Conveyancing & Property Law
Conveyancing – buying and selling property
Conveyancing is the legal process of transferring real property from one party to another.
Real property refers to any house or vacant land or strata unit inclusive of residential, rural and commercial property. Conveyancing involves an intricate knowledge of property law and an understanding of all the processes involved from contract review through to settlement.
Signing a contract to buy or sell real property creates binding obligations between the parties. Buyers must carry out due diligence before and after entering the contract, and sellers must have a compliant contract in place with required disclosure documentation before marketing their property.
The implications for breach of contract, failing to complete a binding contract, or purchasing a property with unknown defects are significant, so it is important to understand your legal position before entering such arrangements.
Buying or selling property is the largest financial transaction most Australians will make in their lives, and property law is complex and technical. We understand this, which is why we offer a personalised service carried out by your own solicitor to help you navigate the processes and protect your interests and investment.
Strata title
If you are buying a strata title property, you should consider some additional matters before your purchase.
Strata title property comprises land in a strata scheme inclusive of individual lots and common property. Owners within a strata scheme are automatically members of the Owners Corporation, who then appoint an executive committee.
The legal title to each lot within a strata scheme, is held outright by the owner who also holds an interest with other lot owners in common property such as stairways, lifts, gardens and swimming pools. The lot is defined according to the respective strata plan and generally is inclusive of the internal areas of the individual unit which may include an adjoining balcony or patio and sometimes a garden area.
When we refer to strata property most people think of residential units in apartment buildings, but strata property can include free standing villa’s and commercial units.
After purchasing a strata unit, the owner automatically becomes a member of the owners’ corporation, which is responsible for managing the strata scheme. This involves arranging insurance, repairs and maintenance, keeping records, and appointing managing agents or building managers. Inspecting the strata records before committing to a contract is important to obtain information regarding the financial status of the strata scheme, the history of the building, past and pending building works, and special levies.
As a member of the owners’ corporation, a lot owner is bound by the by-laws which regulate matters such as permitted renovations, noise restrictions, parking, and the keeping of animals. By-laws may be restrictive and impact the day-to-day living in a strata scheme. They should be reviewed carefully by prospective purchasers.
Community Management Schemes
Another form of strata is encompassed within Community Management Schemes which typically involves a larger land parcel or ‘estate’ containing several strata schemes enjoying communal facilities which might include tennis courts and swimming pools. All the strata schemes contribute to the management of the common property and the community management scheme provides overarching control of the ‘estate’. These are not the most common form of strata but when dealing with a community title the contract documents must disclose information about all the strata schemes and this can add to the cost of contract preparation or searches when purchasing.
Company title
Company title is no longer commonly encountered but prior to the introduction of strata law it was the sole method of owning buildings with multiple dwellings or commercial spaces which could be individually bought and sold. Our firm has dealt with purchase and sale of company titles quite often because several are company title buildings located in and around Sydney.
A company title property is one where the company owns the building and may issue shares to shareholders which shareholding gives exclusive use to particular areas of the building. The share ownership is recorded by the company and may be recorded with ASIC although our firm has dealt with cases where to the surprise of the shareholder their shareholding was not recorded which is a problem when certainty of entitlement to use of property is important. A failure to record a shareholding with ASIC giving exclusive use to a particular apartment in the building or to a garage or car space deprives the shareholder of protection against possible fraudulent transfer of the shares.
Another issue with company title is that when buying a property, the consent of the directors of the company is required and the purchaser must be deemed suitable.
Also, lenders are reluctant to lend on company title because they cannot register a mortgage on the company title. This is different in strata transactions where each lot in the strata is individually owned and recorded in the NSW Lands Registry so a lender can register a mortgage with NSW Lands Registry. The loan interest is clearly documented and the title cannot be transferred or otherwise encumbered unless the mortgage is discharged.
In a company title transaction, a lender will notify the company of its interest secured over the shares. Because there is no central register and lenders retain original share certificates, sometimes the original share certificates can be mislaid which can be problematic years later. However, lenders are able to record their interest in shareholdings owned by an individual in a company title property on the Personal Property Securities Register, which might give lenders more confidence in advancing loan funds. Any purchaser of a company title shareholding would be wise to ensure a search of the Personal Property Securities Register.
An advantage of buying a company title is that they are usually spacious older buildings often in desirable locations but their sale prices are somewhat reduced because of the difficulties with company title.
As a seller of company title property, you need a specially prepared contract of sale including details of the company’s memorandum and articles and the shareholding.
Company Title Conversion to Strata
A company title building can be converted to strata but it is a complex process and does take time because various building certifications, survey and plan preparation and council approvals are necessary along with consents of all owners before any formal application can be made to NSW Lands Registry for title conversion. Sometimes company title buildings have been built on land incorporating several titles and those pre-existing titles must be consolidated in a single plan of subdivision before the strata plan can later be finalised, approved by council and registered with NSW Lands Registry.
Also, before any action is taken the shareholders in the company must vote at a general meeting to commit to the costs involved in the conversion. Generally, the value of individual units increases once a company title property is converted to strata title.
Rural Property
There can be special considerations when buying or selling rural land including checking if there are any Crown land implications or if the land encompasses enclosed roads or rights of way and or restrictions on use or what if any water rights might exist.
Property ownership interests and rights
The manner in which a legal interest in property is held can impact other areas of law such as succession and estate planning, and is an important consideration when disputes arise.
Property held between co-owners as joint tenants is held as a whole – the interests cannot be apportioned into specific shares and the joint tenancy is subject to survivorship provisions. When one co-owner dies, his or her share automatically passes to the remaining owner/s. It cannot be left to anybody else, even if the deceased owner’s Will provides otherwise.
Property held as tenants in common can specify the individual shares held by each owner which need not be equal and may be transferred, sold or left to a beneficiary in a Will.
Property disputes are usually triggered by changing circumstances – a relationship or business breakdown, financial stress or the death of a co-owner. It is important to obtain professional advice regarding ownership interests when purchasing property with a co-owner, or when disputes regarding legal interests arise.
Subdivisions
A subdivision involves the partition of land into smaller parcels, ranging from the division of a single lot into two, to the creation of numerous lots in a large residential or strata development. Once subdivided, a title is created for each new portion of land which can be separately sold and transferred.
Land subdivision is governed by legislation, regulations, planning schemes and policies administered by local councils and other government bodies. Subdivision developments are complex, and it is important to understand the overlap of the relevant laws, and the processes required to achieve the proposed objectives and minimise costly mistakes.
Collaborating with an experienced property lawyer and surveyor to check off due diligence matters, liaise with relevant authorities, and to prepare and explain titling and legal concepts is invaluable throughout this process.
Commercial and retail leasing
A commercial lease governs the relationship between a landlord (lessor) and tenant (lessee) regarding the lessee’s right to occupy premises owned by the lessor. Commercial leases are frequently the subject of legal disputes which often occur due to poorly drafted, ambiguous or non-existent lease agreements, and / or the failure of a party to understand the terms of the lease.
A leasing arrangement is a valuable commodity for both the lessor (whose investment in the commercial premises must be adequately protected) and the lessee (who relies on reasonable terms and security of location to operate a business).
Retail leases are commercial leases regulated by specific legislation which typically applies to premises within shopping centres or that are used wholly or predominantly for conducting a retail business. Retail leasing legislation aims to enhance consumer protection by stipulating minimum terms and conditions and limiting certain provisions that are deemed unreasonable for a lessee. The legislation also imposes certain disclosure obligations upon a lessor.
Lessors and lessees should obtain appropriate advice to ensure their negotiations are properly reflected in a lease agreement, and the provisions comply with any relevant legislation.
Property law Summary
We have outlined summary information about real property but recommend that you should always seek advice when dealing with property transactions. Property law can be complex and involves a range of matters in addition to the sale and purchase of real estate. Sometimes there are tax issues to consider including various revenue rulings pertaining to transfer duty or Foreign Resident surcharges and land tax. Separately there may be federal tax implications such as capital gains tax or Foreign Resident Capital Gains withholding tax.
On the death of an owner of real property it is also necessary to take action to change the official lands registry records which might involve action to change the title to the name of the surviving joint owner or to transmit the property to an executor or to a beneficiary. The latter may sometimes trigger transfer duty payable to NSW Revenue subject to the express terms of the will.
Costs & Disbursements.
When you buy property, you pay transfer duty and when we act for you we incur disbursements on your behalf in ordering relevant searches and enquiries. Some enquiries should preferably be made for your protection prior to exchange. These might include a pest and building report, or for strata plans a strata records inspection. Others are obtained after exchange.
When you sell property, the law requires a contract to be provided with various information to be attached and we must order searches and certificates to comply with the legal obligations.
We pay a fee for searches and enquiries to the providers, which fee is separate from our professional costs.
For conveyancing we outline the scope of work expected and offer a fixed fee estimate for that scope of works. We issue cost disclosures at the commencement of each matter outlining our fees and the estimated disbursements. We outline for you the government charges you are likely to incur in the transaction such as estimated stamp duty and land registry fees
At M Duncan & Associates we are highly experienced in this area of law. You will always be able to consult directly with a solicitor in respect of your matter and we aim to be informative and transparent when acting on your behalf.
If you need any assistance contact one of our lawyers at [email protected] or call 02 9699 9877 for a no-obligation discussion and expert legal advice.