Specialist advice helping you achieve your property goals

A vendor’s Section 32 Statement must contain, amongst other things, the following:

• Financial matters such as mortgages affecting the property.
• Whether it is in a bushfire or termite prone area.
• The outgoings affecting the property.
• Details of building permits issued in the last 7 years, if the property is residential.
• Details about the owner’s corporation if the property is affected by an owner’s corporation.
• What services are not connected to the property.
• Details of restrictions affecting the property such as covenants and easements.
• Planning and Zoning information about the property.
• Material facts about the property.

A cooling-off period applies to all private sales of residential and small rural properties. It begins on the date the purchaser signs the contract and continues until three clear business days after signing. For example, if a contract is signed on Thursday, the cooling off period expires on the following Tuesday (provided there are no public holidays).

The cooling-off period gives the Purchaser time to consider their offer. If they decide they no longer want to buy the property, they can ‘cool off’ by giving written notice to the vendor or the selling agent. The purchaser will be entitled to a full refund of any money paid, less $100.00 or 0.2 per cent of the purchase price, whichever is greater.

The cooling-off period does not apply if:

• the property was purchased at a public auction or within three clear business days before or after a public auction.
• the property is used mainly for industrial or commercial purposes.
• the property is more than 20 hectares and used mainly for farming.
• the purchaser previously signed a contract for the same property with the same terms.
• the purchaser is an estate agent or corporate body.

Because the cooling off period is very short, we highly recommend that you obtain legal advice before you enter a contract of sale.

Unless a purchaser authorises early release of the deposit, Section 24 of the Act requires that the deposit be held by a legal practitioner, conveyancer, or estate agent as stakeholder until the purchaser is entitled to:

• A transfer of the property, or
• Possession or to receipt of rents and profits, at which time the deposit can be paid to the Vendor.

A vendor can request access to the deposit funds paid by the purchaser prior to settlement by providing the purchaser with a Section 27 Statement, commonly known as an “Early Release of Deposit Authority”. It is a statement provided by the vendor that provides information required under s.27 of the Act.

The vendor must disclose:

• The details of any mortgage over the land; and
• Particulars of any caveat lodged under the Transfer of Land Act 1958 in respect of the land.

A Section 27 Statement can only be served when the contract of sale is unconditional. This means that all the additional conditions have been satisfied and the ‘cooling off period’ has expired. A purchaser may then agree to release the deposit to the vendor, provided:

• The purchaser is satisfied with the proof of debt information from the Vendor
• The terms for release under the Contract are satisfied

If the purchaser is not satisfied by the particulars disclosed in a Section 27 Statement, they may object within 28 days, if:

• The vendor has not provided written confirmation from the mortgagee of the information contained in the statement;
• The vendor owes more than 80% of the sale price; or
• A caveat has been lodged in respect of the land.

If the purchaser fails to object within 28 days, they are deemed by s. 27 (7) of the Act to have authorised the early release of the deposit.

A caveat is a notice to the world at large of a person’s proprietary interest in a property, and acts as a “freeze” by temporarily preventing any dealings that compete with the interests of the caveat holder from being registered.

After signing a contract of sale and until the purchaser is registered as an owner on title, their interest isn’t protected and can be lost if someone else registers a competing interest. A caveat may be particularly useful to a purchaser where the vendor has obtained early release of the deposit. If the vendor is unable to effect settlement for whatever reason, it may be difficult for the purchaser to recover their deposit money from the vendor.

A caveat protects the purchaser by recording on title the purchaser’s proprietary interest in the land. Most dealings affecting the land cannot be registered on title without the consent or approval of the caveator on title.

Subject to the conditions in the Contract, a vendor carries the risk of loss or damage to the property until settlement. Further, a dwelling on land is so destroyed or damaged before settlement as to be unfit for occupation as a dwelling, the purchaser has a right to end the contract within 14 days of the purchaser becoming aware of the destruction or damage. In such a case, the deposit and any money paid by the purchaser will be required to be refunded to the purchaser.

Accordingly, it is crucial that a vendor keeps the property insured for loss and damage until at least the date of settlement.

From 1 July 2017, Foreign resident capital gains withholding (FRCGW) of 12.5% applies to all vendors disposing of property under contracts where the price is $750,000 or more.

A purchaser is required to withhold 12.5% of the purchase price at settlement and pay it to the Australian Taxation Office, unless the vendor provides a clearance certificate obtained from the Australian Taxation Office stating that:

• The vendor is not a relevant foreign resident; and
• Withholding is not required.

A clearance certificate is valid for 12 months from the date of issue and can be used for multiple disposals of real property in that period. The clearance certificate must be given to the purchaser within the clearance certificate period and must be provided before settlement.

A purchaser can rely on the clearance certificate as proof that they are not required to withhold. Once a purchaser has received a copy of the clearance certificate, they have met their obligation, even if the vendor’s circumstances change during the settlement period.