They had been thinking of down-sizing for a while, so signed the Agreement for Sale and Purchase that had been placed in front of them without any legal or other advice.

After they had signed the agreement they discovered they had sold for well under market value.  There was nothing they could do about that as it was an unconditional agreement.

This problem could have been avoided if they had:

1. Obtained a valuation from a valuer before agreeing to the price, or;
2. Engaged an agent to sell the property for them and carry out an appraisal and the marketing of the property;
3. Consulted their lawyer before they signed the agreement.

The comparatively modest investment in appropriate advice and services when selling their property could have avoided what turned out to be a significant loss for the couple.

However, once the signed Agreement for Sale and Purchase was sent to her lawyer, her lawyer pointed out to her that the usual clause in the Agreement confirming that the property would be at the (insurance) risk of the vendor (or seller) until settlement had been deleted, as is often the case in mortgagee sales.  This meant that the insurance risk for the property became Sally’s from the date of signing of the Agreement!

It transpired that the property was not insured as the owner had not been able to keep up with payment of premiums.  Sally found it impossible to get insurance before settlement as insurance companies were concerned that the current disgruntled owner who was being forced to sell was still in the property and that the property was likely to be damaged by that owner.  Sally had to hope that the property wouldn’t be damaged (or burnt down!) before settlement which was two weeks later.

When buying at a mortgagee sale, it is important to have a lawyer review the documentation BEFORE you go to auction.  In situations like the above, insurance companies will often agree to insure if there is a term included in the agreement confirming that the property is at the risk of the purchasers from the date of the Agreement.  The other option is to make the settlement date as soon as possible after signing the Agreement.

At Rainey Collins we can guide you through the home buying process.  Take advantage of our FREE first home buyers seminar.

To register your attendance, enter your details below and submit or call Gillian Scanlon on (04) 473 6850.

cforms contact form by delicious:days

At Rainey Collins we can guide you through the home buying process.  Take advantage of our FREE first home buyers seminar.

To register your attendance, enter your details below and submit or call Gillian Scanlon on (04) 473 6850.

cforms contact form by delicious:days

At Rainey Collins we can guide you through the home buying process.  Take advantage of our FREE first home buyers seminar.

To register your attendance, enter your details below and submit or call Gillian Scanlon on (04) 473 6850.

cforms contact form by delicious:days

At Rainey Collins we can guide you through the home buying process.  Take advantage of our FREE first home buyers seminar.

To register your attendance, enter your details below and submit or call Gillian Scanlon on (04) 473 6850.

cforms contact form by delicious:days

The options for transitioning from an LAQC are as follows:

1. Elect for the company to become a Look Through Company (“LTC”) which is a limited liability company, that can pass on its income, expenditure, tax credits, rebates, gains and losses to its shareholders in accordance with their shareholding in the company;
2. Elect to become a partnership or sole trader;
3. Revoke your QC status and therefore become an ordinary company taxed at the ordinary company rate;
4. Do nothing and therefore turn into a qualifying company (which results in an inability to attribute losses to shareholders).

An election must be filed with the Inland Revenue Department within six months of the start of the transitional year (being a choice of one the first two years after 1 April 2011).  Companies opting to become sole traders or partnerships have until the end of the transitional year to transfer ownership of properties, re-document mortgages, and either liquidate or become non-active.

If you have an LAQC and you haven’t already spoken to your accountant or lawyer, you should do so urgently.  Your lawyer will be involved in transferring the property owned by the LAQC and arranging for your mortgage documents to be re-documented.

When settlement day approached, they were shocked when their solicitor forwarded them a statement from their bank showing the amount that needed to be repaid to discharge the mortgage.  The sale proceeds, after deduction of the levies owing and the real estate agent’s fees, were not enough to repay the mortgage.  They had to urgently try to find enough money to cover the amount outstanding to make sure the settlement went through and in the end, had to borrow from Maurice’s elderly parents.

When selling a property, it is important to remember that the following are paid out of sale proceeds:

1. Outstanding rates for the property;
2. Outstanding Body Corporate levies (for unit titled properties);
3. Any loans secured by the mortgage on the title;
4. The real estate agent’s commission.

It is also generally expected that legal fees will be paid on settlement.  When selling your property, make sure you think carefully about whether you can cover any debts associated with the property, and its sale, so you have time to organise additional funds if required.

The answer is no.  The transaction will be what is called “zero-rated” which means GST is compulsorily charged at 0%.  Neither party can pay or claim GST.

Under recent changes to the law, any sale and purchase of land/property that meets the following criteria must be zero-rated:

1. Both vendor and purchaser are GST registered;
2. The purchaser intends to make taxable supplies from the property;
3. The purchaser does not intend to use the property as their principal place of residence.

GST will not be relevant for any non GST-registered person or other entity selling property to a non GST-registered person or entity.

The latest Agreement for Sale and Purchase requires purchasers and vendors to answer various questions about GST which helps ascertain whether GST will be payable by either of them.  Where the vendor is not GST registered these questions should be marked as not applicable.  Likewise if a party is registered for GST but not for activities relating to the sale of the land, the questions will also not apply.

If you are unsure whether GST is payable in relation to a particular property transaction you should speak to your accountant or lawyer before signing any agreement.

They decided not to pursue mediation or negotiation through the Weathertight Homes Resolution Service. Instead, they had their home repaired themselves at a total cost of almost $250,000.

Then in 2009, they brought a case to the High Court to recover the cost of the repairs, as well as $25,000 in general damages for stress and inconvenience.

Unbeknownst to them, the law under which they brought their claim to the High Court had a time limit. This limit meant that because they were not claiming within 10 years of the leak first occurring (which would have been 2006), their claim could not succeed.

They then tried to have their claim transferred to the Weathertight Homes Tribunal; however, the High Court held that due to the time limit, they were barred from transferring their claim to the Tribunal.

In November 2010, they applied to the Tribunal independently to have their claim heard under a different and more appropriate act, where their claim was still eligible.

Unfortunately, the Tribunal struck out their application, and refused to even hear their claim. It held that because they had already pursued alternative proceedings in the High Court, they could not now bring a claim to the Tribunal on the same matter.

Mr. and Mrs. A again appealed this decision to the High Court. The Court hesitantly decided that they could pursue their claim in the Tribunal, as there was nothing expressly stating that they couldn’t. The judge was clear that their delay, and misjudgement of the appropriate law, made them the authors of their own misfortune, and so while he allowed their claim to be heard in the Tribunal, he did not award them any costs.

They could have easily avoided this unnecessary expense and confusion if they had been proactive about their claim and sought legal advice at the outset.

To avoid similar unnecessary and expensive pitfalls call us on 0800 733 424 to get advice on your rights as the owner of a home that is not weather tight.