Ever wanted to know the best way to secure a Loan to your children for purchase of their home?
Make sure that you have a formal Loan Agreement with conditions or a term for repayment and it is not just in writing and repayable on demand.
Have you ever wondered how long you can be chased for a debt or how long you have to recover your unpaid debts?
In most states in Australia, the limitation period for debts is for six (6) years, except in Northern Territory where it is for three (3) years. This means that the creditor can pursue the debt from six (6) years from the date of when:
- The debt became due and payable; or
- The last date a payment was made towards the debt; or
- The date the debtor acknowledged in writing that they owed the debt.
It is imperative that you get the calculations correct, as failure to establish the limitation period, may mean that you will be unable to successfully recover your debt and the debt will become statute-barred.
A statue-barred debt is when the debt becomes older than the limitation period in your State or Territory (being six (6) years in all states in Australia, except in Northern Territory where it is three (3) years). Therefore, a creditor will no longer have legal right of recovery for a statue-barred debt. However, if the debtor acknowledges the debt in writing, or makes any payments towards the debt, then this resets the clock on the six (6) year limitation period.
We recommend a formal Loan Deed and Mortgage registered on title to the property. That way, it is very clear the legal rights of enforcement should the child divorce or die and the property becomes part of a dispute. Call us today on 07 3839 7555 if you would like to discuss this further.
The economy has bounced far better than everyone expected and this has resulted in a surge in property buying. As the economy expands, the more frequent speculative option of buying “off-the-plan” has become . Instead of trawling through open homes to find the diamond in the rough, you might get in on the ground floor by choosing your property from computer generated plans and images in a new development. Whilst this can offer a great opportunity, there are some warnings that need be considered. Here are some of our top tips for off the plan purchases!
- Builder: The builder (as distinct from the seller) will be the person responsible for the actual bricks and mortar work. Quality between builders can be as stark as black and white so you want to make sure that the builder you are signing up with has a good reputation. Check some of there previous builds. How is there rating on social media? You should give us a call to see if they have any pending litigation against them.
- Display Unit: Not all developers use a display unit, but if they do, be sure to do a thorough inspection and take lots of photos! Get a sense of how the layout feels in real life as this is hard to gauge from architectural drawings. Note the size of the rooms, specifications and location of appliances. Even small things are important such as the way the toilet is facing in the bathroom. For small units, this can be critical!
- Completion Date: The hardest thing to get used to when buying off the plan is the lead time between putting ink to paper and getting those beautiful new keys (or, more commonly, access codes). I have never met a more optimistic group than the developers of these projects. Take the estimated completion date and double it. “We are hoping for practical completion by March” – assume they mean by Christmas. This is not usually an issue, if you plan accordingly. But whatever you do, don’t give notice to your landlord just yet.
- Sunset Date: This is the date under the contract that the project must be completed by (this can give you a time frame for completion from the anticipated completion date to the sunset date). But beware, most contracts contain a provision that allows for the sunset date extension which is at the seller’s discretion. In other states, there are statutory restrictions on the sellers right to terminate under a sunset clause. In Queensland it is a maximum of 5 years 6 months. This will usually happen where a sunset date is reached and, under a booming property market, the price the Seller received for the contract some years ago is way under the current market value. Although some protections exist in legislation the contract should be reviewed by a solicitor prior to signing to ensure you will not be stranded come sunset date!
- Deposit: It is common that a deposit is paid to secure your interest in the property. We have seen deposits range anywhere from $1,000.00 to 10% of the purchase price. On a 4-million-dollar unit for example, that is a lot of cheddar. It is important, therefore, to ensure that the deposit remains in the Agent or Seller solicitor trust account, and not released to the Seller. Should the contract not proceed, you want the deposit to be readily available for refund.
- Disclosure Statement: this is a requirement of the Seller and must contain their names and addresses, identify you as the buyer, identify the unit you are buying and put in writing their claims and promises about your prospective title. It will usually contain a draft strata plan showing the proposed location of your unit (your proposed lot), and its position relative to the rest of the building. It includes expected body corporate adminstration and sinking fund levies. This is useful to consider where you are for the purpose of access to other facilities in the building including any views that you might get and natural light into the building. It is also important to consider, if you have an included car park or storage facility, where your lot is relative to those features. This will not always be available at the time you sign the contract.
- Finishes: The contract will contain a schedule of fixtures and finishes. A detailed schedule is important to manage your expectations as to the finished product. Comprehensive review of this document will help avoid arguments and disappointments on completion.
- Changes: Contracts are drafted for the benefit of the Seller and usually allow a lot of changes (often without consultation with or fiscal reparations to the Buyer). These can be anything from alteration of the schedule of finishes, altering dimensions of the property, total number of units in the building and location of the lots, address of the property and location or creation of easements. In Queensland however, a change to the initial disclosure statement that will cause material prejudice (think significant disadvantage), you may have a right to terminate provided you act within the time limits. (30 days after you receive notice of the change or before settlement).
- Defects: Defects need to be notfied within specific time frames and the contract should provide for a procedure in this regard. Check the contract to ensure you have sufficient time to discover and raise issues (no less than 3 months ideally).
- GST: whilst most contracts will quote the price inclusive of GST for residential units, it is important to make sure this is the end of the story. A review of the GST clause in the contract is essential as you do not want to end up with a 10% shortfall come settlement.
- Insurance: In Queensland, we have a statutory building regime that protects new homeowners from defects in building works, or failures to complete the build. However, it is important to note that the cover will not cover multiple unit dwellings of more than 3 storeys. Body coporate insurance is madatory but searches will reveal the extent of the insurance policy. Teinterior of the ujnit and claims for public liability are up to you as the buyer so make sure you get insurance cover, including all appliances.
- Construction: the agent will be a good source of updates during construction, so keep in touch with them throughout the process as they will have an idea if the build is on schedule. They have a vested interest in ensuring your matter reaches settlement!
- By-Laws: Most contracts will contain a draft of the building rules (By-laws). Make sure you review these carefully and consider if they will suit your living arrangements, especially in regard to pets.
- Stamp Duty: this is payable on top of the purchase price and usually represents a significant contribution to the Buyers costs. This will be due and payable 30 days after the contract becomes unconditional or on settlement whichever is sooner. Usually, off the plan contracts will not become unconditional until either registration of the plan and issue os titles and certification for occupation has occurred. Remember to check with your solicitor prior to signing.
- Finance: This is an important (and often overlooked) consideration, especially when your contract may span several years. Whilst pre-approvals are a great indication of your ability to complete at the time of contracting, be warned – they have expiration dates. Most top tier financiers attach a 90-day acceptance period in which to go from formal approval to settlement. After this time, you run the risk of needing to reapply and your circumstances changing. Including a finance clause which is timed based on the registration or final certification date is the safest way to ensure you have the funds to complete or an out if necessary.
If you are thinking of investing in an “off-the-plan” unit, contact Katherine of our office for a comprehensive review of the contract prior to singing. Email Katherine.Blood@Perspectivelaw.com Knowing your rights and obligations now, can go a long way to saving some headache and heartache in the future.