Whether buying or selling real estate, it is essential to seek the services of a conveyancer who will undertake the legal work involved in preparing the sales contract, mortgage and other related documents as a seller, and review and highlight your rights and obligations as a purchaser.
By law, a vendor is required to have a contract of sale drafted before marketing the property. And it is important that the terms of the agreement are negotiated by both parties and should be closely reviewed by a conveyancer prior to signing the contract.
Once you have entered into the contract, you are legally bound and cannot exist just because you have changed your mind or you are unable to obtain finance. However, in some circumstances, if the other party is in breach of the terms of the contract, you may have a right to rescind.
Usually, the buyer will be penalized for delay in settlement. The vendor can issue a notice to complete and subsequently terminate the contract. However, contracts of sale give the vendor the right to delay the settlement for at least two weeks without penalty.
Usually, the buyer can take possession right after settlement. Early possession is also possible, however the seller is not under any obligation to allow for it. Such situations can be negotiated and agreed up on by both parties.
When purchasing a property, the contract of sale indicates if you will obtain vacant possession and have the right to exclusive use of the property. Or otherwise, subject to existing tenancy, where the tenant will remain in occupation and pay rent to the buyer after completion of the sale.
Unless included in the inclusions section of the contract of sale, all items, belongings or rubbish must be removed by the seller prior to settlement.
If damage to the property occurs after exchange but before completion, there are options available depending on the nature of the damage and the surrounding circumstances. In some cases, the buyer may be entitled to exit the contract after he becomes aware of the damage, or to claim compensation for the cost of repairing the damage.
For residential properties, the seller is responsible for the property and should retain insurance until the sale completes. It then passes on the buyer, so it is important for buyers to take out insurance prior to settlement.
When you dispose of an investment property, you are liable to pay Capital Gains Tax on the profits you make. This is calculated by subtracting the cost involved in acquiring the property (including all expenses to maintain and hold the property) from the sale price. Any profit made on the sale will be included in your assessable income tax for that financial year.
When you are buying property in NSW, you are liable to pay stamp duty on the contract. The duty is calculated on the value of the property.
First home buyers may be eligible for exemption or discount depending on the value of the property.
Land tax is payable for all investment properties calculated yearly on the value of the land. It is generally the responsibility of the vendor to pay land tax. However, sometimes the contract will provide for land tax to be adjusted so that the buyer is liable for payment of the land tax from the date of settlement.
Please contact us for further information.
Stamp duty must be paid within 3 months from the date of the contract. For off the plan properties, stamp duty is payable within 3 months of the date of:
- date of the agreement;
- the assignment of the whole or any part of the purchaser’s interest under the agreement;
- the expiration of 15 months after the date of the agreement;
whichever occurs first.
If finance is obtained, generally the creditor will require the stamp duty be paid on or before settlement.
