ILN: BUYING AND SELLING REAL ESTATE - AN INTERNATIONAL GUIDE

[BUYING AND SELLING REAL ESTATE IN AUSTRALIA]

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trust and there was a 50% threshold. The provisions did not apply to landholdings of individuals or discretionary trusts. However, since 19 June 2019, the 50% threshold has been removed and the provisions apply to any type of landholder. A person who acquires an economic entitlement in relation to land is taken to have acquired a beneficial ownership of the land. If the arrangement does not specify the percentage of economic entitlement, it is deemed that the person has acquired a 100% interest in the relevant land. Economic entitlements include an arrangement under which a person is entitled to participate in the income, rents, or profits of the land, proceeds of sale or capital growth. It is important that legal advice is obtained when drafting agreements for these types of arrangements. Verification of identity It is a requirement of the land titles office in each State and Territory that the identification of the parties in a property transaction be verified (“ VOI ”). VOI checks are intended to protect against identity theft and fraudulent land title transactions. This VOI requirement applies to individuals as well as corporate entities. The existence of the company must be confirmed and the identity of the persons signing on behalf of the company must be verified. If an attorney has been appointed under a power of attorney, the attorney’s identity must also be verified. Solicitors are required to certify to the relevant land titles office that the VOI checks have been completed. This verification process is particularly important due to property transactions in Australia now being settled online using PEXA. Verification checks are usually completed by a solicitor for the party or Australia Post. “Reasonable steps” are required to verify the identity of a party. The Australian Registrars National Electronic Conveyancing Council has issued a “verification of identity

standard” (“ Standard ”). If the Standard is followed, then that person is deemed to have taken reasonable steps. If a person resides overseas, the VOI check can be undertaken by a notary public who certifies that they have verified the identity of the party and provide certified copies of the identity documentation (e .g., passport and driver’s licence). The VOI documentation is considered valid for 24 months and can be relied upon across multiple

conveyancing transactions. Adjustments at settlement

In addition to the payment of the price and GST (if applicable) by the purchaser to the vendor at settlement, there is an adjustment of certain annually payable outgoings. Subject to the terms of the contract, certain outgoings are apportioned between the vendor and purchaser. The vendor is usually responsible for all outgoings up to and including the day of settlement and the purchaser is responsible for all outgoings from settlement. The outgoings which are commonly adjusted are council rates, water rates, land tax, owner’s corporation fees/levies and rental income (as applicable). Before settlement, a statement of adjustments is prepared for the parties. This is usually prepared by the purchaser’s solicitor. The adjustment amount for the outgoings is paid or offset against the balance of the purchase price to be paid by the purchaser at settlement. Unless the contract provides otherwise, there is no adjustment for utilities such as electricity, gas, or telephone services. It is the vendor’s responsibility to ensure that all utilities are cancelled from settlement, and it is up to the purchaser to make their own arrangements regarding the utilities from the date of settlement. Settlement – using PEXA As previously discussed, PEXA is an electronic lodgement platform that enables legal

ILN Real Estate Group – Buying and Selling Real Estate Series

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