Preparing the Contract of Sale – the Seller must ‘bare all’

This information has been provided by Australian law firm, Australian Conveyancing Services and is applicable in New South Wales only.

There is complex legislation in force in NSW requiring vendor disclosure in any contract for the sale of residential property (including strata units). The purpose of the legislation is to have a contract with all relevant particulars and attachments at the point of sale, to shorten the time for a formal exchange of contracts, once a buyer is located.

Before you may legally list a residential property for sale (namely, invite offers or advertise), privately or through an agent, or auction a property, you must prepare a draft listing contract. That listing contract must have attached to it the following documents, relating to the land:

• zoning certificate (obtainable from the Local Authority);
• drainage diagram plan (obtainable from the authority responsible for water, sewerage and drainage);
• copy of the title (and, in addition, for strata lots, a copy of the title of the common property) and registered plan (obtainable from the Department of Land & Property Information);
• copy of any document which burdens the title (easement, restriction on user, covenant) obtainable from the Department of Land & Property Information);

Failure to attach any of the required documents will mean that the purchaser has the right to rescind the contract and recover the deposit within 14 days of the exchange of the contract.

The legislation also imports into any contract a prescribed term permitting rescission of the contract and recovery of the deposit by a purchaser in the event of any encroachments (except dividing fences) by or upon the property. To avoid the risk of loss of a contract, it is therefore most important to ensure that there are no encroachments by or upon the land (discoverable by survey by a licensed surveyor), or if there are, that they are clearly disclosed in the contract, and the purchaser is precluded from objecting.

Finally, the legislation imports implied terms in the contract by the vendor that the land is not:

• To ensure that your contract is binding, it is important that you disclose to the Buyer in the contract any matters of which you are aware about the property. Consider also attaching a survey certificate and building certificate to guard against a termination by the Buyer should they discover an encroachment by or upon the property, or improvements having been erected without approval.
• subject to any adverse affectation (defined to cover a wide variety of matters, basically proposals by Governmental Authorities affecting the land); or,
• there is no matter relating to the improvements that would justify the making of an upgrading or demolition order by the Local Authority (being issues relating to the erection of improvements without approval, or in breach of certain acts).

Sales Methods – Pros & Cons

This information has been provided by Australian law firm, Australian Conveyancing Services and is applicable in New South Wales only.

The Agent – Commissions, Expenses and Agreements

This information has been provided by Australian law firm, Australian Conveyancing Services and is applicable in New South Wales only.

When you list your property with an Agent, you will be asked to sign an Agency agreement with the Agent. This is a written contract and not just a ‘listing’ notice – so you need to read it carefully to make sure that you are happy with its terms.

Many clients of mine have not realised this. They can’t even remember really signing anything in particular, probably because they were so focused on the fact that they were listing their property for sale. But I have seen disputes arise between Sellers and their agents, particularly regarding commission and other payments, so you should give this agreement the importance that it is due.

Normally the Agent’s agreement will cover the following:

• The amount of commission payable – The amount of the commission is subject to negotiation between you and the Agent, because in NSW (unlike say in Qld), the commission is deregulated. You will need to do this upfront, at the time when you list the property. As a guide, somewhere between 2 to 3.5% of the final purchase price is usual, and don’t forget to add GST!

The percentage settled on will not only depend on your negotiation skills, but also the nature of the property. For instance, if you are listing a property that buyers will be fighting each other to get, then the Agent will not have to work as hard to make the sale (hence the commission may be at the lower end of the range). But if you have a property that will only appeal to a particular niche market, the Agent may have to work long and hard to make a good sale.

You can also choose to make the rate of commission performance based, i.e. a higher rate if a certain benchmark price is achieved.

• When the commission is payable – The commission is normally payable once you have sold the property and actually received the sale monies. The commission is usually taken out of the deposit after settlement, with any balance of the deposit being sent to you after settlement by the Agent. If the deposit is not enough to cover the commission, then the Agent will ask you for the balance from the sale proceeds.

• Advertising and Marketing Costs – You should request the agent to give you a marketing plan that sets out the type of advertising they will conduct and the time frame for that marketing. The total cost of the marketing campaign should be included in your agreement, along with the payment terms (eg to be taken out of sale proceeds, or payable upfront, etc).

• The type of Agency – This should be clearly stated.

The various types of Agency agreements include:

• Open listing – under this arrangement you sign a contract with an agent but you can also list with other agents or even sell the property yourself. Commission is then only payable to the person who actually brings about the sale (if it is you, then you don’t pay commission to anyone).
• Multi listing – under this arrangement the Agent is part of a network of agents, any of whom may sell the property (and the Agent will share the commission). This is a ‘half way house’ between open listing and sole/exclusive listing.
• Sole listing – a sole agency is an exclusive one (that is you cannot employ other Agents during the sole agency term). However you can still sell the property privately, without paying commission.
• Exclusive Agency – this type of contract between seller and agent is the most restrictive as it entitles the Agent to commission whether or not they sell it, or you or another agent sells it during the exclusive agency term. Most auction sales require this form of listing.

Sole / Exclusive Listing vs. Open Listing

Your Agent will tell you that they will work harder if they have the exclusive right to sell the property. This is because they will be more motivated to sell if they know that only they can be remunerated for the sale. There is definitely some truth in this, and many property owners now give a sole agency to one Agent for a period.

Listing your property with more than one agent means that you potentially reach many more buyers. However you do need to be careful about any confusion in marketing (for instance one Agent thinks you will accept $X, and that the Persian rugs will be included, while Agent Y thinks the price is $Y, and that the rugs are going.

Also, you need to consider, if there is any advertising, which agent will be in charge of this? Open listing can work, but often it has been my experience that Agents put these properties at the bottom of their list of priorities. If you don’t want to go for a sole agency, then perhaps multilisting or even a sale in conjunction may be the way to go. I have seen this to work quite well. It involves asking your main Agent if they will accept sales in conjunction with another agent, usually one other that you specify. This is particularly useful where you really like two different Agencies and can’t make up your mind which one to go with. The main Agent is still the one who does the advertising, and is the ‘controller’ of the process, so confusion is minimized. Keep in mind however, that the two Agents will have to split their commission.

The term of the agency period

The agreement should specify the term of the agreement (that is, how long do you want to be locked in with that Agent). It should also specify how it is terminated (by lapse of the time period, or do you have to give notice in writing, etc). Be careful that you do not lock yourself into a lengthy time period as you may be stuck with a non performing agent – remember, you can always extend the term!

Owner-Builders and the Home Building Act

This information has been provided by Australian law firm, Australian Conveyancing Services and is applicable in New South Wales only.

Every owner-builder should be aware of the requirements of the Home Building Act 1989, which imposes onerous duties and responsibilities upon owner-builders.

An owner-builder is obligated to effect insurance for work done as an owner-builder (being a special type of policy), and must not enter into a contract for the sale of land on which owner-builder work is to be or has been done unless a copy of the contract of insurance is attached to the contract.

The requirement does not apply to a sale of the land more than 7 years after the completion of the work, or if the reasonable market cost of the labour and materials involved did not exceed $5,000.

If the Act is breached, the contract is voidable at the option of the purchaser before the completion.

1. The Home Building Act also implies the inclusion of statutory warranties in the contract in favour of the Buyer. The warranties are.
2. The work has been performed in a proper and workmanlike manner and in accordance with plans and specifications;
3. ll materials supplied will be good and suitable for the purpose for which they are used, and that, unless so stated, they are new;
4. The work has been done in accordance with the Home Building Act and any other law;
5. The work has resulted in a dwelling that is reasonably fit for occupation as a dwelling;
6. The work and materials used are reasonably fit for the purpose.

If you are an owner-builder, take out the insurance required by the Home Building Act, and make sure that you attach a copy of the insurance to the Contract of Sale.

These warranties pass on to subsequent owners and are enforceable for a period of 7 years after the date of completion of the work.

When does a Seller have a definite Contract?

This information has been provided by Australian law firm, Australian Conveyancing Services and is applicable in New South Wales only.

Introduction

In New South Wales, Buyers have a number of opportunities to reconsider their offer to purchase the property, before they become ‘locked in’. The first is the procedure up to exchange, where it is common practice for the Buyer after verbally agreeing with the Seller on the price and other major terms, to then spend 1 to 2 weeks conducting searches/inspections and arranging finance before actually exchanging contracts.

After exchange, the Buyer then has the further right to a cooling off period. Until these ‘hoops’ are jumped through, the Seller cannot bank on the sale of the property.

The Procedure up to Exchange

If your property is sold at auction, then you as the Seller will normally enjoy a strong chance that your property will actually settle. This is because the contract will almost always be unconditional and there is no cooling off period, so unless something unusual happens, the property will proceed to settlement.

If you have listed the property for sale in the conventional way, then normally a Buyer will make a verbal offer, which, if you accept, will usually not lead to an immediate exchange of Contracts (even though you as Seller have a draft contract prepared). The Buyer will usually then conduct their preliminary inspections (such as building and pest) and also ensure that their finance is in place, before they proceed to the exchange of contracts.

What are the Sellers rights?

Because the time lag between verbal offer and exchange can be anywhere between 1 and 3 weeks, the opportunity arises for the Seller or the Buyer to be gazumped. For instance, a Seller may be presented with a second and higher offer after verbally agreeing to a price with the first Buyer.

Even if the first Buyer puts down a holding deposit, you as Seller are not legally obliged to sell the property to them, nor to take the property off the market. You can actually take as many initial deposits as you like. However, you must let the Buyer know if someone else makes a later offer on the same property and tell the first Buyer in writing that:

• you have no obligation to sell the property to them
• they have no obligation to buy the property
• you will refund the deposit if they don’t end up entering into a contract to buy the property

So at this stage you as Seller are not normally legally bound to sell to the first Buyer, and can accept the subsequent offer. The seller is not obliged to compensate the Buyer for the money they have spent on legal advice, inspection reports, finance application costs and inquiries.

Similarly, the Buyer can gazump you, and can buy another property.

After Exchange – the Cooling Off period

Following the exchange of Contracts between the Buyer and the Seller, the Buyer then has a further period in which to change their mind about the property. This period is called the ‘cooling off period’. The Buyer of New South Wales residential property can terminate the contract within a period of 5 working days from the date of the Contract. The cooling off period ends at 5pm on the fifth working day (working day excludes weekends and public holidays).

NOTE: The cooling off period does not apply to AUCTION sales of residential property, nor to any contract made after the auction but still on the same day. However if the property is passed in at auction, and the buyer and seller enter into a Contract after that day then the cooling off period will apply.

What are the Seller’s rights if the Buyer wants to terminate?

The Buyer can terminate the contract during the 5 day cooling off period by giving the Seller, their Solicitor or Agent a signed written notice. The Buyer can only terminate the Contract during that period, so check the start and end date to make sure they are in time.

If they are in time and they have given written notice, then they can legally terminate the Contract. As Seller, your only right then is to charge the Buyer the ‘cooling off’ penalty – which is .25% of the purchase price. If you would like to know what the amount would be, click on the calculator below and insert the purchase price.

  Cooling Off Penalty Calculator

Can the cooling off period be waived?

Strata Title – Tips for Sellers

This information has been provided by Australian law firm, Australian Conveyancing Services and is applicable in New South Wales only.

General Information on Strata Title

With the population around Sydney in particular growing at an ever rapid rate, Units and Townhouses are becoming a popular (and cheaper) alternative to owning a house & land. There are now over 60,000 strata title schemes in New South Wales alone.

When you own or want to buy a Unit or Townhouse, you need to consider the special legal nature of that type of property, that doesn’t apply to an ordinary house & land situation.

This is because a ‘strata titled’ complex consists of not just one dwelling, but many (from the normal ‘6 pack complex’ to a unit complex of 100s of units). Whether you own a unit in a small complex or a large one, there are certain principles that generally apply, as follows:

• You own your unit and the airspace encompassing that unit (but not the roof, external walls or floor). What you do own is normally the internal walls, and fixtures and fittings such as kitchen, carpets, drapes, etc.
• Each unit in the strata scheme has a unit entitlement. Unit entitlement governs the voting rights attaching to the unit, and the proportion of levies that the unit must pay. Each unit owner has an undivided share in the owners corporation, in proportion to the unit entitlement attaching to the unit.
• You have an ownership share, along with all other unit holders, in the common property surrounding the unit (such as foyers, driveway, pool, grounds, common stairwells, etc) in proportion to your unit entitlement.
• There are rules which govern your use of the Unit and the common property, referred to as the Owner’s Corporation by-laws. These by-laws set down the rules of living in the complex.

The Owners Corporation

All of the Owner’s comprise the Owner’s Corporation and they elect an executive committee to make most of the decisions. They are responsible for the maintenance of common property and other matters relating to the complex. The external building and the common property is owned by the Owners Corporation.

Insurance

The owners corporation has the insurable interest in the improvements, and is obligated to effect replacement insurance each year on the building and improvements. The owners corporation is also obligated to effect insurance for public risk (covering common property) and worker’s compensation (covering workers employed by the owners corporation).

Owner’s Corporation Levies

• an administrative budget covering annually recurring expenditure, (ie insurance, annual repairs, lighting to common property, wages etc); and,
• a sinking fund budget, to cover long term expenditure (ie painting of the building, repair/replacement of lifts etc). This fund is designed to have funds available to meet long term expenses when they occur. If adequate funding is not put into place early in the life of a building, the sinking fund will not have sufficient funds to meet long term expenses, and the result will be that the owners at the time when the expense is incurred by the owners corporation will have to pay the expense, which will be raised by way of special levy by the Owners Corporation.

Selling a Property with Tenants in it

This information has been provided by Australian law firm, Australian Conveyancing Services and is applicable in New South Wales only.

A. The procedure

If you decide to sell a property which is tenanted, you can proceed to list it with an agent, or advertise it yourself, confident that you can show prospective purchasers through the property. The standard Residential Tenancy Agreement in New South Wales allows the Seller to show the premises to prospective buyers, on a reasonable number of occasions if the tenant gets reasonable notice on each occasion.

NOTE: Unless the tenant agrees, access is not permitted on Sundays, public holidays or outside the hours of 8am to 8pm.

If you and your tenant are unable to agree upon what is ‘reasonable’, then the Tribunal will on application make an order. The Tribunal will resolve any disputes if one party believes the other is being unreasonable. Access to show buyers can occur at any stage during the tenancy.

As Seller, you are entitled to charge the full agreed rental for the property until the tenancy is legally terminated (the law does not require you to reduce the rent whilst the property is on the market, even though it may inconvenience the tenant).

B. Selling with or without tenants?

This is a commercial decision for you to make – some Agents will say that it is much easier to sell a property without tenants in it, because the law requires the Seller/Agent to give notice whenever they want to bring through a prospective buyer. Also, if your tenants are not tidy or co-operative, they may hinder the sale of your property.

However against these considerations you need to also weigh up the fact that whilst your tenant remains in the property, you continue to receive full rent.

Another consideration is whether a prospective Buyer is likely to want vacant possession of the property, or whether it is more valuable (return wise) as an investment property which is tenanted (an expensive house in a family area is more likely to attract owner occupiers, whilst a Unit in a large complex may be more likely to be purchased as an investment).

Buyers who want to live in the property will want vacant possession on settlement, and you need to determine BEFORE you exchange a Contract for sale of the property whether you can legally do this. Generally the rule is:

• Fixed Term Tenancy (a tenancy that is for a specified period of time and ends on a specified date)

You may terminate a fixed term tenancy upon giving at least fourteen days notice given at any time prior to the expiration of the term. This means that the tenancy may be terminated at the expiry of the fixed term providing at least fourteen days notice is given prior to that expiry date, or after the expiry date, namely at the expiry of the period given under the notice. If the expiry date of the tenancy is not for some time, you may choose either a settlement date under the contract which occurs after the expiry date, or to sell the property subject to the tenancy. If the purchaser is agreeable, the purchaser takes over the tenancy from settlement, and will be entitled to the rental payments from the date of settlement until the tenancy period expires.

• Continuing Agreement Tenancy (a tenancy which does not end on a specified date, usually where the tenant is holding over under an expired fixed term tenancy)

You may terminate a continuing agreement tenancy by giving 60 days notice on the tenants or 30 days notice once you have signed a Contract to sell provided you have given the tenant a notice of your intention to sell the property. You need to ensure that the settlement date agreed upon with the purchaser is a date later than the date of expiry of the notice given to the tenant, so that you are in a position to give vacant possession of the property at settlement.

Insurance – Guidance and Tips for the Seller

This information has been provided by Australian law firm, Australian Conveyancing Services and is applicable in New South Wales only.

You have exchanged contracts for the sale of your property, and are busily planning the big day of settlement. There are many things to do, and the moving to plan.

The risk in respect of damage to the property (improvements & fixtures) passes from you to the purchaser on the date of settlement, or on the date upon which you give possession of the property, whichever is the earlier date.

Once settlement occurs, notify your insurance company in writing that cover is no longer required, and ask for a refund of that proportion of the premium paid by you from that date until the date of expiry of the policy. Alternatively, if you are purchasing another home, ask that the insurance be transferred to cover the new home. Most insurance companies will arrange this for you, and credit the premium that you have paid towards the premium required on your new home.

Make sure that any furniture contained in the property remains covered (probably under a separate policy), and that you notify your insurance company of your move, and your new address, and request your insurance company to cover you with respect to your furniture in transit and at your new address.

House rules for capital gains

Source: By Paul Clitheroe, The Sunday Telegraph – 23/10/05

For most of us, the family home is our biggest investment. Normally, any capital gain you make when you sell what is technically called your principal place of residence is tax-free.

But this isn’t always the case, and there are also potential benefits if you understand the capital gains tax (CGT) rules.

Let’s say you buy a property, then rent it out to help pay the mortgage in the early years.

If you owned the property for eight years and rented it out for four of those years, CGT would apply to half the capital gain if you sold it at the end of the eighth year.

There would be a 50 per cent discount on the CGT because you owned the home for more than 12 months, but the bottom line is that the government would share in your upside.

The situation would be very different, however, if you lived in the home for at least six months after you bought it.

If you then rented it out for the next four years, moved back in again, then sold it three and half years later, no capital gains tax would apply.

This assumes you don’t have another property that you are claiming as your principal place of residence during the four years it was rented.

You also need to have genuinely lived in the home initially, not just dropped around to pick up a token amount of mail.

The different result is due to the six-year rule, as it is commonly known. This rule was developed originally to help diplomats who went on overseas assignments, but is now more widely applied.

It allows you to rent out a property for as long as six years and still claim it as your principal place of residence. If you lived in the home first, you don’t lose the CGT exemption.

Interestingly, where you own more than one home you have the flexibility to decide which one is your principal place of residence.

Say you bought a second home and decided to keep the home you were previously living in to rent out.

If, five years down the track, the first home was sold and made a significant capital gain, you can elect to claim the first home as your principal place of residence. If you did, you wouldn’t have to pay CGT on this sale.

You would have decided that the second home has less potential for capital growth, as CGT would be paid on that property when it was sold.

The CGT would apply to the period where you chose to make the first property your principal place of residence. In other words, if you sold the second property five years after you sold the first one, you would pay CGT on half the gain.

This is because for half the period you owned the property, it was not your principal place of residence, even though you lived in it. The CGT discount would also apply.

If you do have to pay CGT on a property when it is sold, remember to add to the cost base any renovations and other capital expenses that were not tax deductible but that added value to the home. A higher cost base reduces the CGT you pay.

Smoke Alarms – laws for NSW Property Owners

This information has been provided by Australian lawyer, Maree Slingsby and is applicable in New South Wales only. This article draws on information contained in Fact Sheets issued by NSW Department of Planning and NSW Department of Lands 2006. NSW owners of residential property in most circumstances must install smoke alarms (the Environmental Planning and Assessment Amendment (Smoke Alarms) Regulation 2006). This law is designed to minimise the number of deaths in house fires, many of which occur at night time when the occupants are asleep. An estimated 670,000 dwellings in NSW still do not have smoke alarms.

Who needs to install smoke alarms?

The regulation requires owners of new and existing houses, townhouses, and units (homes) to ensure that smoke alarms are installed in their residences. Other dwellings are also included (eg relocatable homes, residences above shops, etc). Failure to do so will incur a penalty. There are some exceptions, such as certain moveable dwellings, and buildings in which nobody sleeps, however these exceptions are very limited. For more detail on dwellings that are included/excluded, see the EPA Regulation. Owners of homes that have smoke alarms installed in compliance with a current or previous requirement need take no additional action. Also, homes where smoke alarms have already been voluntarily installed are not required to take action if their smoke alarms are in good working order and in the right locations (see below for details).

How does this affect Sellers?

Persons intending to sell their homes who enter into a Contract on or after 1 May 2006 and who are affected by the new legislation will be legally required to have installed the smoke alarms into the property they are selling.

How does this affect Buyers?

Buyers entering into a Contract to purchase a residential property should make sure that the Seller has included a ‘Warning Statement’ regarding Smoke Alarms in the prescribed form in the Contract (appears in REI standard conditions). Buyers should check the property to ensure that complying smoke alarms have been fitted.

Type of Smoke Alarms required

Any smoke alarm that complies with the Australian Standard (AS)3786 – 1993, Smoke Alarms (which should be noted on the product packaging) will meet the new requirements. These alarms can be hard-wired (powered from the mains electricity supply) or battery-operated at the owners’ choice.

Where to locate smoke alarms to meet the new requirement

The number of smoke alarms required will depend on the size and layout of each particular home. For houses and townhouses (Class 1a buildings) and manufactured/relocatable homes, smoke alarms are required on or near the ceiling in the following areas: in storeys containing bedrooms: in every corridor or hallway associated with a bedroom, or, if there is no corridor or hallway, between the part of the home containing the bedroom and the rest of the dwelling; and in any storey not containing bedrooms. In these storeys smoke alarms should be located in the path of travel most likely to be used by those evacuating the home. For apartments, blocks of flats (Class 2 buildings) and residences over shops or caretaker flats (Class 4 parts of buildings) smoke alarms are required on or near the ceiling in the following areas in each flat or unit: in every corridor or hallway associated with a bedroom, or, if there is no corridor or hallway, between the part of the unit containing the bedroom and the rest of the dwelling; and in any storey not containing bedrooms. In these storeys smoke alarms should be located in the path of travel most likely to be used by those evacuating the unit. For an excellent article on location of smoke alarms click here.

Penalties for non-compliance

The regulation includes provisions for fines to be issued for failure to install smoke alarms after 1 November 2006, however there are no new inspection powers. Also, from 1 May 2006, it will be an offence to interfere with or remove an existing smoke alarm, unless it is to repair, maintain or replace the alarm.

Swimming Pools

Warning Statements and Compliance Certificate laws for NSW Property Owners

This information has been provided by Australian law firm, ACS, and is applicable in New South Wales only.

This article draws on information contained in Fact Sheets issued by various Local Government Authorities 2016.

From 29 April 2016, properties sold with a pool must have one of: a ‘relevant occupation certificate’; a ‘certificate of compliance’; or a ‘certificate of non-compliance’, issued from the NSW Swimming Pool Register.

This means that from 29 April 2016:

1. Vendors are now able to transfer the obligation of obtaining a ‘certificate of compliance’ to the purchaser. A ‘certificate of non-compliance with detailed reasons of non-compliance’ can now be attached to the contract of sale.

    

2. The buyer of a property with a non-compliant swimming pool has 90 days from the date of settlement to address any issues of pool barrier non-compliance and obtain a certificate of compliance.

    

3. Properties with more than two (2) dwellings are exempt from the requirement to provide a compliant pool barrier on sale or lease, as they are already regulated through mandatory three (3)-yearly council inspections.

    

The owner of a property with two (2) or fewer dwellings and a pool must have a certificate of compliance before entering into a lease.

A relevant occupation certificate means an occupation certificate issued under the Environmental Planning and Assessment Act 1979 that is less than 3 years old and that authorizes the use of the swimming pool.

Allowing the transfer of obligation for swimming pool barrier compliance provides greater flexibility to the sales process, while ensuring that incidents of non-compliance are addressed. However, this flexibility does not extend to the leasing of properties. Landlords are to ensure that the tenant is provided a copy of a valid ‘certificate of compliance’ at the time the lease is entered into because landlords have a responsibility to provide a safe environment for their tenants

Recent amendments to Swimming Pool legislation have been set in place in an effort to reduce the risk of drowning of young children in backyard pools. These changes will affect all property owners, including those that do not have a swimming pool located on the property.

What are the new requirements?

The Swimming Pools Act 1992 dictates that the owner of premises on which a swimming pool is situated must ensure that the swimming pool is surrounded by a child restraint barrier that:

separates the swimming pool from any residential building situated on the premises and from any place (whether public or private) adjoining the premises, and is designed, constructed, installed and maintained in accordance with the standards prescribed by the regulations.

Further it is a requirement that any access to the swimming through this barrier is to remain securely closed at all times.

There may be some exceptions to these rules but the best way to be sure is to make contact with your local council for more details.

The new amendments also require that Warning signs be erected in a prominent position in the immediate vicinity of the swimming pool (it is preferable this be displayed adjoining the shallow end of the pool) containing the words “YOUNG CHILDREN SHOULD BE SUPERVISED WHEN USING THIS SWIMMING POOL” together with details of resuscitation techniques associated with infants, children and adults.

Furthermore that in NSW, the owners of properties with a swimming pool and/or a spa pool are required to register their pools and spas on the NSW Swimming Pool Register.

Warning Statements

In line with the amendments to the Swimming Pool Act amendments the Conveyancing (Sale of Land) Regulation 2010 requires that all contracts of sale now include a warning statement in the Contract, in the prescribed words.

Failure to attach the correct prescribed Notices from 1 September 2010, may result in the Buyer being able to terminate the Contract, within 14 days of exchange.

It is important that this warning statement included in all contracts for the sale of land, even where the property does not include a swimming pool.

How does this affect Sellers?

Contracts exchanged on or after 1 September 2010 must include the new prescribed warning statement, even where the property does not include a swimming pool. Sellers should ensure that upon collating their contract that this statement is attached.

Additionally, where there is a pool located on the property the Seller is legally required to ensure that the pool is compliant with the new safety requirements. If a compliance certificate is not already issued by Council, the Seller should make arrangements with the local government authority to obtain this certificate prior to marketing the property for sale.

How does this affect Buyers?

First and foremost a Buyer entering into a Contract to purchase a residential property should make sure that the Seller has included a ‘Warning Statement’ regarding swimming pools in the prescribed form in the Contract (appears in REI standard conditions). This will be the case even where there is no pool located on the property.

Secondly where a Buyer is purchasing a property that has a pool located at the premises should make enquiries with the Seller and the local government authority to ensure that the pool is compliant and that the appropriate Compliance Certificate has been issued for the property. We suggest that this is done prior to exchange of contracts where possible.

In the event that the pool is not compliant the Buyers will become responsible to ensure that the pool is compliant and to obtain this certificate from council.

Penalties for non-compliance

The Swimming Pools Act 1992 includes provisions for fines to be issued, including ‘on the spot’ fines, for failure to comply with the requirements set down by this Act and the regulations. The purchaser may rescind the contract of sale if the seller does not comply with the new requirements. Additional inspection powers have been granted to local government authorities to enter and inspect swimming pools located on properties to inspect for non-compliance.

The Deposit – A Buyer’s Guide

This information has been provided by Australian law firm, Australian Conveyancing Services and is applicable in New South Wales only.

In a contract for the sale of residential property in NSW, the deposit is held by the Agent, or, if there is no Agent, by the Solicitor for the Seller, in trust as stakeholder for the Seller and the Buyer until completion. It cannot be released by the stakeholder without an authority from both the Seller and the Buyer, which is given at completion. Legislation protects this deposit in the hands of the Agent or Solicitor from being misused, so the deposit is safely held until completion occurs. If completion does not occur for any reason, the deposit is held by the stakeholder at the direction of both the Seller and the Buyer, or court order.

Because in NSW, a 10% deposit is usually provided by the Buyer, it is becoming common for a Seller to request a release of the whole, or part of the deposit prior to completion, usually to enable the Seller to utilise the amount released as a deposit on the purchase of another property.

It is true that the standard contract provides that if any of the deposit is released prior to completion by the Buyer, it is a charge upon the land in favour of the Buyer (only subject to any other existing right on the land). This is some comfort to a Buyer, but can be risky. There may be many reasons why it is difficult to enforce such a charge, some of which are:

• The charge comes second to any prior mortgage over the property. The Seller’s mortgagee is not bound by the charge (or the current contract between the Seller and Buyer), and could, if the Seller should default under the mortgage, sell the property to recover the amount owing under the mortgage (this may not be enough to also pay back your deposit!);
• the charge stops if the contract is rightfully terminated by the Seller (for instance due to a breach of the Contract by the Buyer)
• The charge may be void, if the Seller becomes insolvent before completion, as against the trustee in bankruptcy of the Seller.

If you do agree to release the whole or part of the deposit:

• Allow it to be available at completion only, or
• Make some enquiries first as to any mortgage on the title, and the amount secured under it, to ensure that the Seller has sufficient equity to complete settlement from the balance of purchase monies (being the price less the deposit).

When can the Buyer change their mind?

This information has been provided by Australian law firm, Australian Conveyancing Services and is applicable in New South Wales only.

Introduction

In New South Wales, the Buyer has two major opportunities to reconsider their proposed property purchase. The first is after you have agreed verbally with the Seller to purchase the property, but before contracts are exchanged.

The second is after contracts have been exchanged and during the cooling off period. However Buyers need to know that there is a cost to changing your mind, once you have exchanged contracts.

The Procedure up to Exchange

If you are going to bid on a property at auction, then you will need to arrange your finance, and all preliminary inspections and searches before you attend the auction. You can change your mind obviously at any point up until the hammer falls in your favour. After that you will be compelled to sign a Contract, which will normally be unconditional and usually requires a 10% deposit.

For non-auction sales, you as Buyer will normally make a verbal offer first, and if the Seller accepts that offer, then you can proceed in one of several ways: if you want to exchange contracts immediately (to take a sought after property off the market) you can do so, allowing the statutory cooling off period (5 business days, unless shortened) to quickly arrange building and pest inspections, as well as finance. Then, if you do cool off, you can terminate the contract, subject to the payment of a penalty.

More usually, it is considered better to conduct your preliminary inspections and arrange finance, and then exchange contracts. Because the time lag between verbal offer and exchange can be anywhere between 1 and 3 weeks, the opportunity arises for the Seller or the Buyer to be gazumped. For instance, a Seller may be presented with a second and higher offer after verbally agreeing to a price with you as the first Buyer.

Similarly, you as Buyer can gazump the Seller, and can go and buy another property instead.

The Cooling off period

Following the exchange of Contracts between the Buyer and the Seller, the Buyer has a cooling off period in which to change their mind about purchasing the property. This ‘cooling off’ period starts on the Contract date and lasts for a period of 5 working days, terminating at 5pm on the fifth working day (working day excludes weekends and public holidays).

The situations where you as a Buyer do not have the right to a cooling off period are:

if you buy a property at auction or if you buy the property after the auction and on the same day

if you have waived your rights to the cooling off period by signing a s66W certificate (with legal advice)

if you have purchased the property pursuant to an option

Penalties

A Buyer may terminate the Contract, but only within the cooling-off period, and must give a notice in writing to the Seller, their Solicitor, or Agent. This is an absolute right and no reasons need to be given, however, there is a cost to terminating. If a Buyer terminates under the cooling-off period a “termination penalty” must be paid to the Seller. That termination penalty is 0.25% of the purchase price under the contract. If you would like to know what the amount could be, insert a purchase price in the calculator below.

 Cooling Off Penalty Calculator

Waiver of cooling-off period

The cooling-off period can be waived by a Buyer but only by the Buyer following a very strict procedure as set out in the Act. A Buyer must obtain from a solicitor a certificate in the approved form, (s66W Certificate) where the solicitor states amongst other things, that they have explained the legal nature and consequences to you of waiving the cooling-off period.

The cooling-off period may alternatively be shortened using a similar procedure or by inserting a clause in the contract.

Pre-contractual legal advice

Just because you as a Buyer have got a cooling off period, doesn’t mean that you should be blasé about entering into a contract. Firstly, we have seen that there is a cost if you want to change your mind. Secondly, it is important to make sure that all of the terms and conditions that you want are in the Contract at exchange, as it is difficult to try and negotiate these at a later stage

Obtaining pre-contractual advice from your solicitor could be as simple as arranging for the agent to fax the proposed contract through to your solicitor, and your solicitor providing advice and input to you over the telephone. If you are using the Quicklaw DIY service, you can have your Contract reviewed before signing for a small additional fee.

Joint Tenants vs Tenants in Common

This information has been provided by Australian law firm, Australian Conveyancing Services and is applicable in New South Wales only.

If you are purchasing a property with one or more other persons, then you will need to state whether you are holding the property as joint tenants or as tenants in common. This will be specified on your Contract and in your transfer document.

If you own a property as joint tenants, it means that:

• You all own the property in equal shares
• If one of the owners die, then their share automatically passes to the other owners (even if you have a Will that gives your share to someone else – your Will cannot override a joint tenancy)

This type of ownership is most popular with married and long term defacto couples, as it is often their wish that if they die, that their share in the property goes to the other partner.

If you own a property as Tenants in Common:

This way of owning a property is popular with owners who don’t want their share to necessarily all go to the other owners. For instance, if you buy into a property with a group of friends, or with your business partner, etc.

Transfer Duty

This information has been provided by Australian law firm, Australian Conveyancing Services and is applicable in New South Wales only.

This discussion relates to the transfer duty requirements in New South Wales for the purchase of residential property. Each State will have its own particular rules.

Our Article covers the major general stamp duty effects for residential property. However, you should contact  Revenue N.S.W. to confirm transfer duty liability for your particular situation.

Transfer Duty on Finance raised to Purchase

Duty on mortgages for owner occupied housing was abolished on 1 September 2007.

Owner occupied housing

From 1 September 2007, mortgage duty will not be chargeable if the mortgage secures an advance or advances made for the purpose of owner occupied housing and no other advances. Borrowers must be natural persons.

Investment housing

From 1 July 2008, mortgage duty is not chargeable if the mortgage secures an advance or advances made for the purpose of investment housing and no other advances. Borrowers must be natural persons.

1 July 2009

Mortgage duty is abolished. NSW mortgage duty will not be chargeable on advances made on or after 1 July 2009.

Strata Title – Buying into a Family

This information has been provided by Australian law firm, Australian Conveyancing Services and is applicable in New South Wales only.

With the population around Sydney in particular growing at an ever rapid rate, Units and Townhouses are becoming a popular (and cheaper) alternative to owning a house & land. There are now over 60,000 strata title schemes in New South Wales alone.

When you buy into a Townhouse or Unit complex, you need to consider the special legal nature of that type of property, that doesn’t apply to an ordinary house & land situation.

This is because a ‘strata titled’ complex consists of not just one dwelling, but many (from the normal ‘6 pack complex’ to a unit complex of 100s of units). Whether you buy into a small complex or a large one, there are certain principles that generally apply, as follows:

The Owners Corporation

Insurance

The owners corporation has the insurable interest in the improvements, and is obligated to effect replacement insurance each year on the building and improvements. The owners corporation is also obligated to effect insurance for public risk (covering common property) and worker’s compensation (covering workers employed by the owners corporation).

Owner’s Corporation Levies

You pay to the Owner’s Corporation certain levies, and the amount depends on your lot entitlement. There are normally two levies that are payable on a periodic basis:

• an administrative budget covering annually recurring expenditure, (ie insurance, annual repairs, lighting to common property, wages etc); and,
• a sinking fund budget, to cover long term expenditure (ie painting of the building, repair/replacement of lifts etc). This fund is designed to have funds available to meet long term expenses when they occur. If adequate funding is not put into place early in the life of a building, the sinking fund will not have sufficient funds to meet long term expenses, and the result will be that the owners at the time when the expense is incurred by the owners corporation will have to pay the expense, which will be raised by way of special levy by the owners corporation.

Unit buyers – Do you Homework First!

I have seen many unit complexes and strata scheme situations, and each does have its own particular ‘personality’, which is largely dependent on the character types of owners and how they interact. Just like with a normal family – some are rowdy, some always arguing, some peaceful and stable, so too are various owner’s corporations. If you get a good group of owners and a competent Corporation, you will be happy, but a constantly bickering or inflexible Corporation can make life very unpleasant. Take a look at the following real life examples:

Example 1: Bonnie was an elderly lady who bought a Unit on the ground floor of a Complex that contained 19 other units. The heat affected her so she wanted to install an air conditioning unit in her bedroom (the type that sticks out of the window/wall). The Body Corporate was a tough one run by a dictatorial Manager, who did not want the outside walls ‘defaced’ by unsightly projections. Bonnie had to stick to a fan.

Example 2: George and Meredith owned a Unit that was part of a ‘6 pack’. Most of the owners used the Units as holiday homes a few times a year, although there were one or two retired owners who lived there permanently. George wanted to put up a lattice wall at the front of his Unit to give him some privacy from the road. The Body Corporate readily agreed and George erected the wall.

Read the Owner’s Corporation family ‘diary’ before you buy!

The Owner’s Corporation is required by law to keep a written record of its various dealings. This includes its budgets and forecasts of expenditure, correspondence, insurance details, particulars of the owners and also the Minutes of meetings with its members.

The Owners Corporation must allow you to inspect their records upon payment of the stated fee.

If the members of the family don’t get along, or there are other problems (such as large expenditures coming up or litigation) then you may not want to buy into this.

By looking at the records before you sign, you can avoid walking into trouble – not all problems that appear after you sign allow you to terminate after you sign (for instance if there is a long history of bickering, disputes or poor management of the complex).

Insurance – Guidelines and Tips for the Buyer

This information has been provided by Australian law firm, Australian Conveyancing Services and is applicable in New South Wales only.

The Conveyancing Act in New South Wales states that the risk for the property between Buyer and Seller (after the exchange but before settlement) does not pass to the purchaser until:

Some further Insurance Tips:

• If you are getting finance, then your mortgagee will often require you to arrange a Certificate of Insurance before settlement. Make sure that it is a Certificate (not a cover note) and that the insurance is paid. Also get the Insurer to note the mortgagee as an interested party on the Certificate.
• Make sure the Insurance is in the name or names of all the actual Buyers (as noted on the Contract).
• Insure for the full insurable value of the property (namely the value of the improvements). If you are unsure as to this value, take the market value of the property as a whole, and deduct the value of the land or use the replacement value
• Check that your policy covers you for public risk. Most policies of insurance on residential homes have this as an extension. You will be glad that you did, if you are unfortunate enough to have a visitor suffer an accident or injury on your property, which may be as a result of your negligence.

If the property is damaged between the date of the contract and the settlement (or early possession date) then the Buyer may:

• seek a reduction of the purchase price on completion by the amount which is “just and equitable in the circumstances”. There is no formula for determining that amount so it would be up to the parties to negotiate, or referred to arbitration under clause 7 of the standard contract. However, even if the purchase price is not reduced on completion, the purchaser’s right continues and a proper amount may be recovered from the Seller as a debt after settlement.
• Where the damage is substantial, the buyer has an extra option – they may terminate the contract by giving notice in writing. ‘Substantial damage’ means damage which renders the land (a term which includes buildings and other fixtures) ‘materially different from that which the buyer contracted to buy’.

Buying a Property with Tenants in it

This information has been provided by Australian law firm, Australian Conveyancing Services and is applicable in New South Wales only.

When you buy a property and the tenants are to remain in the property, then I recommend that you follow this procedure:

Before you sign the Contract, talk to the Seller or their Agent who manages the tenancy to make sure that the tenants are regular payers and that they keep the property in good condition. If they are not good tenants, look at whether they are on a fixed term tenancy or simply a periodic tenancy. If fixed term, how much longer does the term have to run? If periodic, then you can ask for vacant possession in the Contract (Seller needs to give 4 weeks notice after contract signed).

On settlement, some of the items that you should collect from the Seller include:

• The tenancy agreement (as signed by the previous Landlord (the Seller) and the tenant
• A copy of the condition report (if one exists)
• Bond transfer form
• A letter from the Seller addressed to the Tenant directing them to pay the rental to the new Landlord (the Buyer)

You will also need to adjust the settlement figures for the rental, and collect keys from the Seller/Agent (as your Landlord’s copy).

For more information on residential tenancies in New South Wales, visit the Residential Tenancies Authority site, which provides a host of free information at www.fairtrading.nsw.gov.au.

Underground Cables – Let the Buyer beware

This information has been provided by Australian law firm, Australian Conveyancing Services and is applicable in New South Wales only.

In the last 10 years we have seen a surge in communication services, including the Internet, more mobile phones and pay TV. All of these communications are serviced by underground cables, so their presence in residential back yards are also increasing.

The standard conveyancing searches carried out by Solicitors for the Buyer of a property will not discover the existence of any underground cables. This is because communications carriers have special powers granted under the Telecommunications Act which permits them to lay cables without the need to take out easements which show on Title Deeds.

The carrier who wants to lay cables over private property, must notify the Owner of the property and compensate that Owner for any loss that they suffer as a result of the installation. But subsequent owners do not get any compensation and do not need to be notified by the Carrier of the cable’s existence.

With the presence of cables affecting property now estimated to be 3-5% and growing, it is recommended that property buyers (or owners wanting to do work on their property) conduct an underground Telco search as part of their searching procedure. (Statistic quoted from Pronet Consulting, Telco searchers).

The cost of finding underground cables on your property after settlement can be very high:

Get a Telco search done. The costs is $55.00 but it protects a major investment. The best time to do the search is before you sign a Contract.

Getting the cable relocated is one option, but this can be expensive.

Property Searches – How many? How much?

This information has been provided by Australian law firm, Australian Conveyancing Services and is applicable in New South Wales only.

Because the purchase of a property is such a significant investment, it is wise not to skimp on the number of searches that you do.

Standard Property Searches done in New South Wales

The standard property searches that most Solicitors will do for you if you are buying a property (and the ones that Quicklaw recommends and which are included in the DIY conveyancing service) are:

• Title Search – a title search will be attached to your contract. You would however normally order a final search at completion, to check that nothing has changed since the date of the last title search. If you are borrowing, your financier will want a copy of this search handed over at completion
• Environmental Protection AuthorityDepartment of Defence – This Authority only deals in details to Unexploded Ordnance Sites. From 28 April 2003 the previous low-lying and flood-prone search (Environment and Protection Authority) is incorporated in the Section 10.7(2) of the Environmental Planning and Assessment Act, 1979 and is supplied in the Contract by the vendor.
• Land Tax search – this search tells you if the Owner owes any land tax in relation to the property. If the owner did not pay it before settlement, the monies due would pass on to you as the new owner
• Bankruptcy/Company search – tells you if the owners are bankrupt/wound up – if so, they could not hand over the ownership of the property to you without the Official Receiver in Bankruptcy’s approval
• Roads and Maritime Services – ascertains whether the property will be affected by any road planning proposals
• Local Authority search – A section 603 Certificate regarding rates status is a necessity
• Water Authority Search – If there is a separate Water Authority in the Area a SECTION 66 Certificate must be done for water rates status
• Telco Search – to ascertain the existence of underground telecommunications cabling – see our article Underground cables – Buyer Beware .

For Units and Townhouses

Some additional searches are standard – they include:

• Owner’s Corporation search – to see if there are any claims regarding the Owner’s Corporation by any of the Unit Owners
• Strata Inspection Report – this is a physical inspection which is done to see what owner’s corporation levies are owing, the insurance, and a host of information about the goings on in the Owner’s Corporation (eg disputes, any litigation, budget forecasts, etc) This search should be done PRIOR to exchange of contracts

Cost of Standard Searches

The search outlays will vary depending on the Local Council search, but the following is a rough guide:

For Vacant Land/House and Land: $220.00 – $390.00

For Unit/Townhouse: $420.00 – $475.00

Additional Searches that may be required:

The Zoning Certificate attached to the Contract by the Seller is a very good indicator as to whether additional searches my be required. This should be assessed as per each individual property. For example:

• If the Zoning Certificate indicates property is affected by mine subsidence, then a mine subsidence search should be done
• If property is affected by flooding then you should examine the likelihood of flooding and to what extent

Both of the above searches should be done PRIOR to exchange.

Rail Corporation NSW

If the property is near a railway, this search will advise whether the property is likely to be affected by future railway proposals.

Transgrid (POWER)

An additional search to do if your property is located near powerlines.

Education Department Search

Checks on whether any schools are planned for the near vicinity.

Heritage Search

If you believe that the property may be listed on the heritage register (for historically significant properties).

Survey Plan (offline)

When you are unsure of the property’s boundaries, particularly useful in inner city areas where houses may not be built entirely within actual boundaries.

House rules for capital gains

Source: By Paul Clitheroe, The Sunday Telegraph – 23/10/05

For most of us, the family home is our biggest investment. Normally, any capital gain you make when you sell what is technically called your principal place of residence is tax-free.

But this isn’t always the case, and there are also potential benefits if you understand the capital gains tax (CGT) rules.

Let’s say you buy a property, then rent it out to help pay the mortgage in the early years.

If you owned the property for eight years and rented it out for four of those years, CGT would apply to half the capital gain if you sold it at the end of the eighth year.

There would be a 50 per cent discount on the CGT because you owned the home for more than 12 months, but the bottom line is that the government would share in your upside.

The situation would be very different, however, if you lived in the home for at least six months after you bought it.

If you then rented it out for the next four years, moved back in again, then sold it three and half years later, no capital gains tax would apply.

This assumes you don’t have another property that you are claiming as your principal place of residence during the four years it was rented.

You also need to have genuinely lived in the home initially, not just dropped around to pick up a token amount of mail.

The different result is due to the six-year rule, as it is commonly known. This rule was developed originally to help diplomats who went on overseas assignments, but is now more widely applied.

It allows you to rent out a property for as long as six years and still claim it as your principal place of residence. If you lived in the home first, you don’t lose the CGT exemption.

Interestingly, where you own more than one home you have the flexibility to decide which one is your principal place of residence.

Say you bought a second home and decided to keep the home you were previously living in to rent out.

If, five years down the track, the first home was sold and made a significant capital gain, you can elect to claim the first home as your principal place of residence. If you did, you wouldn’t have to pay CGT on this sale.

You would have decided that the second home has less potential for capital growth, as CGT would be paid on that property when it was sold.

The CGT would apply to the period where you chose to make the first property your principal place of residence. In other words, if you sold the second property five years after you sold the first one, you would pay CGT on half the gain.

This is because for half the period you owned the property, it was not your principal place of residence, even though you lived in it. The CGT discount would also apply.

If you do have to pay CGT on a property when it is sold, remember to add to the cost base any renovations and other capital expenses that were not tax deductible but that added value to the home. A higher cost base reduces the CGT you pay.

Smoke Alarms – laws for NSW Property Owners

This information has been provided by Australian lawyer, Maree Slingsby and is applicable in New South Wales only.

This article draws on information contained in Fact Sheets issued by NSW Department of Planning and NSW Department of Lands 2006.

NSW owners of residential property in most circumstances must install smoke alarms (the Environmental Planning and Assessment Amendment (Smoke Alarms) Regulation 2006).

This law is designed to minimise the number of deaths in house fires, many of which occur at night time when the occupants are asleep. An estimated 670,000 dwellings in NSW still do not have smoke alarms.

Who needs to install smoke alarms?

The regulation requires owners of new and existing houses, townhouses, and units (homes) to ensure that smoke alarms are installed in their residences. Other dwellings are also included (eg relocatable homes, residences above shops, etc). Failure to do so will incur a penalty.

There are some exceptions, such as certain moveable dwellings, and buildings in which nobody sleeps, however these exceptions are very limited.

For more detail on dwellings that are included/excluded, see the EPA Regulation.

Owners of homes that have smoke alarms installed in compliance with a current or previous requirement need take no additional action. Also, homes where smoke alarms have already been voluntarily installed are not required to take action if their smoke alarms are in good working order and in the right locations (see below for details).

How does this affect Sellers?

Persons intending to sell their homes who enter into a Contract on or after 1 May 2006 and who are affected by the new legislation will be legally required to have installed the smoke alarms into the property they are selling.

How does this affect Buyers?

Buyers entering into a Contract to purchase a residential property should make sure that the Seller has included a ‘Warning Statement’ regarding Smoke Alarms in the prescribed form in the Contract (appears in REI standard conditions). Buyers should check the property to ensure that complying smoke alarms have been fitted.

Type of Smoke Alarms required

Any smoke alarm that complies with the Australian Standard (AS)3786 – 1993, Smoke Alarms (which should be noted on the product packaging) will meet the new requirements. These alarms can be hard-wired (powered from the mains electricity supply) or battery-operated at the owners’ choice.

Where to locate smoke alarms to meet the new requirement

The number of smoke alarms required will depend on the size and layout of each particular home. For houses and townhouses (Class 1a buildings) and manufactured/relocatable homes, smoke alarms are required on or near the ceiling in the following areas:

• in storeys containing bedrooms: in every corridor or hallway associated with a bedroom, or, if there is no corridor or hallway, between the part of the home containing the bedroom and the rest of the dwelling; and
• in any storey not containing bedrooms.In these storeys smoke alarms should be located in the path of travel most likely to be used by those evacuating the home.

For apartments, blocks of flats (Class 2 buildings) and residences over shops or caretaker flats (Class 4 parts of buildings) smoke alarms are required on or near the ceiling in the following areas in each flat or unit:

• in every corridor or hallway associated with a bedroom, or, if there is no corridor or hallway, between the part of the unit containing the bedroom and the rest of the dwelling; and
• in any storey not containing bedrooms. In these storeys smoke alarms should be located in the path of travel most likely to be used by those evacuating the unit.

For an excellent article on location of smoke alarms click here.

Penalties for non-compliance

The regulation includes provisions for fines to be issued for failure to install smoke alarms after 1 November 2006, however there are no new inspection powers. Also, from 1 May 2006, it will be an offence to interfere with or remove an existing smoke alarm, unless it is to repair, maintain or replace the alarm.

Swimming Pools

Warning Statements and Compliance Certificate laws for NSW Property Owners

This information has been provided by Australian law firm, ACS, and is applicable in New South Wales only.

This article draws on information contained in Fact Sheets issued by various Local Government Authorities 2010.

From 29 April 2016, properties sold with a pool must have one of: a ‘relevant occupation certificate’; a ‘certificate of compliance’; or a ‘certificate of non-compliance’, issued from the NSW Swimming Pool Register.

This means that from 29 April 2016:

1. Vendors are now able to transfer the obligation of obtaining a ‘certificate of compliance’ to the purchaser. A ‘certificate of non-compliance’ can now be attached to the contract of sale.

    

2. The buyer of a property with a non-compliant swimming pool has 90 days from the date of settlement to address any issues of pool barrier non-compliance and obtain a certificate of compliance.

    

3. Properties with more than two (2) dwellings are exempt from the requirement to provide a compliant pool barrier on sale or lease, as they are already regulated through mandatory three (3)-yearly council inspections.

    

The owner of a property with two (2) or fewer dwellings and a pool must have a certificate of compliance before entering into a lease.

A relevant occupation certificate means an occupation certificate issued under the Environmental Planning and Assessment Act 1979 that is less than 3 years old and that authorizes the use of the swimming pool.

Recent amendments to Swimming Pool legislation have been set in place in an effort to reduce the risk of drowning of young children in backyard pools. These changes will affect all property owners, including those that do not have a swimming pool located on the property.

What are the new requirements?

The Swimming Pools Act 1992 dictates that the owner of premises on which a swimming pool is situated must ensure that the swimming pool is surrounded by a child restraint barrier that:

• separates the swimming pool from any residential building situated on the premises and from any place (whether public or private) adjoining the premises, and
• is designed, constructed, installed and maintained in accordance with the standards prescribed by the regulations. <<

Further it is a requirement that any access to the swimming through this barrier is to remain securely closed at all times.

There may be some exceptions to these rules but the best way to be sure is to make contact with your local council for more details.

The new amendments also require that Warning signs be erected in a prominent position in the immediate vicinity of the swimming pool (it is preferable this be displayed adjoining the shallow end of the pool) containing the words “YOUNG CHILDREN SHOULD BE SUPERVISED WHEN USING THIS SWIMMING POOL” together with details of resuscitation techniques associated with infants, children and adults.

Warning Statements

In line with the amendments to the Swimming Pool Act amendments the Conveyancing (Sale of Land) Regulation 2010 requires that all contracts of sale now include a warning statement in the Contract, in the prescribed words.

Failure to attach the correct prescribed Notices from 1 September 2010, may result in the Buyer being able to terminate the Contract, within 14 days of exchange.

It is important that this warning statement included in all contracts for the sale of land, even where the property does not include a swimming pool.

How does this affect Sellers?

Contracts exchanged on or after 1 September 2010 must include the new prescribed warning statement, even where the property does not include a swimming pool. Sellers should ensure that upon collating their contract that this statement is attached.

Additionally, where there is a pool located on the property the Seller is legally required to ensure that the pool is compliant with the new safety requirements. If a compliance certificate is not already issued by Council, the Seller should make arrangements with the local government authority to obtain this certificate prior to marketing the property for sale.

How does this affect Buyers?

First and foremost a Buyer entering into a Contract to purchase a residential property should make sure that the Seller has included a ‘Warning Statement’ regarding swimming pools in the prescribed form in the Contract (appears in REI standard conditions). This will be the case even where there is no pool located on the property.

Secondly where a Buyer is purchasing a property that has a pool located at the premises should make enquiries with the Seller and the local government authority to ensure that the pool is compliant and that the appropriate Compliance Certificate has been issued for the property. We suggest that this is done prior to exchange of contracts where possible.

In the event that the pool is not compliant the Buyers will become responsible to ensure that the pool is compliant and to obtain this certificate from council.

Penalties for non-compliance

The Swimming Pools Act 1992 includes provisions for fines to be issued, including ‘on the spot’ fines, for failure to comply with the requirements set down by this Act and the regulations. The purchaser may rescind the contract of sale if the seller does not comply with the new requirements.Additional inspection powers have been granted to local government authorities to enter and inspect swimming pools located on properties to inspect for non-compliance.