Legal do’s and don’ts when selling a property

To achieve the best sale price and the most efficient sales process there are some steps that you should take from a legal perspective before you list a property with an estate agent.

Naturally, this list is in addition to the steps that you would also take to improve the appearance of the property and maximise its appeal to potential purchasers.

 

Building Works 

You will be required to disclose any building works requiring either a Building Permit or Builders Warranty Insurance in the past 7 years.

If this applies to you it will help to collate the paperwork well before you list the property for sale.

For owner builders this may mean that you need an owner builder inspection report and also the required owner builder insurance. However, there are expiry dates on these documents, so you will need to plan carefully.

 

Tax – GST, CGT and others

Selling a large asset like a property can have substantial tax implications.

The sale of existing residential homes doesn’t generally attract GST, but the sale of other property types can attract GST.

Capital Gains Tax (CGT) applies to the disposal of most assets although your principal place of residence is generally exempt. However, if you have moved in and out, travelled overseas, used the property for business purposes and/or had other principal places of residence over the period you have owned the property the Capital Gains Tax issues can become quite complicated.

The sale of a property also has implications on land tax assessments; foreign residents may be subject to tax withholding requirements; the loss of negative gearing and/or depreciation benefits may impact your income tax liability and there may be other issues for specific vendors.

You need to ensure that you get the right advice and know the best GST outcome for you before you list the property for sale. Getting tax wrong can lead to substantial unnecessary tax to pay.

 

Title/Mortgage

If you have paid off your mortgage you need to locate the title. In many cases, even though you have paid off the money due under your mortgage the bank will still have the title and the mortgage may still be registered. The good news is that banks are generally pretty good at looking after titles – and will usually release them within two weeks or so on payment of the required fee.

If you haven’t paid out your mortgage you need to ensure that you understand how debt is secured against the property. If you have cross secured different debts or used the property to secure other facilities then you may need to tidy these issue sup before you list the property.

 

Tenants

If the property is tenanted, you need to consider whether the tenant is staying on or if you are selling the property with vacant possession. In some cases, such as commercial property, a stable tenant with a long-term lease can add value to the property.

However, if you are selling a family home, there may be a limited number of potential investors. In that case, the house may achieve a higher price if it is sold with vacant possession.

Often the best result is to be able to offer purchasers their choice of vacant possession or a tenant that is prepared to sign a longer-term lease.

Given that 12-month leases are common, if you intend to sell a tenanted property you may need to consider this issue long before your planned listing and auction date.


Chattels

Be clear about what items are included in the sale.

Fixtures, being things like fixed heating systems, light fittings and curtains are generally expected to be sold with the property. Chattels, in simple terms things that are easily picked up and moved, are generally not included in the sale.

However, confusion can arise in relation to:

  • Appliances like dishwashers that are not entirely fixed – but can be moved;
  • Large pot plants and even plants in the garden;
  • Security systems that are fixed to the house.

Ideally, you should create a list of what will stay and what you are entitled to remove prior to listing the property for sale.

 

Paperwork

It is important to have the right contract and section 32/vendor’s statement.

I believe that it is best to have a comprehensive contract and section 32/vendor’s statement. A full set of certificates and searches will help to make a buyer feel more comfortable about the property and will make it easier for a purchaser to buy the property.

You also need to consider what special conditions are appropriate in your circumstances. What will add value to a potential purchaser and what conditions do you need as vendor to ensure that the sale is as smooth as possible.

If it is time to sell we would be pleased to assist you with the process.

We have been assisting vendors for more than 20 years to achieve the best result possible with a minimum of stress.

 

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