Conveyancing Costs – Buying

Cost of Conveyancing

The costs and disbursements to purchase a property are generally higher than the costs to sell as there is more work involved.

Most law firms offer conveyancing services as part of their practice. In Tasmania there are also a number of licensed ‘conveyancers’. Licensed conveyancers are not lawyers but are licensed to undertake conveyancing services and their role is limited to only providing those services within the scope of their qualifications.

Most law firms and conveyancers are able to provide estimates over the telephone as to the likely costs.

Do-it-Yourself?

Handling your own conveyancing can be time-consuming and risky particularly if you are the purchaser.

If something goes wrong (for instance the person misunderstands a document, a clause in the contract or a search result) this could end in expensive and unnecessary litigation.

Insurance

The law in Tasmania regarding when risk is considered to pass to a purchaser under a contract for sale, whether the contract has been completed or not, is a grey area.

Some contracts seek to include clauses to pass liability to a purchaser from the date the contract is signed, regardless of whether or not there are still conditions, such as finance, to be satisfied. The cautious position, and usually noted on ‘standard form’ contracts for sale of residential property is that either party can be risk until the contract has been completed and both parties should protect themselves by maintaining adequate and proper insurance until the contract has been completed.

Searches

Various searches are carried out on behalf of the purchaser by their solicitor or conveyancer to identify:

(a) if the vendor has good title to the property to pass to the purchaser;
(b)  if the property is affected by mortgages, leases, or other matters which the purchaser has not contracted to accept;
(c) if there are any problems with satisfying the condition precedent in the contract as to the use that the purchaser intends to put the property

Searches are usually commenced after a contract has been signed unless legal advice indicates they should be undertaken before signing, including where in potential auction sales these kinds.

Some of the searches and enquiries commonly undertaken include:

• Council searches as to Council rights and powers concerning the property and information regarding the rates on the property, including any arrears;
• Land Tax searches;
• Hydro Search for way leave easements;
• Search the Department of Transport for road plans which will affect the property;
• Checking the boundaries of the property as physically fenced or pegged match with what is on the registered title plan and to ensure there are no encroachments onto or by the property – the help of a registered surveyor may be required. Physical inspection of the property is beneficial to check for the existence of any physical features apparent on the property that may not be appearing on the title plan or any search reults from Council. For example, an inspection may reveal that a drain physically exists on the property that may have become an easement by prescription
• Search bankruptcy records – this is to verify the legal ability of the vendor to sell the property and to ensure they are not bankrupt, in the process of bankruptcy or an undischarged bankrupt having come into ownership of the property through an inheritance for example
• Check Mineral Resources Tasmania for the existence of mining exploration licences and the soil make up

Issuing requisitions on title to the Vendor for answering by the Vendor. Whilst not an exhaustive list of requisitions some common requisitions are:

• What documents of title will be handed over on settlement?
• What covenants and easements affect the subject land?
• Are there any, and if so what, mortgages, easements, licences, restrictions, covenants or conditions as to user or otherwise, or any encumbrances affecting the subject property not disclosed by the usual searches?
• Has the vendor received or are they aware of any notices from any federal, state, local government or other body or authority as to road construction or footpaths, drains channelling, sewerage, water installation, stormwater drainage, encroachment, user or any other matter in relation to the said land?
• Is the vendor aware of any restrictions as to the user of the subject property or as to the erection, construction or alteration of any buildings, whether residential dwellings, flats, apartments, home units or otherwise on the subject land?
• Are there any, and if so what, amounts due or accruing for rates, taxes, road or street construction, drainage, sewerage or water connection in respect of the subject property or is there any contingent liability or liabilities in respect thereof not disclosed by rate certificate under section 132 of the Local Government Act 1993 (Tas)?
• Who is in occupation of the said land and in what capacity?
• Has any person acquired any rights by adverse possession of the subject property or any portion thereof and if so what?
• Has any person the right to remove any fixtures on the land such as buildings, sheds, fencing, or any fixtures in any building on the land, and if so what?
• Are there any, and if so what, subsisting agreement or liabilities for boundary fences between the vendors and any adjoining owner or occupier and has any notice been given in respect of boundary fences?
• Are any of the chattels and goods included in the Agreement for Sale subject to any existing Hire Purchase Agreement, Bill of the Sale or any other encumbrance, registered or unregistered?
• Are there any way-leave agreements with electricity authorities affecting the said property or are there any contracts with the said Commission for the guarantee of the supply of power by way of private power line or otherwise?
• What mining rights, mining leases, licences or mining tenements exist in the property under the Mining or any other Act relating to the same?

Answers to Requisitions on Title

The answer to the above questions may be ‘no’ but lawyers will phrase it something like ‘Not to the knowledge of the vendor but the purchaser must make their own usual enquiries of all relevant authorities’.

However the answer might be ‘yes’. Searches may reveal things that are unwelcome to the purchaser. Often local residents will know about problems in a particular suburb because of adverse media coverage. Such problems may include contamination from heavy industry, land slip areas, etc. The purchaser may be advised of these problems by the relevant Council during routine searches.

For rural blocks, problems that are revealed may be different such as the discovery of unwelcome easements or rights of way, or the discovery that the fences on the property in no way relate to the boundaries. The question arises, what to do when one of these searches provides unwelcome information. If the answer is such as to make the purchaser wish to withdraw from the contract then this is certainly the time to obtain legal advice.

Stamp Duty

Stamp duty is payable by a purchaser.

The amount of stamp duty to be paid on a purchase depends on the features of the transaction. Sometimes stamp duty is calculated based on the purchase price of the Property or there may be situations where stamp duty is assessed differently based on the value of the Property, particularly if a private sale or sale between family members.

There are a number of rulings on the issue of stamp duty. Professional advice should be obtained as to the impact of stamp duty prior to entering a contract.

You may be eligible for a reduction in stamp duty if you are eligible for a First Home Owner Grant. Information as to the stamp duty reduction that may apply in addition to First Home Owners grants and a useful stamp duty calculator are available on the State Revenue Office website.

The Duties Act 2001 (Tas) changed on 1^st October 2012 and an example of how stamp duty is currently calculated based on the purchase price of a Property is set out below.

Rates after 1 October 2012 are:

• $150,000: Purchase Price stamp Duty on Property: $4,185
• $500,000: Purchase Price stamp Duty on Property: $18,247.50

The higher the purchase price or value of the transfer, the higher the stamp duty payable. Extract tables from the State Revenue Office of Tasmania is set out below.

Transfers BEFORE 1^st October, 2012

Value of the Property (including chattels)                       Duty Payable
$0 – 1,300                                                                        $20

$1,301 – 10,000                                                                $1.50 for every $100, or part, of the dutiable value

$10,001 – 30,000                                                              $150 plus $2 for every $100, or part, by which the dutiable value exceeds $10,000

$30,001 – 75,000                                                              $550 plus $2.50 for every $100, or part, by which the dutiable value exceeds $30,000

$75,001 – 150,000                                                            $1,675 plus $3 for every $100, or part, by which the dutiable value exceeds $75,000

$150,001 – 225,000                                                          $3,925 plus $3.50 for every $100, or part, by which the dutiable value exceeds $150,000

Over $225,000                                                                 $6,550 plus $4 for every $100, or part, by which the dutiable value exceeds $225,000

Transfers AFTER 1^st October 2012

Value of the Property (including chattels)                       Duty Payable

$0 -1,300                                                                          $20

$1,301 – 25,000                                                                $20 plus $1.75 for every $100, or part, by which the dutiable value exceeds $1,300

$25,000 – 75,000                                                              $435 plus $2.25 for every $100, or part, by which the dutiable value exceeds $25,000

$75,000 – 200,000                                                            $1,560 plus $3.50 for every $100, or part, by which the dutiable value exceeds $75,000

$200,000 – 375,000                                                          $5,935 plus $4.00 for every $100, or part, by which the dutiable value exceeds $200,000

$375,000 – 725,000                                                          $12,935 plus $4.25 for every $100, or part, by which the dutiable value exceeds $375,000

Over $725,000                                                                 $27,810 plus $4.50 for every $100, or part, by which the dutiable value exceeds $725,000

Filing Fees

In addition to payment of stamp duty, legal fees and disbursements for conveyancing work there are some Government filing fees payable in sale and purchase of real estate.

For example, these are some common filing fees and the current rates (subject to change) on a standard residential property sale and purchase:

(a) Filing fee on the transfer document signed by the Vendor – currently $188.64;
(b) Filing fee on registration of discharge of a Vendor’s existing mortgage – currently $152.64;
(c) Filing fee on registration of a new mortgage $123.12

The above fees are current as at the date of production of this chapter The Land Titles Office can provide information as to the current filing fees and fees on any other commonly lodged documents. A link to the Land Titles Office website and telephone contact details appear at the end of this chapter.

First Home Owners Grant

First home buyers may be eligible for up to a $7,000 Commonwealth grant towards the purchase of a residential home. More information including forms, guidelines, rulings and eligibility criteria is available from the State Revenue Office of Tasmania.

Settlement

On the due date for settlement, if you have engaged the services of a solicitor or conveyancer they will handle the procedural steps of settlement.

The purchaser and vendors should agree the final settlement figure. This amount is the purchase price less the deposit, plus or minus pro-rata rates and land taxes.

On settlement date the purchaser should have arrangements in place for the required funds for settlement to be made available. The purchaser’s solicitor or conveyancer will generally handle the collection of funds and the necessary cheques for settlement. They should also provide:

• The original Certificate of Title to the property;
• The original correctly signed and witnessed land transfer form;
• Keys (if applicable);
• Discharge of any registered mortgage or other encumbrance such as a caveat and applicable filing fees.

If the purchaser has taken out a mortgage to finance the purchase, all of the final steps on settlement day will be organised by their bank. The Certificate of Title and other documents will be retained by their bank who will organise assessment and payment of stamp duty and registration of the Certificate of Title into the name of the purchaser and the bank keep the original Certificate of Title while the mortgage is current.

If there will not be a mortgage to finance the purchase, usually the purchaser’s solicitor or conveyancer will handle the assessment and payment of stamp duty and registration of the Certificate of Title into the name of the purchaser. The Purchaser should ensure that they keep the original Certificate of Title in safe custody (such as by storing in a safety deposit box with a bank or in the strong room of a law firm) as the costs, risks and inconvenience of replacing a lost or stolen Certificate of Title are considerable.