 2020. The settlement date is 1 February 2020.

We calculate this by:

1. Calculating the number of days from 1 January 2020 to 31 March 2020; equals 91 days.
2. Calculating the number of days from settlement date to 31 March 2020; equals 59 days (attributable to the Seller).
3. ($200/91 days) = $2.197 per day x 59 days = $129.67

$129.67 will be added to the funds required from the Buyer to cover your pre-payment of the rates charges.

If the charges remain outstanding, we will attend to payment of the outstanding account with your Council (on your behalf) from the settlement funds and make an adjustment in your favour for the Buyer’s share as we would have if the charges had been paid by you prior to settlement. We do this so the charges are paid in full at the time of settlement and there can be no dispute over who is responsible for the payment once settlement has taken place.

Occasionally, settlement may occur at a time that the charges have not yet been issued by the authority. In these circumstances, we make an adjustment in the Buyer’s favour for your share of the charges from the start of the period until the settlement date.

The Buyer will be issued with a bill for those charges and it will be the Buyer’s responsibility to pay the charges in full.

Body Corporate Levies

If the levies have been paid by you, prior to settlement, an adjustment will be made in your favour from the settlement to the end of the current period that the charges relate to.

For example:

Levies charges total $200 for the period from 1 Jan 2020 to 31 March 2020. The settlement date is 1 February 2020.

We calculate this by:

1. Calculating the number of days from 1 January 2020 to 31 March 2020; equals 91 days.
2. Calculating the number of days from settlement date to 31 March 2020; equals 59 days (attributable to the Seller).
3. ($200/91 days) = $2.197 per day x 59 days = $129.67

$129.67 will be added to the funds required from the Buyer to cover your pre-payment of the levies.

If the charges remain outstanding, we will attend to payment of the outstanding account with your Body Corp (on your behalf) from the settlement funds and make an adjustment in your favour for the Buyer’s share as we would have if the charges had been paid by you prior to settlement. We do this so the charges are paid in full at the time of settlement and there can be no dispute over who is responsible for the payment once settlement has taken place.

Occasionally, settlement may occur at a time that the charges have not yet been issued by the Body Corp. In these circumstances, we make an adjustment in the Buyer’s favour for your share of the charges from the start of the period until the settlement date. The Buyer will be issued with a bill for those charges and it will be the Buyer’s responsibility to pay the charges in full.

Reduction – Building and Pest

If a reduction of the purchase price was negotiated under the building and pest condition, that reduction will appear in the settlement statement.

Bank Cheques:

Under the contract, the Buyer is responsible for the payment of the fees for bank cheques which are payable to you or your mortgagee.

If any other cheques are required to be paid from the settlement proceeds (i.e. Agent’s commission, legal fees, payment to councils, water utilities or body corporates) those fees are payable by you and an adjustment will be made in the Buyer’s favour for the additional bank cheque fees.

If you need any assistance contact one of our lawyers at hello@savvylaw.com.au or call 07 3733 1541 for a no-obligation discussion and legal advice.​