Are verbal agreements binding?

The Property Law Act states that all agreements to sell land in Queensland must be in writing. This includes any amendment to the contract; therefore, if you wish to change the finance or settlement date, this needs to be in writing. Normally the solicitors for the buyer and seller simply swap letters. Notwithstanding, these people can still be held liable for verbal representations if the other person acted in reliance upon that representation. We generally recommend that all amendments and representations be confirmed in writing.

Can I take the dishwasher with me when I sell my house?

This will depend upon whether the dishwasher is fixed permanently to the house or is something which is able to be moved around the house with minimal effort. Under the standard REIQ contract, all objects fixed to the house stay with the house unless specifically stated otherwise in the contract.

The majority of dishwashers today are built into the kitchen in that there is a specific spot in the kitchen underneath the bench where the dishwasher sits. The dishwasher is then connected to the plumbing with the intention that it does not move. The court has ruled that in this situation, the dishwasher stays with the house.

In some of the older houses, the dishwasher is on wheels and is connected up to the taps or otherwise moved out of the way when not in operation. You would be able to take this dishwasher with you. Of course, if you are in any doubt, you or your real estate agent should specify what happens to the dishwasher in the contract.

Do contracts for the sale of land need to be in writing?

In the absence of a real estate agent, private negotiations are usually conducted verbally, with offers and counter-offers going back and forth between the buyer and seller. The question often arises as to whether a verbal agreement will create a legally enforceable contract. Unfortunately, if you reach a verbal agreement, you rely wholly on another's word, leaving the temptation open for them to accept a better offer, commonly referred to as gazumping.

Does the seller need a solicitor?

If everything runs smoothly, then no. Less than 25% of all contracts fit this description. Even a simple extension of finance can cost thousands of dollars if not handled properly and there are complications. It should also be remembered that the buyer's solicitor is under a duty to do the absolute best for his or her client who may disadvantage you, unless you know what you are doing.

Is GST payable?

The standard REIQ contract for houses, land, and units states that the GST is included in the price. Therefore any GST payable is paid by the seller. There is no GST payable for residential properties (houses and units) even when the house is being used for a commercial purpose. If, however, a commercial building is used for residential purposes, GST is payable by the seller. GST is payable on the sale of land by developers irrespective of what it is zoned.

What about safety switches?

Recent changes to electricity regulations now require the seller to notify the buyer whether the property has a safety switch or not. The safety switch only relates to the circuit covering the power points and not the lights or any of the other circuits.

If there is not a safety switch installed, then the buyer must - within ninety (90) days after settlement - install a safety switch. The seller must indicate on the transfer documents whether there is a safety switch installed or not, and this information will be passed onto the relevant government department.

What do I need to include in a contract of sale?

In addition to the usual particulars such as the names of buyers and sellers, purchase price and any special conditions, you need to insert the details of anything which may affect the property. The two most common examples of this are the names of tenants (if the tenants will remain in the property after settlement) and the details of any easements which may affect the property; examples include a drainage easement or an access easement where you have the right to travel over your neighbour's property to reach the road.

If these matters are not disclosed in the contract, the buyer may be entitled to withdraw from the contract or claim compensation from you even if they were advised of this prior to signing the contract.

In addition, even if you had given this information to the real estate agent or solicitor to include in the contract, you should still check that the contract has been prepared correctly as you are the person signing the contract not the solicitor or real estate agent.

What furniture must the seller leave behind?

The seller must leave all fixtures with the property unless specifically stated otherwise in the contract. This will include, but is not limited to, stoves, hot water systems, fixed carpets, curtains, blinds and the fittings, clotheslines, fixed satellite dishes, television antenna and in-ground plants.

If you have any doubts as to whether something should stay with the property or be allowed to be taken, you should clarify this in the contract.

What happens to the rental bond?

If you are buying a property that has a tenant in it and the tenant will be staying on after settlement, at settlement, your solicitor should receive a transfer of the bond held by the Rental bond Authority. The Rental Bond Authority will still hold the bond; however, it will now be recorded in your name rather than in the seller's name. If the bond was paid directly to the seller and not to the Rental Bond Authority, then the seller should pay that money to you at settlement and you should arrange for it to be deposited with the Rental Bond Authority.

If you are a tenant buying from your landlord, you should request that your solicitor collect at settlement a release of bond form so that you can lodge this with the Rental Bond Authority and collect your bond after settlement.

What is a body corporate?

A body corporate is a special type of company set up to manage the common property in a complex for a set of units. There is a community management statement which outlines how the body corporate is to be managed. Each unit owner pays fees to the body corporate for the ongoing maintenance of the complex.

From the body corporate fees paid by the unit holders, the body corporate must maintain, manage and control the common property, while also establishing rules and maintaining building and public liability insurance for the common property. The common property will usually include driveways and often the building containing the units.

The unit holders are also required to pay yearly fees into a sinking fund. These fees are retained by the body corporate management committee to fund large cost maintenance and capital works when needed.

What is a building covenant?

A building covenant is a restriction or requirement set out by the developer of a subdivision on the type of house/shed/fence that may be built on blocks contained within the subdivision. The building covenants form part of an agreement between the developer and the buyer of the block of land. It is important that when the buyer sells the land, even if a house has been constructed in accordance with the building covenants that they include in the contract, a clause requiring the new buyer to also be bound by the building covenants is included.

Building covenants are generally accepted as a good idea as they increase the value of the area and ensure that no substandard homes are built in that area.

What is a rates adjustment?

This is where the solicitors for the seller and buyer work out what proportion of the rates each of the parties pay. The normal procedure is that if a rates notice has been issued, then the rates will be paid using the purchase monies with the purchase price increasing by the buyer's share of the rates. If the rates have already been paid, then you will simply increase the purchase price by the buyer's share of the rates. If a rates notice has not been issued, then the purchase price will decrease by the amount of the seller's share of the rates. For example, if the rates were $600.00 and settlement occurred on 30 September, then the purchase price would increase by $300.00. This is assuming that the rates are paid half yearly.

What is an adjustment?

Solicitors often talk about a rates adjustment, rent adjustment and body corporate adjustment. What they are really saying is the purchase price has either increased or decreased depending on whether rates have been paid or not and the same with the rent or body corporate fees.

Because rates and body corporate fees are paid for a period of time and are usually paid half-yearly, then the seller (if the rates are paid) or the buyer (if the rates aren't paid) needs to be reimbursed, because that person will be paying the rates for the other party. The way they reimburse the seller or the buyer is to either increase or decrease the purchase price. This is why, even though the contract says you paid $120,000.00, you won't actually be paying $120,000.00 - it will be a figure slightly different to the purchase price.

What is an encumbrance?

An encumbrance is quite simply a legal claim on an estate. The most common types are mortgages, easements, warrants of execution and caveats. On the standard REIQ contract, there is a section in the schedule for the seller to insert the details of any encumbrances which will remain on the property after the property is transferred to the buyer. Consequently, the mortgage over the property should never be inserted as this will be released at settlement. If an easement is inserted, you should find out the details about the easement before signing the contract.

Who can witness documents?

There is provision in a standard REIQ contract for both the sellers and buyers signatures to be witnessed. There is no strict legal requirement for the signatures to be witnessed; however, it is recommended that the signatures be witnessed by an independent party.

Unlike the transfer documents, the person witnessing the documents does not need to be a Justice of the Peace or Commissioner for Declarations.

The purpose of the witness is to stop parties denying they signed the contract at a later date.

Who is responsible for installing safety switches?

If no safety switch is installed, then the electricity regulations require the buyer to install the safety switch within ninety (90) days from the date of settlement. It is important to note that a lot of building inspectors are noting the lack of a safety switch as a building defect and this may allow the buyer to pull out of the contract.

If no safety switch is installed, it should be resolved prior to signing the contract who will install the safety switch - the buyer or the seller. As it is a building defect, we recommend the seller install a safety switch prior to settlement.

Who pays the penalty fee?

Where a buyer terminates the contract during the cooling off period, the buyer may have to pay a penalty fee (25% of the purchase price) if a deposit has been paid. If no deposit has been paid, then there is no penalty fee payable and neither the buyer nor the real estate agent is required to pay any money to the seller. Where a deposit has been paid and a penalty fee is deducted from the deposit, the penalty fee is half paid to the seller with the other half being paid to the real estate agent.

Why use a conveyancer?

Buying a property can be a very easy process, as long as no issues arise and the seller's conveyancer is very helpful. In our experience, that almost never happens.

For example, even extending the finance approval date, if done incorrectly, can result in a buyer being penalised hundreds of dollars. Conveyancers, in addition to doing all the standard work necessary to ensure you become the registered owner of the property, also give you instant advice on what to do if any changes need to be made to the contract or a problem arises.

We have found that people who act for themselves often have problems in the following areas:

Changing the finance/pest and building inspection/settlement dates - Simply agreeing to change these dates over the phone is not sufficient or valid. Undertaking and checking the necessary searches - One person even handed over the purchase money to the seller without realising that the seller was no longer the registered owner of the property. Calculating adjustments that need to be made to the purchase price as a result of searches undertaken on the property. When acting for a buyer of a property, a conveyancer ensures your interests are looked after and will generally:

Check the contract and resolve any problems created by a mistake on the contract. Advise the buyer of any relevant dates such as building and pest inspections and contact the client on the relevant dates to ensure the buyer complies with all obligations. Undertake all necessary searches, checking the searches and advising the buyer on any issues that may arise as a result of the searches. Calculate adjustments that need to be made to the purchase price and correspond with the buyer's bank to ensure all requirements have been met and there are sufficient funds available at settlement. Using professional conveyancers provides the buyer with the added reassurance that all of their rights and obligations under the contract are attended to and the buyer is protected from any losses which could occur as a result of not doing so.