[BUYING AND SELLING REAL ESTATE IN AUSTRALIA]
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has a specified timeframe in which to register the plan and construct the dwelling. These types of contracts are typically drafted on a vendor favourable basis, with the vendor having flexibility regarding construction and broad termination rights, especially if the development does not proceed. A purchaser’s right to terminate the contract is usually limited. Residential, commercial and vacant land can be purchased and sold “off -the-plan .” Selling “off the plan ,” is possible because of a legislative
lease. Some leases have termination rights, or rights under the retail lease legislation for longer terms, and certain rent review methodology. The applicable retail lease legislation has a big impact on leases, so leases are not always what they seem to be. DIFFERENT METHODS OF SALE Private Sale vs Auction Private Sale A property can be sold privately through a sales agent or by private sale directly between a vendor and a purchaser. In most cases, a vendor will engage a real estate agent to sell the property, as this can be more efficient, and the vendor has the benefit of the real estate agent’s brand, reputation and database of potential purchasers. In these situations, contracts may be negotiated and re-drafted to suit both parties and may include agreed conditions. Auction A property can also be sold at a public auction. This involves the engagement of a real estate agent, who is also an auctioneer. An auction date is set by the vendor and interested buyers can attend the property and submit their offers by placing a public bid. Each State and Territory has its own legislation which governs auctions. Sales of property by auction are unconditional. The contract is signed, and the deposit is paid after the auction has concluded. Generally, the vendor controls the bidding by setting a reserve price, which is the minimum price a vendor will accept for the property. Sometimes, the bidding at a public auction does not reach the vendor’s reserve price . When this occurs, the property is “passed in” and the highest bidder has the first right to negotiate with the vendor at the reserve price. Generally, at auctions it is more difficult for a purchaser to renegotiate the contract.
regime which allows this. Commercial Properties
Commercial properties include retail, industrial and office spaces. The purchase or sale of a commercial property may be with vacant possession or subject to a lease (i.e., tenanted). A property may comprise both commercial and residential spaces (e.g., commercial space at ground level, with adjoining residential space upstairs). If the property is leased and is sold to a purchaser subject to the terms of the lease, it is important for the purchaser to review the terms of the lease, especially if the purchaser is relying on the rent for income. The sale of commercial properties are usually a taxable supply and subject to the payment of a Federal Goods and Services Tax (“ GST ”) . However, the sale of leased property can be GST free if the parties agree that it is the supply of a “going concern .” To satisfy the going concern exemption, certain requirements must be met. Retail Properties When buying or selling a retail property in Australia, each state and territory has its own specific retail legislation, which governs retail premises, the lease provisions and disclosure documentation. If purchasing a leased property, it is important for a purchaser to review the lease documentation. A failure to do so could adversely affect the purchaser’s rights as the future landlord to enforce the terms of the
ILN Real Estate Group – Buying and Selling Real Estate Series
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