Shane Jacob, from Shane Jacob Settlements, is conducting training Seminars for estate Agents. The seminars will focus on recent changes io the Real Estate and Conveyancing Industry and may assist you and your representatives when preparing Contracts of Sale.

The aim of the seminars are to provide a guideline, which we hope will assist you in answering questions from your Clients when entering into Contracts of Sale and simplifying  the process of Property Sales and Conveyancing.

With the combined work efforts in your Sales Team and our Conveyancing practices as “One Team Together” our goals are equal in what we all wish to achieve. That is, “To complete the Sale and Settlement of all properties on time to a very high standard whilst maintaining a level of expertise that our clients will want to come back to again in the future”.

Shane Jacob is an appointed Councilor  for the Australian Institute of Conveyancing WA Division with 27 years experience in the Conveyancing Industry and encourages more educational information being shared throughout the Real Estate Industry.

If the property is leased – it is recommended that the Buyer is provided a copy of the lease agreement and a notation on the contract that the property is leased and the Buyer has received a copy of the lease agreement at the time of entering into the sale.

The Settlement Agent for the Buyer is required to obtain the following information as outlined in the Joint Form of General Conditions For The Sale of Land from the Property Manager, or Seller if the property is self managed:

·        Statement of when rent is paid to

·         Property Condition Report

·         Details of Bonds paid and associated documentation

·         Notice by seller in writing to the Tenant advising the property has been sold,  and directing the tenant where to pay future rents to which shall apply at settlement date

If the lease is an oral lease, then a letter from the Seller is required addressed to the Buyer outlining the terms of the lease,  rent payable,  bond paid etc.

The Settlement Agent for the Buyer is required to obtain the following information as outlined in the Joint Form of General Conditions For The Sale of Land from the Property Manager, or Seller if the property is self managed:

 ·        Statement of when rent is paid to

 ·         Property Condition Report

 ·         Details of Bonds paid and associated documentation

 ·         Notice by seller in writing to the Tenant advising the property has been sold, and directing the tenant where to pay future rents to which shall apply at settlement date

 ·         Additional information also required on Commercial Leased Properties:-

 o        Does the lease give the Lessee 1^st right of refusal to purchase the property and if so,  has the Lessee been given this opportunity YES/NO

 o        Does the Lease require the Lessee to have a Bank Guarantee in place, if so the role of the Settlement Agent is to establish where the Guarantee is held, can the Guarantee be re-issued, or if possible assigned to the Purchaser YES/NO

 o        Are there any areas that are Vacant, - if so,  who pays the outgoings on the Vacant area of the premises YES/NO

 o        How are outgoings invoiced,  monthly as a outgoing or upon assessment from the rating authority

 o        Will a variable audit by the property manager be conducted @ settlement date YES/NO

 o        Does the lease have provision for any options to extend the lease period,  and if so have these options been exercised YES/NO

If the Commercial Property is leased and has been sold, then the property may be GST exempt if sold as a Going Concern - If this applies, please complete the GST Annexure and cross out the options that do not apply. Have all parties sign this Annexure and include same into the conditions of the Contract.

The onus is on the seller to provide the Buyer prior to entering into the contract the following documents along with other associated documents which the Agent needs to pass onto the Buyer :-

• Form 29 and Form 28 completed in full and signed by the Seller
• Copy of strata plan identifying the lot sold and also the unit entitlement (have the buyer sign identifying the lot and also the unit entitlement on the copy of the strata plan provided and ensure it forms part of the contract)
• Standard and non-standard By-Laws
• The seller must complete in full and sign the Disclosure prior to the Buyer entering into the contract – (it may be prudent at the time of listing the property to have the Form 28 completed to pass onto the Buyer when the contract is executed)

If the Form 29 and Form 29 are not provided to the Buyer prior to executing the contract then the Buyer may be in a position where they can terminate the contract.

As you are aware NOMINEE CLAUSES ARE NO LONGER ACCEPTABLE BY THE OFFICE OF STATE REVENUE WHEN EXECUTING CONTRACTS. (This is at their discretion, however no longer an accepted practice when entering into contracts)

The Office of State Revenue regulation is that the true buyer must be known at the time of entering into the contract.

REIWA have a standard form which is attached and should be completed prior to the contract being entered into, or an agreement otherwise in writing should be executed by the “Principal” appointing the “Agent” to execute and Offer and Acceptance on their behalf.

Ie. “The Agent: – John Smith as Agent for Sue Smith “The Principal”

Evidence of a principal Agent Agreement is essential prior to the contract being executed to validate such arrangement in place.

This is essential to ensure that if the Principal does not purchase the property and the contract does not proceed, that the actual “Agent” is not then pursued by the Seller and/or the Office of State Revenue.

When completing a contract where an Agent is being utilized then the following wording is recommended:

Sole Proprietor (Purchaser)

John Smith as Agent for Sue Smith

Joint Proprietors

John Smith and John Smith as Agent for Sue Smith (Please also show the correct tenancy) i.e. Joint Tenants, Tenants in Common 50/50 share

Where there is uncertainty please call your Settlement Agent for assistance in how the contract could be written when describing the Buyer.

When a Buyer is purchasing the property as trustee for a Trust then the following description should be used.

John Smith and Sue Smith as Trustee for the J & S Smith Family Trust

If the Trust is not disclosed at the time of entering into the Offer and Acceptance, the Office of State Revenue may deem the Trust entity to be a 2^nd transaction and charge double Stamp Duty if the trust is not disclosed on the contract.

The Seller should always seek advice from their Accountant before entering into any contract if they are registered for GST to ascertain whether GST should apply to the sale price or not

REIWA have issued a GST Annexure which is attached, and it is always recommended that this Annexure is completed by all parties and forms part of the actual Offer and Acceptance when the contract is entered into

If the Seller is not registered for GST then the Seller cannot charge GST on the sale price

If the property is leased and is exempt from GST please have the GST Annexure completed to verify this to avoid any confusion between the parties (ie “Going Concern”)

If the Margin scheme is being applied by the Seller,  then this must be disclosed on the contract at the time of sale. This is very important for your Seller, otherwise they may not be able to adopt the margin scheme.

If there are issues at settlement where funds are required to held back by the Settlement Agent/s for the parties, and if you are preparing a Variation at any time to the Contract. It is recommended these variations include the following information to cover all parties to the Contract where possible and leave a clear understanding of the processes of the basis settlement shall proceed and works are carried out:

• How much money is being held
• Who is to hold the money
• What is the money being held for
• When will the repairs be completed
• Who is responsible for the repairs being done
• How long will the money be held for
• What happens if the repairs are not completed by the date expected

Possession is a very difficult matter particularly in the Pilbara where Sellers are concerned about leaving their property vacant and unattended prior to settlement.

It is prudent, if a Buyer is seeking Possession Prior to Settlement that a disclosure to each party is provided by you as Agent confirming that, the party should seek legal advice prior to signing the possession form and indemnifying you from any claim or action in writing.

Continued on Possession Prior to Settlement……………..

If possession is granted,  then it is imperative that a copy of the buyers insurance is provided to you prior to signing of the possession form,  and also notifying your seller not to cancel their policy until such time settlement has been effected.  The Seller and Buyer should always seek advice from their own insurers in this regard prior to signing the possession form.  Please note that all outgoings are payable by the Buyer at the date of possession or settlement whichever is the earlier

When the Offer and Acceptance is received the Settlement Agent will

• Peruse the contract and any annexure
• Open a file
• Order a copy of the title/strata and any encumbrances
• Check and diarize special conditions

If the contract is conditional – write to all parties and send an authority to act to the client they represent.

If the contract is unconditional then:

• Send an initial statement to the Seller
• If there is a  mortgage – write to the lender and request a discharge
• Send an identification form to the seller to correctly identify the property sold
• Follow up any special conditions
• Send the Transfer to the seller when to hand from the Buyers Settlement Agent
• Prepare and issue a final statement to the Buyers Settlement Agent with all the outgoings adjusted (rates and taxes,  rent if applicable)
• Arrange Settlement with the Buyers Settlement Agent and the Mortgagee for the Seller where applicable
• At all times, the settlement Agent for the seller remains in contact with the Seller, the Mortgagee, the Real Estate Agent and also the Settlement Agent for the Buyer

• Send Statement,  Transfer and copy of title/strata/encumbrances to the Buyer
• Send a copy of the Transfer to the Buyers Lender if applicable
• Notify all rating authorities of the sale by way of Advice of Sale
• Notify Strata Manager/Property Managers where applicable of the sale and request information
• Stamp the Transfer if Stamp Duty is paid prior to settlement by the Buyer (this is a requirement under the Joint Form of General Conditions)
• Send the Transfer to the Sellers Settlement Agent once executed by the Buyers
• Follow through all special conditions on the contract and forwarding all reports to the client for acceptance, or their instructions if there is any issues with the report
• Assist the Buyer in negotiating with the Seller and Agent in the event of any defects or issues with the inspections carried out are not to the Buyers satisfaction
• Once all parties are ready to complete settlement,  arrange settlement with the Buyers Bank where applicable and Settlement Agent for the Seller

When special conditions form part of the Offer and Acceptance, the Settlement Agent has a duty of care to follow up these conditions to ensure.

• The special conditions are carried out and provided within the time limits specified in the Offer and Acceptance
• That the Buyer or Seller which ever is applicable to the condition, is satisfied with same

The difficult task of the Settlement Agents role is having control of when the inspections and special conditions are carried out.

It is our obligation to ensure that our clients are fully aware of the rights and obligations if they are not satisfied with a special condition on a contract not being fulfilled to their satisfaction.

It is recommended where possible that all inspections are carried out and provided as soon as practicable and within the time limits provided in the Offer and Acceptance. If there is adequate time to resolve any issues the Buyer may have, it results in most cases an agreement being reached between the Buyer and Seller so settlement can proceed. However in some instances where the reports are provided within in the specified time frame,  but on the “last hour” which in some instances has proven to be a time frame that does not allow the parties adequate time to resolve any issues, the Buyer may then terminate the contract if the contract provides.

We have a duty of care to always act in our clients best interests, and ensure that they have a clear understanding of their rights, remedies and obligations under the terms of all Offer and Acceptances to the best of our ability.

Thank you for taking the time from your very busy schedule to read the attached information that I hope has been both informative and helpful to you and your staff members.

SHANE JACOB

Principal