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Wk 8: Contract to Settlement, Pt 1 - Coggle Diagram
Wk 8: Contract to Settlement, Pt 1
Transfers
- Qld slower than other states to accept paperless system
- Paper Certificates of Titles gone
- Can still do paper transfers
- Increasing majority of conveyancing is done elctronically
- PEXA is taking over
Ye Olde paper system
Forms 1, 24, 25
- Cl 5.2(1) REIQ H&L contract requires preparation of transfer documents by the BUYERS SOLICITOR
- Cl 1.1(2)(kk) this means:
- form of transfer
- any other doc to be signed by the seller for stamping, registering the transfer
- Cl5.3(1) Seller must deliver to buyer unstamped Transfer Documents capable of immediate registration
- Usually seller --> buyer Transfer Documents for stamping)
E-Conveyancing
- Cl11.2 REIQ "Completion of Electronic Workspace"
- JOINT OBLIGATION to:
- Ensure EW is completed
- All electronic conveyancing documents (ECD) and Financial Settlement Schedule completed and digitally signed
- (ECD - cl 11.7 as defined in the Land Title Act, s 14B 'a doc lodged electronically' - Transfer document, forms 24A, 24B, 25).
- Buyer --> stamp duty assessed, incl no. in the workspace
Objections
- Objection to TITLE - assertion there is a defect in the seller's title to the land
- Objection to CONVEYANCE - assertion that there is a defect in the form of transfer
- s61(1)(d) PLA implied term: purchaser entitled to have any objection to registration of the transfer removed by the seller
- Seller has until SETTLEMENT to remove the objection(s)
- Failure = usually an essential breach
- May reveal a defect in title (eg undisclosed lease)
but not always
- Caveat
- unregistered power of attorney
- transfer not capable of immediate registration
Death - seller, buyer
Caveats
- S122 LTA - anyone claiming 'an interest in a lot'
- S124 LTA - prevents regn of 'any instrument affecting the lot' (some exceptions)
S126(4) - three months then the caveat will lapse if no proceedings initiated (some are non-lapsing, eg lodged by the registrar. Also s 74(1A) PLA - instalment contract purchaser = non-lapsing)
Priority Notices
- S139(1) LTA - lodged by a person who is or will be, a party to an instrument that-
- a) is to be lodged; and
- b) will affect the lot or an interest in the lot
-
Outgoings
Cl 1.1(2)(z), 2.6 REIQ
- After execution of the contract
- Buyer assumes the risk of loss
- Seller pays (up to settlement)
- Outgoings (Rates etc)
- Ordinary expenses of preserving the property
- Land tax is paid by the seller
Buyer pays the proportion of outgoings attributable after settlement
- Adjustments are agreed in a 'settlement statement'
- One off payments are not 'outgoings'
- A levy or surcharge for a single non-0-recurring payment will NOT be adjusted between the parties
- Eg, a notice requiring the seller to undertake works before settlement
- This expenditure is covered under cl7.6 REIQ
- Lump sums due to a seller from a tenant (eg due to breach) will also not be apportionable
-
Cl 2.6(2) Adjusted as follows
- for those paid, on the amount paid
- for those assessed but unpaid, on the amount payable excluding discount
- for those not assessed:
= on the amount the authority advises
= if no advice - on the latest assessment
Cl 2.6(5) WATER
- Buyer has to get the meter read
- assume that rate of use continues the same
Land Tax
- Imposed on all freehold land other than individual's home
- Unpaid land tax creates a CHARGE with first priority
- Unpaid charges are an objection to title
- Can be overcome at settlement to give the buyer a title free of encumbrance
- Cl 2.6(4) - CANNOT apportion land tax. It is payable by the seller.
Rent, Profits, Bonds
- NO apportionment at common law
- Under REIQ contract rent for current period must be apportioned in the accordance with the contract (cl 2.6)
- Arrears belong to SELLER 2.6(7), 5.4
- Unpai rent for settlement date and following day not adjusted until paid (2.8)
- Rent already paid for the current period or beyond must be adjusted at settlement (2.9)
Foreign Investors
- If an owner fails to notify the Treasurer of a notifiable action or significant action (residential land acquisition) before buying land: penalty is 10%
- This becomes a CHARGE with first priority over the land to secure payment
- Failure = seller will not provide title free of encumbrance (defect in title) cl 7.2
- Buyer will likely terminate if not previously disclosed (7.4(4)) unless amounts paid out at settlement
Witholding Tax
- From 1 July 2017
- All conveyances of property over $750,000
- The purcaser MUST WITHHOLD 12,5% to pay to the ATO if:
- any vendor is a foreign resident
- the acquisition is not excluded
- the vendor does not provide a clearance certificate or make a relevant declaration
-Clearance certificate valid for 12 months cl 2.5 REIQ
Time
- s 62 PLA - where time stipulations are not of essence in equity, they will be treated similarly at law
- But this does NOT apply if the contract states time is of the essence
- Cl 6.1 REIQ states time IS OF THE ESSENCE
- DAY of settlement is of the essence
- HOUR of settlement (9AM _ 4PM, cl 5.1) is NOT essential
- Breach = essential term. Other party can terminate without further notice (and get the deposit)
- If a RANGE of time (9-5) is stated, and time is of the essence, then tender after the time is ineffectual: Union eagle v Golden Achievement Ltd
Interest, Payments
- If contract stipulates interest is to be paid on late payments - Is this inconsistent with time being of the essence?
- What about payments for extending settlement date?
- Not necessarily - but must be carefully drafted so as to preserve the stipulation that time is of the essence! (Also...instalment contract)
- The same drafting caution must be used for dates of fulfilment of s/contract
- Do not use 'within a reasonable time'
Extensions
- Mere extensions of time is NOT a waiver of 'time is of the essence' condition
- substitutes the new time for old time
- operates as a postponement of election to terminate or affirm
- This is within solicitor's authority
Also within conveyancer's authority Clerks - Inness v Waterson ATF Cobok Family Trust
- If you do without instruction client will be held to it!!
- Always get in writing
- Always state time continues to be of the essence
Notices
- Where time is not of the essence
- can serve a notice to complete (if not in default)
- sets up NEW date, failing which a breach will treated as REPUDIATION
- If a SPECIFIC DATE in the contract
- Wait till date has passed
- serve notice to complete
- allow reasonable time to complete
- if NO DATE in contract
- wait REASONABLE TIME for performance
- serve ontice to complete
- allow reasonable time for performance
- only after expiration of stated time can the party terminate
- Laurinda c Capalaba Park SC
STATE:
- parties' names
- what must be done
- reasonable time for performance
- consequences - contract may be treated as at an end or steps taken to enforce it