Conveyancing

Did you know that a deposit paid to purchase property could be released early before settlement? Usually you will hear the term Section 27 used by real estate agents and conveyancers. It allows for the vendor, in certain circumstances, to get early access to the deposit monies before settlement.

Why is a Deposit Required?

Deposit funds are a common necessity to secure your property purchase. When purchasing real estate, a purchaser is commonly required to pay the deposit upfront. A deposit is a proportion of the contract price, can be negotiated with the vendor and is usually ten percent (10%) of the purchase price. The deposit money can either be paid as a lump sum or in installments depending on your negotiation with the vendor or their estate agent.

You may encounter a problem when it comes to the release of the deposit funds. Therefore, it is important to know of your rights to simplify this process and have a successful outcome without any settlement delays or additional legal expenses.

How is a deposit held and by whom?

Standard practice is for the deposit funds to be retained in the real estate agent’s trust account. In certain circumstances the vendor’s legal practitioner or conveyancer may also hold the deposit in their trust account. According to section 24 of the Sale of Land Act 1962 (Vic) , the professional who holds this amount on trust is regarded as a stakeholder to the transaction.

Generally, these funds are held on trust and released to the vendor on settlement day. Many individuals are unaware that a deposit can be released earlier in certain circumstances. Sometimes your real estate agent may discuss this option with you but it is recommended that you seek legal advise to avoid any further complications.

The Section 27 Statement – early release of deposit authority

A vendor can gain access to their entire deposit before settlement date. This option is known by many in the legal industry as “Section 27 deposit release statement” and provided by Section 27 of the Sale of Land Act 1962 (Vic).

Common reasons to have the deposit released

Before we discuss the procedure for a Section 27 deposit release, let’s consider common reasons why vendors seek out this early release option:

• Some vendors may need the deposit funds prior to settlement to make a payment towards their existing mortgage, towards their deposit for another property purchase, an investment or for the payment of other financial commitments.
• Sometimes the selling real estate agent prefers their clients to have early access to the deposit so they can also be paid their commission.
• There may be other grounds for this release, such as the vendor preferring the funds in their own pockets and not a third party’s trust account.

Requirements of Section 27

Section 27 of the Act sets out the procedure to have the deposit released. Any consent to release must be in writing. This means that a verbal agreement is not sufficient for an early release. The vendor’s legal representative drafts a Section 27 statement in accordance with the legislation and seeks the purchases consent to this statement.

The legislation requires the vendor to disclose particulars of any mortgages and caveat registered over the property. Since the purchaser’s legal representative will often object to a Section 27, a letter from the bank will usually be required to confirm Section 27 particulars and satisfy these objections. Most banks in Victoria take 1-2 weeks after receiving a discharge request to complete the required letter, and some banks will not be forthcoming with the vendor’s requests.

Matters are generally less complicated if there is no mortgage registered on the property or there are no further claims against the property by third parties.

It is generally not advisable to agree to an early release if the vendor’s existing mortgage or loan amount is a sum that is more than eighty percent (80%) of the purchase price, a sum greater than the purchase price or if there is a caveat over the property and a third party is making a claim against the property.

If there aren’t sufficient funds to pay of the mortgage and the vendor’s bank delays settlement the purchaser will not be able to accept title and take ownership of the property. In this instance, if the vendor has obtained the early release of the purchaser’s deposit, and the vendor is unable to effect settlement, it may be difficult for the purchaser to recover their deposit monies from the vendor.

Who prepares the early release of deposit statement?

The vendor or their legal representative draft the statement for an early release of deposit and serve this written request on the purchaser’s conveyancer or their legal representative. The documents must be prepared in good faith and truthfully. There are severe penalties where the vendor knowingly or recklessly supplies false information to the purchaser about the particulars required to be given under Section 27 of the Act.

Section 27 provides that an offence for these situations may be a penalty of up to fifty (50) penalty points. The purchaser shall also be entitled to rescind the contract of sale and recover their deposit money monies where there is a breach of Section 27 of the Act.

To accept an early release

According to Section 27 of the Act, the purchaser can consent to an early deposit release if they are satisfied with the particulars provided by the vendor and there are sufficient funds to discharge all mortgages and encumbrances over the property.

Both the vendor and purchaser must agree by signing the Early Release Deposit Authority , giving the conveyancer, agent or lawyer permission to release the funds. Any such consent should occur within twenty-eight (28) days of receiving the request for an early release. Usually the deposit is released soon after the purchaser’s acceptance of the statement.

Can I decline the request?

Yes! A purchaser is not obligated to agree provided that they have a valid reason for their objection. The Act provides that a purchaser has twenty-eight (28) days from receiving the written notice to inform them that they are not satisfied with this arrangement and they must give valid reasons for their decision.

Purchasers often feel that as they haven’t yet got their end of the bargain – the property, the deposit should be held by a third party as is, and the Purchaser objects (blocks) the release. For this reason we always advise vendors under no circumstances should they rely on the deposit monies.

Below are some of the main reasons the purchaser can object:

• The property is an off the plan purchase;
• The contract is unconditional – purchaser has already accepted title;
• The mortgage amount secured against the property is more than 80 percent of the sale price in the contract; and
• There is a caveat on the property.

What happens if I don’t respond to the vendor’s Section 27 statement?

There are legal implications if the purchaser fails to notify the vendor or their representative of their decision before the twenty-eight (28) day deadline.

In this situation, it is deemed that the purchaser is satisfied with the early release of the deposit and the deposit would be automatically released as if the purchaser had accepted this arrangement. It is advisable that you respond to the other side to avoid this situation.

It is important to seek legal advice to avoid any unnecessary costs. Our dedicated property lawyers will be happy to assist you in making an educated decision about your property sale or purchase. We can identify any other ground that you can use to object to a early deposit release. Please call our property and conveyancing team on (03) 8590 8370 today for all your deposit enquiries or other property matters.

This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.

 Last updated: 8 June 2022 Article by: Jennifer El-Asmar Edited by: Halil Gokler

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Are you looking at buying owner occupied or investment property in Victoria? It is essential you are aware of your rights and obligations when making an unconditional offer. Are you looking at potentially selling property? It is just as important to know how unconditional contracts can impact you as a vendor. The risk of making an unconditional purchase offer will be discussed in detail.

Each Contract of Sale is uniquely drafted to include specific conditions. It is advisable that you have the Contract of Sale and Section 32 Vendor Statement reviewed by your legal representative before proceeding to make an offer or execute documents.

The Contract of Sale may have been drafted taking into consideration that the property is being sold either at auction or through private treaty. When purchasing at auction, note that you will be making an unconditional purchase of property with no right to cool off. Similarly, if you are purchasing an off the plan property, you will be making an unconditionally offer.

If you are purchasing through private treaty, your offer may be subject to certain conditions.

Examples of conditions that may apply include:

1. Subject to finance clause – the sale is subject to the purchaser unconditionally obtaining finance;
2. Subject to a building inspection;
3. Subject to a pest inspection;
4. Subject to review of contract of sale by the purchasers legal representative;
5. Any additional special condition the parties deem fit.

We reiterate that is important to get a Contract of Sale and Section 32 Vendor Statement reviewed before signing in order to avoid any issues arising and to mitigate any risks that may arise.

What is an unconditional contract of sale?

Going unconditional means that a purchaser is proceeding with the purchase of a property without any conditions. The purchaser is then obliged to settle on the property and cannot end the contract.  Such a contract will have specific conditions in place to reflect this.

A conditional contract means there are conditions to the purchase, this reduces the risks of a purchaser being unable to settle on time.

Private purchases of property are generally conditional contracts – however, this is not always the case. Unconditional offers can still be made on privately sold properties.

When you purchase a property at auction in Victoria, you are purchasing the property with no conditions. Therefore, the purchase is immediately considered to be a “unconditional contract”.

What are the risks associated with going unconditional?

The risks associated with making an unconditional offer privately or at auction, will depend on each persons circumstances.

Examples of risks you may face include:

1. Finance not getting approved prior to the settlement date;
2. Losing your deposit;
3. Being unable to settle on time;
4. Potentially facing additional costs – penalty interest rate and legal costs.

Can a seller cancel an unconditional contract?

The unconditional agreement can be confirmed by the vendor’s signature. If buyers have already made the unconditional offer but wish to back away from the contract, the only way to do so is if the Vendor has not signed yet and your offer to purchase is withdrawn.

How to mitigate the risks associated with going unconditional:

Know your obligations

Be aware of what going unconditional actually means. You have no cooling off period and are legally obliged to settle on the purchase.

Due diligence

It is best that any potential purchaser’s make a time to go and view the property in person before signing an unconditional Contract of Sale. Ensure that you are able to go through the entire property and conduct an in-depth inspection of the property prior to signing. Take images and video’s of the property for your reference. Some real estate agents try and rush these inspections, don’t feel pressured!

Pre-approval or having funds available

Obtaining pre-approval from your bank or lender prior to signing an unconditional Contract of Sale will provide potential purchaser’s with an indication of how much money they are able to borrow and what conditions may be applicable to their loan.

This will save time, as once you sign the unconditional contract, your lender or broker can begin the process of obtaining final approval.

It is important that purchaser’s get in contact with their lenders or brokers and discuss the bank or lender’s position on purchasing a property unconditionally and how much time they require to have the loan formally approved after the Contract of Sale is fully executed. This will increase the likelihood of ensuring all necessary unconditional finance approvals are completed.

If you are purchasing a property out-right, the risks of being unable to settle on time are reduced.

Ensure you are aware of the approximate amount of funds needed to settle so that you are able to make the necessary arrangements.

Building and pest inspection

Organising for a professional to conduct a pest and building inspection prior to signing an unconditional Contract of Sale will reduce the risk of purchasing a property that may have major defects or issues that may result in substantial costs to rectify, that may be prone to pest infestations, poor physical condition and other related issues.

Being made aware of this prior to signing will assist in ensuring that you are aware of the condition of the property and can avoid making the purchase if required.

If any issues do arise from the inspection, purchasers can then determine whether making the purchase is worth it or not, being aware that an existing home is likely to have some fair wear and tear.

Having the Contract of Sale and Section 32 Vendor Statement reviewed

Obtaining professional advice on a Contract of Sale and Section 32 Vendor Statement can ensure that purchasers are aware of any hidden issues prior to signing.

It is important that purchasers are made aware of the special conditions relating to their purchase, the potential costs associated with being unable to settle on time and the risks they may face as a result.

If exceptional circumstances arise and you have undertaken all of the above precautions and are unable to settle on time, consider other options available to you. For example – borrow money from a private lender, family member or friend. Also make sure that you obtain expert advice from a solicitor.

The Australian property market can be fiercely competitive and securing your dream home might be a daunting process. Ensure you are taking the right precautions, this will assist in making your property purchase a smooth one.

Do you need assistance with reviewing a Contract of Sale and Section 32 Vendor Statement? Contact our team on (03) 8590 8370 to obtain legal advice from our expert property lawyers and conveyancers. We can assist you with your property purchase or sale. We service all Melbourne suburbs and can also guide you through this complicated process.

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Verification of identity (VOI) requirements in property settlements

When you are buying, selling or transferring property in Victoria you will need to have your identity verified by your legal representative. The verification of identity requirement form part of the transition to the electronic conveyancing system.

Verification of identity reduces the risk of identity fraud and unauthorised property transactions and ensures that the right persons are dealing with the land.

How to conduct a verification of identity (VOI)?

Your legal representative needs to take “reasonable steps” to verify your identity. Reasonable steps include taking such steps as an ordinary prudent person would have taken the in the circumstances in the ordinary course of their business. Whether such steps were taken will be a question of fact depending on the circumstances of each case.

The verification of identity is valid for two (2) years and can be used for all land transactions during that period.

What are acceptable identity documents?

An original and current documents from one of the below listed categories must be provided to satisfy the verification of identity requirements.

Minimum document requirements for Australian citizens or residents

Category 1

Australian Passport or foreign passport or Australian Evidence of Immigration Status ImmiCard or Australian Migration Status ImmiCard

plus Australian driver’s licence or Photo Card

plus change of name or marriage certificate if necessary

Category 2

Australian Passport or foreign passport or Australian Evidence of Immigration Status ImmiCard or Australian Migration Status ImmiCard

plus full birth certificate or citizenship certificate or descent certificate

plus Medicare or Centrelink or Department of Veterans’ Affairs card

plus change of name or marriage certificate if necessary

Category 3

Australian driver’s licence or Photo Card

plus full birth certificate or citizenship certificate or descent certificate

plus Medicare or Centrelink or Department of Veterans’ Affairs card

plus change of name or marriage certificate if necessary

Category 4

(a) Australian Passport or foreign passport or Australian Evidence of Immigration Status ImmiCard or Australian Migration Status ImmiCard

plus another form of government issued photographic identity Document

plus change of name or marriage certificate if necessary

(b) Australian Passport or foreign passport or Australian Evidence of Immigration Status ImmiCard or Australian Migration Status ImmiCard

plus full birth certificate

plus another form of government issued identity Document

plus change of name or marriage certificate if necessary

Category 5

(a) Identifier Declaration

plus full birth certificate or citizenship certificate or descent certificate

plus Medicare Card or Centrelink or Department of Veterans’ Affairs card

plus change of name or marriage certificate if necessary.

(b)      Identifier Declaration by a Person specified in Verification of Identity Standard

plus Medicare Card or Centrelink or Department of Veterans’ Affairs card

plus change of name or marriage certificate if necessary.

Minimum document requirements for Persons who are not Australian citizens or residents

(a)Foreign passport

plus another form of government issued photographic identity Document

plus change of name or marriage certificate if necessary

(b) Foreign passport

plus full birth certificate

plus another form of government issued identity Document

plus change of name or marriage certificate if necessary.

Can a VOI be conducted at Australia Post?

Australian Post is an Approved Identity Verifier and can VOI clients for both paper and electronic property transactions.

A participating post office can verify identity for clients that are:

• buying land or property, or one of multiple purchasers buying land or property
• selling land or property, or one of multiple owners selling land or property
• transferring land or property to someone else, having land or property transferred to them, or one of multiple parties involved in the transfer of land or property.

Australia Post charge a service fee of $49. These fees can be paid in cash, EFTPOS, Visa or MasterCard.

Australia post ensure that the VOI report is delivered to your legal representative within 15 minutes of you completed your identity check.

Our office also contact VOI

Contact our office on 8590 8370 or further information or to make appointment with one of our professional staff to assist with the verification process.

Our office can also assist to witness a statutory declaration, provide certified copies of documents or with your conveyancing transaction.

Please make sure your bring the correct identity documents to ensure the verification is valid.

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What are statement of adjustments?

Towards the end of the conveyancing transaction statement of adjustments are prepared to ascertain the balance of the purchase price payable to the vendor and to adjust for outgoings such as council rates, water rates and owners corporation fees. In individual circumstances it may also be required that adjustments occur for items such as rental payments, land tax, rebates and security bond.

Outgoings that are adjusted tend to be recurring in nature and relate to a certain period, such as monthly or quarterly.

It is standard practice for the purchaser’s lawyer to prepare the statement of adjustments and forward to the vendor’s lawyer for validation purposes prior to settlement.

Contractual conditions that relate to statement of adjustments

The obligation to prepare adjustments arise from the signed contract of sale. General Condition 23 of the Law Institute of Victoria (LIV) details this requirement.

How do we adjust for outgoings?

Outgoings can be adjusted on a paid or owing basis. When adjusting on a paid basis, the understanding is the the vendor has paid the outgoing. An allowance is then made in favour of the vendor in the adjustments. If the rates are unpaid, then a portion of the settlement funds payable to the vendor by the purchaser (from the amount due to the vendor) is used to pay the outstanding portion of the rates. The rates are treated as paid by the vendor and an allowance is again made to benefit of the vendor.

It is important that adjustments are accurate as the purchaser of property will be required to pay rates and all outgoings when due and payable to the relevant authority. This requires a payment of both arrears and current rates. An incorrect adjustment by the solicitor would leave a potential purchaser out of pocket post settlement.

Adjustments are based on the settlement date which is the date the purchaser becomes the new owner of the property by taking possession of the property. In circumstances where there is a delay in settlement, adjustments should be recalculated to take effect from new new settlement date. If the settlement delay is caused by the property purchaser, the vendor may seek that adjustments occur from the original contract of sale settlement date. This will compensate the vendor for any loss caused by the property purchaser’s delay.

What is penalty interest and how does it relate to the adjustments?

Penalty interest is paid by a property purchaser who is in default of the contract of sale and the terms of the transaction. A delay in settlement can be classified as an event of default. General condition 33 outlines the interest payable on default.

Penalty interest will be calculated adjusted and payable to the vendor similar to the other outgoings.

What happens if the parties fail to adjust?

A failure to adjust can lead to a waiver of the right to adjust. Similarly, if a vendor agrees to settle without adjustments, it can be argued the the vendor waived their right to adjust. A readjustment may be available if there is an error as opposed to a total failure to adjust. It may be argued that the obligation to adjust does not merge at settlement and a readjustment made in favour of the relevant party.

How is rent and other outgoings adjusted for rental or investment properties?

For residential properties water and council rates are normally paid by the landlord. If the landlord/vendor pays these rates adjustments occur in the normal method outlined above.

If the tenant is responsible to pay these outgoings or expenses and they have been paid, then there would be no need for an adjustment.

However, if the tenant is responsible but has not paid, then the purchaser should propose an adjustment. The property purchaser will be able to recover these amounts directly from the tenant at a later stage.

Rent should also be adjusted on a pro-rata based on whether it has been received by the landlord.

How can our office assist you?

Contact our office for all your property transaction whether you are a seller or buyer. We can provide legal advice in relation to preparing the statement of adjustments. Our Melbourne qualified lawyers will minimise any unnecessary expense and make sure all conveyancing documents are prepared accurately.

Liability limited by a scheme approved under Professional Standards Legislation.

Last updated: 14 December 2021 Article by: Halil Gokler

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What is the sale of real estate nomination form?

Did you know that there are circumstances where the purchaser can nominate an alternative individual or entity to take ownership of the property. This can be a family member, friend or company who then becomes the nominated purchaser.

When would a contract purchaser nominate?

A property purchasers may decide to nominate an alternative purchaser in the following circumstances:

·        The nominated purchaser is not available at the time of making an offer or cannot attend the property auction;

·        Where there is more multiple purchasers but only one party signs the contract of sale; and

·        A contract purchaser cannot settle on the property and only a nominated purchaser can fund the purchase.

How would you incorporate a nomination clause into the contract of sale?

It is common practice to add “and/or nominee” after the purchaser’s name in the Contract of Sale (“Contract”). This allows the contract purchaser to nominate a nominee purchaser.

The right to nominate is recognised common law and is also contained with the general conditions of the Law Institute of Victoria (LIV) Contract of Sale. General Condition 4 of the LIV contract of sale states as follows:

“The purchaser may no later than 14 days before the due date for settlement nominate a substitute or additional person to take a transfer of the land, but the named purchaser remains personally liable for the due performance of all the purchaser’s obligations under this contract.”

Either the contractual or common law right can be relied upon to process a nomination. The common law right may also be excluded by contract of sale.

Is a new contract of sale required?

This process does not require a separate contract of sale. The sale of real estate nomination form is drafted and can be used to verify stamp duty with the State Revenue Office (SRO) and finalise the property transfer.

The purchaser’s solicitor normally prepares the nomination form for an off the plan contract of sale.

When does nomination lead to double stamp duty?

 Nomination will not lead to double duty except in very limited circumstances involving:

− additional consideration; or

− land development (following either a contract or option).

How do you prove that nomination has occurred?

Although there is no requirement for the nomination to be made in writing a stand form is drafted for the purposes of the SRO . A Statutory Declaration is also required by the SRO. This is normally lodged with the transfer of land document and occurs as part of the Digital Duties Form.

Can multiple nominations occur?

Whilst no cases have considered multiple nominations or revoked nominations, there does not seem to be anything in principle against the right to do so. It is for the nominee to satisfy the State Revenue Office in relation to the duty consequences of the nomination process.

Can a vendor charge a fee to approve a nomination?

 A vendor cannot charge legal costs to the purchaser for nomination under section 42 (3) of the Property Law Act 1958 (Vic). Furthermore, they cannot include a special condition in the Contract to enforce such a request.

How does nomination interplay with default?

The vendor can enforce the contract against the original purchaser and any notice of default must be served on that purchaser. In practice, it may be served on both the original purchaser and the nominee. A nominee ordinarily has no right to enforce against the vendor, as the nominee is not a party to the contract. Only the purchaser may do so.

What is the difference between nomination, assignment and novation?

A purchaser remains liable under a nominated contract, the nominee merely being permitted to exercise the purchaser’s rights. An assigned contract results in the nominee standing in the place of the purchaser. A novation is where the original contract is cancelled and the new purchaser enters into a second contract with the vendor.

Need assistance in drafting a standard nomination form? Contact our team on (03) 8590 8370 to obtain legal advice from our expert property lawyers and conveyancers. We can assist you with your property purchase or sale. We can also assist to validly nominate you purchase.

This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.

Liability limited by a scheme approved under Professional Standards Legislation.

Last updated: 7 December 2021 Article by: Halil Gokler

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Stamp duty on breakdown of relationship

Separation can be an extremely emotional time, it can be difficult to think about all the small details involved when transferring property from former partners. At Haitch Legal, we have extensive experience in property law and and can assist you with all your property transactions.

When does the stamp duty exemption apply?

Any property transfer pursuant to a breakdown of marriage, de facto relationship or domestic relationship is exempt from stamp duty. The transfer can be from both parties to either on of the parties or from one party to the other.

Prior to finalising the transfer, it is advisable that you enter into Consent Orders or a Binding Financial Agreement (BFA) with your former partner. Either of these will document the separation and specify the property settlement. A family lawyer can assist in drafting the Consent Orders or BFA. You do not need to go to court to obtain a Binding Financial Agreement.

The exemption applies to both residential properties, commercial properties and investment properties.

What is the relevant Legislation?

Section 44(1) of the Duties Act 2000 (Vic) states that no duty is chargeable in respect of a transfer of dutiable property if it can be satisfied that:

(a) the transfer has been made solely because of the breakdown of marriage or domestic relationship; and

(b)(i) the transferor is a party (or both parties) to the marriage of domestic relationship; and

(c)(i) the transferee is a party (or both parties) to the marriage or domestic relationship; and

(d) no other person takes or is entitled to take an interest in the property under the transfer.   

What evidence does the State Revenue Office (SRO) require to finalise the transfer?

The State Revenue Office (SRO) requires an all in one Digital Duties Form to be completed by both parties with all their details.

As part of this form the parties will need to specify breakdown of relationship as an applicable stamp duty exemption or concession. here is also an additional requirement that there be no consideration on the transfer of land document for the stamp duty exemption to apply.

The Duties Online Form will need to be signed by all parties to the transaction and once stamp duty is verified there will be no requirement to pay stamp duty.

Example of the stamp duty exemption

Josh and Elizabeth are getting a divorce. Elizabeth has 2 investment properties in her name. Under the agreed court orders, Elizabeth has to transfer 1 of the properties to Josh. Because the transfer is occurring due to a breakdown of marriage, Josh and Elizabeth will be exempt from paying any stamp duty at settlement.

Does the stamp duty exemption apply to trusts or company transfers?

The stamp duty exemption is also available where there is a transfer to a trustee of a trust because of a breakdown of marriage or domestic relationship, the transferor was one of the spouses or domestic partners, and only the parties to the marriage or domestic relationship or their children were beneficiaries of the trust.

Section 44(1) of the Duties Act 2000 (Vic) states that no duty is chargeable in respect of a transfer of dutiable property if it can be satisfied that:

(a) the transfer has been made solely because of the breakdown of marriage or domestic relationship; and

(b)(ii) the transferor is a trustee of a trust of which a party (or both parties) to the marriage or domestic relationship is a beneficiary (or are beneficiaries); and any list of transferees as listed in Section 44(1)(c)

Subject to some restrictions, transfers from corporations can also qualify for an exemption where the transfer has been made solely as a result of breakdown of a marriage or domestic partners. The additional requirement that must be met is that the dutiable value of the property being transferred must not exceed the value of the interest of the parties to the marriage or domestic relationship in the corporation.

Section 44(3) of the Duties Act 2000 (Vic) states that no duty is chargeable in respect of a transfer of dutiable property if it can be satisfied that:

(a) the transfer has been made solely because of the breakdown of marriage or domestic relationship; and

(b) the transferor is a corporation; and

(c) the transferee is any of those contained within this subsection; and

(d)…

(e) the dutiable value of the transfer does not exceed the value of the interests of the parties to the marriage or domestic relationship in the corporation; and

(f) as a result of the transfer, the value of the interests of the parties to the marriage or domestic relationship in the corporation is reduced by the same amount as the dutiable value of the property transferred.

Contact us for further information

Contact our office on 8590 8370 for more information on all your legal matters including the stamp duty exemptions that apply to your situation. Our conveyancing Melbourne property lawyers can also assist in transferring property pursuant to your relationship breakdown so you don’t pay stamp duty.

This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.

Liability limited by a scheme approved under Professional Standards Legislation.

Last updated: 23 November 2021 Article by: Halil Gokler

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Licence Agreements in Victoria – Everything you need to know.

_{Have you purchased a new residential or commercial property but don’t want to wait until settlement to move in? Or have you sold your property but have concerns you won’t be ready to move out by the settlement date?…Keep reading!}

What are licence agreements?

A licence agreement is a contractual agreement made by two parties, the licensor and licensee. The licensor provides the licensee with the right to use the property.  Both the vendor and the purchaser can be either the licensor or the licensee depending on the circumstances.

A licence agreement allows purchasers to have early access to a property and can allow vendors to remain on a property even after the settlement date has lapsed. Licence agreements allow both parties to ensure their rights are being protected. However, licence agreements do not allow for a free pass to stay or leave as one pleases. Both parties must consent to the agreement and are under no obligation to agree to a licence agreement. Therefore, in some circumstances a licence agreement is simply not an option.

Who prepares and pays for the licence agreement?

It is recommended that a legal practitioner or qualified person prepares the licence agreement. This ensures that the document is properly completed and both parties are protected. Generally, the party that requests the licence agreement is responsible for paying for it. However, in some circumstances this is not the case. If one parties lawyer prepares the licence agreement, the other parties lawyer will generally review it before it is signed.

EXAMPLE: A purchaser is having trouble getting their finance approved and settlement is slowly emerging. The vendor has also struggled to find a house to rent. Due to the purchaser being in default, they may contribute to or pay for the drafting of the licence agreement. The vendor would remain in the property and the purchaser would have more time to find accommodation.

Our property and conveyancing lawyers have represented both purchasers and vendors in the drafting, reviewing and negotiation of licence agreements. If you would like more information on how we can help you please contact us by phone on 03 8590 8390.

Licence agreement or Lease?

Be careful – a licence agreement and lease are two different things!

A lease involves a landlord and a tenant. The landlord owns the property and the tenant occupies the landlord’s property. A formal contract (the lease agreement) is put in place. The lease agreement generally sets out the obligations of the parties.  A lease allows the tenant to have exclusive possession of a property.

A licence agreement involves a licensor and licensee. The licensor provides the licensee with temporary access to the licensor’s property. A contractual agreement (the licence agreement) is used. Licence agreements are usually entered into for shorter periods of time and occur as a result of purchasing or selling a property. Therefore, it involves a vendor and a purchaser.

EXAMPLE

Early possession: The purchaser buys a commercial property from the vendor in order to start a new business. The purchaser requests early possession of the property through a licence agreement in order to begin preparing for the business to operate.

Possession after settlement: The vendor has sold their family home to the purchaser. The vendor has organised to rent a property that will be ready two months after the settlement date. The vendor requests to remain in the property and pay licence fees until they are able to move into the rental property.

 What are the advantages and disadvantages?

ADVANTAGES

One of the major benefits of using a licence agreement is the flexibility. Individuals or businesses are provided with the opportunity to either have access to the property before settlement (purchaser) or remain in the property for a period of time after settlement (vendor). This can often result in reducing stress. These agreements assist parties with both time and convenience. One party also receives the benefit of an income when the agreed licence fees is paid.

DISADVANTAGES

The drafting of the licence agreement is an additional cost that needs to be paid for by one party or both parties, depending on the circumstances. The party that has possession of the property is responsible for all outgoings from the date of occupation which is considered an additional cost. Using a licence agreement can involve risk.

Terms of a licence agreement

A licence agreement should address all of the important details. For example, the names of the licensor and licensee, financial arrangements, time frame, repairs, rates, taxes and the rights and responsibilities of both parties.

Should I enter into a licence agreement?

There are various factors to consider when determining whether or not to enter into a licence agreement.

Firstly, consider the circumstances. If you have not sold or purchased a property, it is unlikely that a licence agreement will be used. Secondly, determine whether you would be the licensor or the licensee. Consider your position and determine the benefits and risks associated. Thirdly, ensure that the property can be accessed. If the property is occupied, the licensor would be unable to access the property.

Parties must agree on the licence fee that will be paid and the duration of the licence agreement. If both parties agree to enter into a licence agreement, they must agree on who will be responsible for drafting and paying for the agreement.

Before signing off on any licence agreement, ensure that you understand your legal rights and responsibilities. Having an expert legal practitioner or conveyancer that can review or draft the licence agreement for you is crucial. Get in touch with our team today to find out more information on licence agreements.

 Last updated: 1 July 2021 Article by: Halil Gokler Edited by: Randa Balbissi

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In Victoria, when you buy or sell a property, you will need a legal contract known as the Contract of Sale. This contract depicts the particulars of sale and ensures that both parties are clear about their obligations. It is usually prepared by a legal practitioner or conveyancer and both the purchaser (buyer) and vendor (seller) must sign. Often, instead of drawing up a new contract, real estate agents, legal practitioners and conveyancers will use a standard contract. This could be the Contract of Sale of Land from the Law Institute of Victoria (LIV) or from By Lawyers.

Typically, a Contract of Sale includes the following:

• The names of each party (vendor and purchaser, real estate agent, legal practitioner(s) or conveyancer(s))
• The address
• The deposit and sale price
• The settlement date
• Information relating to the certificate of title
• Whether the property is to be sold with vacant possession or subject to a lease
• General and special conditions

There are a number of general conditions in a contract that outline the rights and responsibilities of the vendor and purchaser, as well as some additional clauses known as special conditions. These include general conditions covering GST, builder warranty insurance, general law land, default notices, how the purchaser will pay the deposit, security interest, settlement and much more.

Today, however, we’ll be focusing on just one: General Condition 28. This condition outlines whether the vendor or purchaser is liable for any notices issued on the property. When you own property, you don’t live in isolation; parties such as local councils, owners corporations and other authoritative bodies have certain regulations you must comply with.

If your property isn’t up to scratch, chances are you will hear from these parties in the form of official notices, orders, demands or levies. But when you’re in the process of transitioning ownership from one party to another, who’s obliged to act —and, most importantly, pay?

We’ve broken down General Condition 28 to help you better understand your rights as a vendor or purchaser and the particulars of what you must do in this situation.

First of all, what is General Condition 28?

General Condition 28 in the LIV Contract of Sale of Land covers the subject of notices; that is, who is obliged to take responsibility for any property liabilities during the sale period. Depending on what stage of the process parties are at, the contract deems whether the vendor or the purchaser must take action.

The condition reads as follows:

28.1 The vendor is responsible for any notice, order, demand or levy imposing liability on the property that is issued or made before the day of sale, and does not relate to periodic outgoings.

28.2 The purchaser is responsible for any notice, order, demand or levy imposing liability on the property that is issued or made on or after the day of sale, and does not relate to periodic outgoings.

28.3 The purchaser may enter the property to comply with that responsibility where action is required before settlement.

In other words, the vendor is liable for any one-off notices that require immediate action prior to the sale of the property. After the contract has been entered and the property has been sold, this responsibility is given to the purchaser, even before settlement. This means that the purchaser can be given access to the property prior to settlement, allowing them to fulfil any legal obligations; however, this is only in cases where notices must be addressed before the date of settlement.

If notices have not been addressed by the vendor at the time the contract is devised, it is within the right of the purchaser to refuse settlement until the issue has been handled or appropriate arrangements have been made to satisfy the conditions.

This condition was known as General Condition 21 under the previous version of the LIV standard Contract of Sale and is currently General Condition 21 in the By Lawyers contract. Despite the different numbers, the two general conditions are virtually the same and clearly outline your legal obligations: the vendor must oversee notices before the sale and the purchaser must oversee notices after.

What is considered under General Condition 28?

Typically, this condition applies to notices for any action that carries legal consequences for not following through by a certain date. That is, notices normally concern issues where you are in violation of the law, council or owners corporation rules, or the regulations laid out by another official body. You are only obliged to cooperate if there are legal ramifications for not doing so.

Notices cannot be verbal; as By Lawyers states, a notice must be in writing and place an “immediate legal obligation on the recipient” (either the vendor or the purchaser, depending on the time the notice is issued). As such, the recipient must act before the date given or they will be liable for any consequences.

Some notices that are covered by General Condition 28 include:

• Demolition orders
• Plumbing works
• Fencing requirements under the Fencing Act
• The removal of hazards such as noxious weeds or fire hazards
• Breaches of planning permissions

Notices may also include fees that need to be paid; however, as stated in the contract, this excludes any regular payment (see below).

What isn’t considered under General Condition 28?

As stated in both 28.1 and 28.2, periodic outgoings are not applicable. Examples of this include monthly, quarterly or annual payments.

That being said, the purchaser’s right to be informed about any existing regular costs is detailed in Section 32 of the Sale of Land Act, which states that the purchaser must be informed of the ‘particulars of any notice, order, declaration, report or recommendation of a public authority or government department or approved proposal directly and currently affecting the land…which the vendor might reasonably be expected to have knowledge’.

Such information is typically outlined in the vendor’s statement (also known as a Section 32). This allows the purchaser to anticipate any regular payment they may be required to make if they choose to go through with the sale.

If a vendor’s statement is not provided or information is false — such as omitting any notices, orders, demands or levies — the purchaser may claim their right to end the contract.

It is important to note that ending the contract is subject to a few factors, such as whether the error is attributed to the vendor’s representative rather than themselves or whether the purchaser can prove they would not have paid for the land or property if they were aware of the missing information. The particulars of this can be quite complex, so it is always best to get legal guidance when it comes to contract disputes.

Special levies for owners corporations

If the land or property is affected by an owners corporation — that is, it includes common areas such as driveways, lobbies, basements, stairs/lifts, gardens or other services — there are extra considerations you will need to take into account when it comes to the purchase.

For one, the statement made by the vendor must report any regular fees such as administrative fund levies (regular/daily maintenance, electricity for main areas, insurance) and sinking fund/capital works fund levies (to cover larger purchase items for future maintenance/repairs). It is important to note that owners corporations issue levies to lots, not to individuals. If you are the purchaser, you will need to double-check that all outstanding levies have been paid before agreeing to the contract and making your payment.

The resolutions made at the last annual general meeting should also be supplied by the vendor, as these may provide insight into the condition of the property and whether there are any upcoming projects that may require special levies.

Special levies are used when there is not enough money in either the administrative fund or the capital works fund to pay for essential costs. This can be either due to a project going over budget or unforeseen circumstances, such as damage to the building.

In terms of who is responsible for the payment, the Property Law Dispute Resolution Panel has been consistent in insisting that legal liability only applies once the formal levy has been imposed. Thus, the general conditions of the contract require the vendor to pay for any special levies issued prior to the contract date. However, if the special levy has not yet been imposed by the time the contract is signed, the purchaser will inherit the cost.

That being said, this only applies to levies charged as a lump sum. Some special levies may be charged as smaller payments over a period. As these are ongoing payments under General Condition 28, purchasers will not be obliged to pay these fees. This is where things can get complicated, and why it is so important to have the right legal advice.

Before entering a contract, it is important for purchasers to enquire whether there are any planned changes or anticipated work that will require special levies. It is also a good idea to evaluate the Sinking Fund and whether it is sufficient enough for emergency repairs and long-term maintenance. In certain cases, the purchaser may be able to negotiate a lower price to offset the cost of the levy.

Before signing off on any contracts, you should ensure that you understand your legal rights and responsibilities. Having an expert legal practitioner or conveyancer who can explain the Contract of Sale and guarantee that your best interests are represented is crucial. Get in touch with our team today to find out more about general conditions and what they mean for you.

This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.

 Last updated: 15 June 2021 Article by: Halil Gokler Edited by: Randa Balbissi

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Owning your own home is every Australian’s dream. Unfortunately, as you probably already know, it’s a very expensive dream.

Luckily, the Victorian government offers a number of tax exemptions for homeowners, including the principal place of residence exemption for land tax. Your principal place of residence (PPR) — that is, the place where you live the majority of the financial year — is exempt from tax. But what about Victorians who own more than one property, or have a more complicated land situation?

We get many questions from our clients about what this exemption means for their tax, whether or not they can have two or more properties qualify as a principal place of residence for tax purposes, and how they can minimise the amount of land tax they pay per tax year. Below, we’ve addressed some of the most common inquiries we get and created a beginner’s guide to the PPR exemption.

A bit about land tax

Land tax is the total taxable value of any land you own in Victoria, except for your principal place of residence. It is calculated on 31 December and is only payable if the amount is greater than $250,000 for individuals ($25,000 for trusts). Assets you may have to pay land tax includes any investment properties you have, a holiday house, rural properties (except for land used for primary production), and any vacant land.

If your residential property is all the land you own, great! That means there is no land tax for you to worry about. If, however, you also use that property for your business, the exemption only applies to the area exclusively used for residential purposes.

Land tax can be quite complicated, which is why it is always best to seek out expert advice if you are unsure.

How is land tax calculated for joint ownership?

If you own land with another party — a spouse or partner, for example — the process for calculating land tax is a little different. If all the jointly owned land you own is exempt or does not meet the $250,000/$25,000 threshold, you will not be assessed. If not, you will be required to undergo both an individual and collective assessment:

• First, you will be assessed together, as if you were a single person. This assessment will focus on all the land you jointly own. If you are assessed under this model, you receive a deduction for your individual assessment: you can either deduct your share of tax in the joint ownership assessment or the tax based on your share of the jointly owned land (whichever is the smaller of the two).
• You will then be assessed on all the land you own, including land you are the sole owner of and any other jointly owned land with other parties.

Can I claim a principal place of residence exemption?

Typically, when you buy a property, you’ll submit a Notice of Acquisition of an Interest in Land form to Land Use Victoria. This tells the government that you’re planning on using this property as your main residence and they will automatically apply this exemption for the relevant tax period.

However, there are a few other ways that you can qualify for the exemption:

• If you have been granted a life estate
• If you have been granted the right to live at the property by a will
• If you are a vested beneficiary under a fixed trust and live at the property
• If you are an eligible trustee

In these cases, you will have to contact the State Revenue Office to lodge an application for an exemption. Only a natural person — not a company or a trust — is eligible.

For the exemption to apply, the land must be used and occupied by the individual. If you do not use and occupy the land, you may be considered an absentee owner and will be required to pay a 2% surcharge. Not informing the government of your absentee status may result in some pretty hefty penalties.

What requirements must be met for a principal place of residence exemption?

In order to be exempt from land tax, you must live on the land for at least six continuous months in the previous financial year from 1 July. In certain cases — for example, if you have purchased or moved into a property after this date — the government may defer your payment for six months and reassess your eligibility.

The land must also have a legal residence that has been issued with a certificate of occupancy to ensure that the structure is fit for living in.

Partial exemption

A partial exemption applies in certain circumstances:

• If part of the land is used for business activities, you can only claim an exemption on the parts of the property that are solely used as a residence.
• If the land contains a separate residence (e.g., a granny flat, unit or house) that the owner leases, land tax can be assessed on the income. If the owner only receives nominal payments for board or a member of the family lives in the space and contributes towards utilities and other expenses, they may still qualify for the exemption. Otherwise, it will only apply to the land used solely as a residence for the owner/trustee.
• If only one vested beneficiary of the trust lives at the property, only that person will receive an exemption on their share.

Special circumstances

If you can no longer live in your principal place of residence due to circumstances outside of your control, you may still be exempt from land tax. This includes cases where:

• The owner is hospitalised
• The owner is moved to a residential care facility
• The owner lives with a carer who looks after their daily needs
• The home is no longer safe due to outside circumstances (bushfires, flooding, accidental or malicious damage, etc.) and the owner has no other land that could be used as a PPR

In most of these scenarios, you cannot rent the property or use it for income while receiving the exemption.

If you are temporarily living or working overseas, you may also be able to claim an exemption if you have previously obtained an exemption for the property or lived in the residence for at least six months (consecutive). When submitting your case, you must show that you intend to use the property as your primary residence upon your return and that no other land in Australia is nominated as your main residence. Additionally, you must show that you did not rent your property for a period of six months or more during your absence in the year before assessment.

What’s the difference between a principal place of residence exemption and a main residence exception?

Though similar, the requirements for the main residence exemption under capital gains tax (CGT) are different to those of the land tax exemption; thus, even if you qualify for one, you may not be eligible for the other.

Some of the criteria that the government looks for when determining whether you qualify for the main residence exemption includes:

• Whether you and your family live at the property
• Where you keep your personal belongings
• Whether the property is your mailing address and the address you use on the electoral roll
• Whether you’ve connected services such as gas and power to the property

Can more than one property have an exemption from land tax?

In certain circumstances, you may be able to claim a dual principal place of residence exemption. These are outlined below. Otherwise, only one of your properties may be nominated as your main residence.

Purchasing a new principal place of residence

This is used to facilitate the transition from an old place of residence to a new property. If an individual/trustee purchases a property that they intend to use as their new residence but have not moved out of their old house before 31 December of the previous assessment year, they can apply for a dual PPR exemption.

That being said, there are some conditions. The individual may not rent out the property or obtain any income from it during this period. Additionally, they must move into the new property within a year of purchasing it and must use it as their main residence for at least six months.

Selling your old principal place of residence

Similar to purchasing a new property, this dual exemption is intended to facilitate the transition between one residence to another. If the owner or trustee has moved into a new residence but cannot sell the old property before 31 December of the previous assessment year, they may claim an exemption on both properties.

As with the previous case, individuals cannot use the second property to bring in an income. The sale of the old property must occur by the end of the tax year; otherwise, the exemption may become void.

The building is located on the boundary of two properties

If your house or structure occupies two properties — that is, the residence is located on both of the lots in question — you may apply for a dual exemption.

Adjoining properties

Contiguous land owned by the same individuals/trustees may be exempt if:

• The properties adjoin or are separated by a road, railway, or other easily navigated boundaries
• The second property does not host a separate residence (i.e., a house or building that is capable of occupation)
• The second property augments the principal place of residence
• The second property is used only for the benefit of the owner/beneficiary

For example, contiguous land may not have a granny flat or separate house but may have features such as a swimming pool, garage, shed, or tennis court.

It is more difficult to qualify for an exemption under these circumstances if you live in metropolitan Victoria; typically, you are only eligible if you live in an apartment or rental unit and have a car park or storage space under a different title. In regional Victoria, however, you will be able to claim a dual exemption on any contiguous land you own.

Need more information on the dual PPR land tax exemption ? Our expert property lawyers will be happy to assist.

This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.

 Last updated: 15 June 2021 Article by: Halil Gokler Edited by: Randa Balbissi

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Victorian HomeBuilder applications must have been submitted by midnight 14 April 2021. Supporting documents can be uploaded after this date as needed; however, the main application must be lodged.

Many Victorians have struggled as a result of COVID-19. The government is doing its part to help get things back on track, with a significant initiative being the HomeBuilder Grant.

The HomeBuilder Grant can be used by an Australian citizen to substantially renovate an existing home, build a new home, or buy an off-the-plan home. Originally slated for 1 January 2021 to 31 March 2021, the government extended this date to 14 April 2021. As this date has lapsed, Victorian HomeBuilder applications can no longer be submitted. However, supporting documents can still be uploaded.

As of 12 March 2021, 26,858 HomeBuilder applications have been filed in Victoria (both new build and renovation).

Whether you are building a new home or undergoing extensive renovations, this is your chance to get some well-deserved financial aid and enhance your property. Read on to find out everything you need to know about the HomeBuilder Grant: eligibility criteria, your obligations under your contract, and how you can apply.

Who can apply for a HomeBuilder Grant?

The grant is open to eligible owner-occupiers, including first home buyers, and provides support to Australians looking to build a new home or renovate their existing property. Applicants can be individuals or couples who will be registered as the homeowners on the certificate of title; that is, an applicant must be a person, not a company or trust. Owner-builders are not eligible for the grant.

Only Australian citizens are eligible for the HomeBuilder Grant; residents and those in Australia on a visa do not qualify. Applicants must not exceed the income cap ($125,000 per annum for individuals, $200,000 per annum for couples). This is based on your 2018-2019 or your 2019-2020 taxable income and is demonstrated by the notices of assessment received from the Australian Taxation Office.

Other eligibility criteria are as follows:

• The property must be in Victoria.
• Construction must commence within six months of the contract being signed.
• The property must be the principal place of residence for the applicant upon completion for a continuous six-month period.

Contracts must be signed between 4 June 2020 and 14 April 2021 (inclusive). Contracts signed before this date will not be considered for the grant. Additionally, if construction began before this date, you will not be eligible.

Construction does not have to begin once the contract is signed or the HomeBuilder application has been submitted. However, you must commence construction within six months of the contract being signed; otherwise, you may be in violation of the terms of the grant and will have to repay any money received.

Do I need to be registered as the owner on the certificate of title before applying for a HomeBuilder Grant?

You must be recognised as the owner of the property on the certificate of title, though the deadlines for this differ depending on the type of grant you receive. For new builds, you should be registered by the time foundations have been laid, while the grant for off-the-plan/new homes requires you to be registered on the certificate of title once construction on the building has been completed. In the case of substantial renovations, you must be registered as the owner-occupiers before you enter a contract with the builder.

$25,000 HomeBuilder Grant

If you entered into a contract between 4 June 2020 and 31 December 2020 (inclusive), you may qualify for the $25,000 grant. This includes the following:

• A new home build where the property value (house and land) must not exceed $750,000.
• Contracting a licensed builder for substantial renovations to your home. These must total between $150,000 and $750,000 and the existing property value cannot exceed $1.5 million. If you demolish your existing house and plan to completely rebuild, you will be considered in this category if both the demolition and rebuild occur on/after 4 June 2020.
• The purchase of a new home or off-the-plan home where construction commenced on/after 4 June 2020. The contract price must not exceed $750,000.

*All cost thresholds are inclusive of GST

$15,000 HomeBuilder Grant

If you entered into a contract between 1 January 2021 and 14 April 2021 (inclusive), you are eligible for the $15,000 grant. This includes the following:

• A new home build where the property value (house and land) cannot exceed $850,000.
• Contracting a licensed builder to substantially renovate your home. In this case, these must be valued between $150,000 and $750,000 and the property value cannot exceed $1.5 million. This category also encompasses projects where you demolish and rebuild a new house on your existing land, provided that demolition did not occur before 4 June 2020.
• The purchase of a new home or off-the-plan home where construction commenced on/after 4 June 2020. The contract price cannot exceed $850,000.

*All cost thresholds are inclusive of GST

What counts as a substantial renovation?

According to Section 195-1 of the GST Act, substantial renovations are:

“renovations in which all, or substantially all, of a building is removed or is replaced. However, the renovations need not involve removal or replacement of foundations, external walls, interior supporting walls, floors, roof or staircases”.

Substantial renovations are functional and typically improve the safety or liveability of a home. Aesthetic alterations (flooring, painting, landscaping, etc.) and renovations purely for enjoyment, such as adding a swimming pool, will not be considered.

If you demolish the existing structure on your land and commence construction on a new home, this also is considered a substantial renovation for the HomeBuilder Grant.

Other circumstances

First home buyers

First home buyers may apply for the HomeBuilder Grant in tandem with the First Home Owner Grant, making this a great opportunity for those new to the housing market. If the new home you buy is in regional Victoria, you will receive a greater amount.

Homes destroyed in the 2019-2020 bushfires

For people whose homes were destroyed in the bushfires and wish to rebuild on the same land, you would apply for a substantial renovation rather than a new build.

Regional Victoria

If you live on a farming property that would normally exceed the house and land value limit, there are alternate modes of assessment available. In these cases, the government may only consider the value of your home instead of looking at the land.

You will be required to provide a cover letter that demonstrates your land is used as a genuine farming property. Additionally, you can use the following documents to support your HomeBuilder application:

• Insurance documents that indicate the replacement value of your home and the rate notice of your land.
• Independent valuation of your home based on replacement cost and rate notice of your land.

What builders are eligible for HomeBuilder?

There are certain criteria your builder must meet. Builders should have a domestic builder (unlimited) licence from the Victorian Building Authority. For some substantial renovations, a builder may only be required to hold a domestic builder (limited) licence. A copy of this license must be included to support your application.

Your builder also must have held their license for a certain amount of time, depending on the grant.

• For contracts signed before 29 November 2020, the builder must have been registered before 4 June 2020.
• For contracts signed after 29 November 2020, the builder must have only been registered before 29 November 2020.

When will I hear back about my grant application?

The government aims to get back to every applicant within 15 business days; however, due to the sheer number of applications, this process will almost certainly take longer. It is important to note that your application must have been lodged before 14 April 2021 — you do not have to have it approved before this date.

Depending on whether you’re building or renovating, you will receive your payments at different phases of the project:

• New builds must have laid foundations and individuals must have paid the first progress payment to their builder.
• For substantial renovations, the grant is only given after construction commencement and individuals have submitted proof of payment (at least $150,000).
• For new home contracts or off-the-plan homes, the property must be registered in your name on the title by 30 April 2023.

If you are unsuccessful in obtaining a HomeBuilder Grant, there are still options available. You may be able to appeal the decision to the relevant dispute resolution body. Our lawyers are always happy to discuss your case if you feel that there are grounds for appeal.

What about other states?

The HomeBuilder Grant is available all across Australia, although there are some differences between states. For example, other states still observe the initial $750,000 price cap on new builds, while this was increased in Victoria to $850,000. In New South Wales, the maximum is $950,000. Thus, you will need to be aware of the conditions of the grant in the state/territory you are purchasing in as you may not qualify.

If you wish to apply for a HomeBuilder Grant in another state or territory, make sure you check the relevant rules and regulations. A more comprehensive list of the different eligibility criteria and government bodies assessing the grant can be found here.

Great! So how do I get started?

To apply for a HomeBuilder Grant, you’ll need to submit the following to the State Revenue Office:

• Proof of identity
• A dated copy of the contract that is signed by you and your nominated builder
• A copy of the builder’s license/registration to prove eligibility
• A copy of either your 2018-2019 or 2019-2020 tax return
• Supporting documents (approvals from your council, land value estimations,

For more information about the HomeBuilder Grant, visit the State Revenue Office website or get in touch with one of our property experts.

This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.

 Last updated: 1 January 2021 Article by: Halil Gokler Edited by: Randa Balbissi

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