Selling or leasing your property? Changes to swimming pool compliance apply to you!

Previously, we wrote about the changes to swimming pool compliance, which were due to take effect in April this year. The requirements for the sale (and leasing) of properties with a swimming pool have undergone some changes and a new set of compliance requirements commenced on 29 April 2016.

Certificate of Non-Compliance – Passing responsibility to the purchaser

Previously, owners were required to obtain a valid certificate of compliance or occupation certificate (no more than 3 years old) along with a registration certificate evidencing that the pool had been registered on the online register (www.swimmingpoolregister.nsw.gov.au).

For clients selling their property, the changes now include the option to obtain a certificate of non-compliance as an alternative to the certificate of compliance. Certificates of non-compliance are issued in the case where a certificate of compliance cannot be obtained and shift the responsibility of obtaining the certificate of compliance to the purchaser.

A certificate of non-compliance cannot be used if you are leasing your property.

I am selling a property with a swimming pool. What do I need to do?

Unless you have already done so, you must arrange an inspection by Council or a private certifier (known as ‘E1 Certifiers’) before you sell your property and obtain either a certificate of compliance or a certificate of non-compliance.

If your swimming pool is less than 3 years old and you have a relevant occupation certificate, you do not need to obtain a compliance certificate, but you must ensure that your pool is registered.

An inspection by a local authority must be carried out within 10 business days where an inspection is requested for the purposes of a lease or sale. If the certifier is not satisfied that the swimming pool complies with the requirements, then a certificate of non-compliance will be issued within seven days, along with a written notice setting out the reasons why the requirements have not been met and the steps to be carried out to meet those requirements.

You should give a copy of your certificate of compliance, certificate of non-compliance or occupation certificate (whichever is applicable) to your solicitor, as it must be attached to the contract for sale. Failure to attach one of these documents is deemed a breach of of the Conveyancing (Sale of Land) Regulation 2010 (NSW) and a purchaser will be able to cancel the contract and have their deposit refunded.

I am purchasing a property with a swimming pool. How do the changes apply to me?

Purchasers who complete a sale with a certificate of non-compliance attached to the contract will have 90 days from the date of settlement to rectify the non-compliance issues. Purchasers should inform themselves of the nature and extent of the non-compliance issues and assess whether the cost of rectifying those issues is reflected in the purchase price.

Rectifying the areas of non-compliance could involve extensive and expensive works. Purchasers must be satisfied before they sign a contract that they are happy to carry out the works and can afford them. To that end, we suggest purchasers obtain a pre-purchase contract review before attending an auction or signing a contract with an agent. As part of our pre-purchase contract review service, we make enquiries with the sellers and will obtain a copy of the notice issued by the certifier that will detail the areas of non-compliance so that you can make an informed decision regarding the purchaser price or if you want to buy the property at all.

Exemptions – strata schemes and off-the-plan contracts

Strata and community schemes comprising are subject to mandatory inspections every three years and a certificate of compliance must be maintained by the scheme. However, an owner of a lot in a strata or community scheme is not required to attach the certificate of compliance to the contract for sale. This exemption does not apply to 2 lot strata schemes (such as duplexes).

A general exemption also applies to off-the-plan contracts.

If you have any queries about buying or selling a property with a swimming pool, please contact us today by phoning (02) 9481 9800, emailing us at admin@trouncerlegal.com or filling out our contact form here.

New Swimming Pool laws come into effect next month

New legislation is going to prove a headache for clients selling or leasing properties with a swimming pool or spa pool.

From 29 April 2016, all properties in NSW with a swimming pool or spa pool cannot be sold or leased without a valid certificate of compliance or, if less than 3 years old, an occupation certificate that authorises the use of the pool (a “relevant occupation certificate”).

To date, the only requirement has been to register your pool with the government, which is a relatively easy process and can be done online here.  This was meant to have been done by 29 October 2013 but can still be completed (a fine of $220.00 may apply but is unlikely).

Do the changes apply to me?

The changes apply to you if you are the owner of a property with a swimming pool or spa pool. If you own a lot in a strata scheme that has a swimming pool or spa pool, then you own that pool jointly with all other owners in the strata scheme and the owners’ corporation is responsible for ensuring there is a valid certificate of compliance.

A “swimming pool” is defined as an excavation, structure or vessel that is capable of being filled with water to a depth greater than 30cm and is used for swimming, wading, paddling or any other human aquatic activity. This means even a small, above-ground pool or spa may require a certificate of compliance. (If you think about it, some blow-up pools fall into this definition!)

I am selling my property. How do the changes apply to me?

If you are selling your property you must ensure the contract for sale includes:

  1. a valid swimming pool certificate of compliance or a relevant occupation certificate issued within the last three years, and
  2. a certificate of registration.

Failure to attach either document may allow the purchaser to rescind the contract within 14 days of exchange (unless settlement has already occurred).

I am leasing my property. How do the changes apply to me?

If you are leasing your property then you, and/or your real estate agent, must ensure that any residential tenancy agreement entered into on or after 29 April 2016:

  1. includes a valid swimming pool certificate of compliance or a relevant occupation certificate, and
  2. a copy of the certificate of compliance is provided to the tenant.

How can I organise an inspection and obtain a certificate of compliance?

Inspections and certificates can be carried out and issued by local councils and accredited certifiers registered with the Building Professionals Board. Accredited certifiers are those holding category A1, A2 or A3 or category E1 accreditation under the Building Professional Act 2005).

We recommend you arrange your inspection as soon as possible, even if you are not planning on selling or leasing for some months. Often, councils and certifiers can be booked out for weeks in advance and, if you are required to carry out works to the pool, there will be further delays in completing those works and arranging a further inspection.

For more information, head over to the Office of Fair Trading website. A Swimming Pools fact sheet is available here.

Have any other queries about leasing or selling your property?

Contact Trouncer Legal today by phoning (02) 9481 9800, emailing admin@trouncerlegal.com or by filling out our contact form here.

New legal protections for off the plan property purchasers

Proposed amendments to the Conveyancing Act 1919 will be a welcome change to purchasers buying properties off the plan, who are otherwise plagued with risk and uncertainty.

Off the plan contracts

An off the plan contract is a contract for the sale of a property in a new subdivision that does not have a separate title at the time the contract is entered into. Often the construction of the property will not be complete, but developers will pre-sell the vacant lots or units.

Sunset clauses

Usually, the contract will be conditional upon the property being registered by a certain date (referred to as the “sunset date”). If the property is not registered by the sunset date, then the contract will allow either the buyer or the seller to rescind the contract (referred to as a “sunset clause”).

Recently, sunset clauses have been the subject of some controversy due to reports of developers deliberately delaying a project, so that the sunset clause can be exercised. The developer rescinds the contract, refunds the deposit and resells the property at a higher price than what was contracted with the original purchaser. While the purchaser gets their deposit back, they are not entitled to any compensation. Such action, while somewhat unfair, is entirely legal under the current laws, as parties are free to negotiate the terms of an off the plan contract (which are usually weighted heavily in favour of the developer).

Proposals for change – Conveyancing Amendment (Sunset Clauses) Bill 2015 (NSW)

The Conveyancing Amendment (Sunset Clauses) Bill 2015 (NSW) was introduced into the NSW Parliament Legislative Assembly on 10 November 2015. The Bill will introduce a new Division 10 of the Conveyancing Act 1919 to prevent sellers from unreasonably rescinding off the plan contracts for a residential lot* under a sunset clause.

The seller may only rescind the contract if:

  1. the seller gives the purchaser a notice in writing at least 28 days prior to rescission under a sunset clause. The notice must state why the seller is proposing to rescind and give reasons for the delay; and
  2. the purchaser gives written consent to the vendor’s proposed rescission; or
  3. the vendor obtains an order from the Supreme Court permitting the rescission; or
  4. the reason for the rescission comes within a category prescribed by the Regulations (no Regulations have yet been made).

Should the seller approach the Supreme Court, it must convince the Court that rescission of the contract is just and equitable in all the circumstances.  The Court will consider the following:

  • the terms of the contract;
  • whether the vendor has acted unreasonably or in bad faith;
  • the reason for the delay;
  • whether the subject lot has increased in value;
  • any other matter the court considers to be relevant.

If the seller is unsuccessful, the seller must pay the purchaser’s costs of the application to the Supreme Court.

Application of the new provisions

The proposed amendments will apply to existing contracts and any rescission by a vendor on or after 2 November 2015.

What’s next

We would expect the Bill to be debated shortly and perhaps some minor amendments made to clarify some provisions.

* “residential property” has the same meaning that it does in s 66Q of the Conveyancing Act 1919

Sebastian and Genevieve are experienced property lawyers who have both acted on numerous off the plan sales and purchases. Contact Trouncer Legal today by phoning (02) 9481 9800, emailing admin@trouncerlegal.com or by filling out our contact form here.

Strata Law Reform in NSW – An update for owners

The NSW Government is reforming strata laws in NSW, in what represents the most extensive overhaul since the commencement of the Strata Titles Act 1973. Owners of strata lots can primarily expect changes to the management of strata schemes, building defects in new buildings and redevelopment of older buildings.  Here is a summary of the major changes:

By-Laws

The reforms propose the following changes to by-laws:

  • Owner renovations – the proposed changes would establish a streamlined approach for owner renovations, categorised in three tiers: cosmetic changes, minor renovations and renovations that change the external appearance of the lot. The proposed changes would simplify the approval process for owners wanting to make minor changes to their lot;
  • Parking control – the reforms propose to provide more options for owners corporations to control unauthorised parking on common property, including employing local council to manage unauthorised parking;
  • Short-term letting – easier procedures are proposed for owners corporations to enforce by-laws pertaining to excessive noise and poor behaviour, which is often a by-product of short-term letting;
  • Overcrowding – the reforms allow owners corporations to make a by-law limiting the number of occupants who can reside in a lot;
  • Pets – reforms would amend the model by-laws to remove any reference to a ban over having pets in a strata scheme, so that a request to keep a pet cannot be unreasonably refused. The reforms do not prevent a strata scheme from making its own by-laws regarding the keeping or prohibition of pets;
  • Smoke drift control – smoke drift will be specifically noted as a nuisance and owners corporations would be allowed to enforce a ban on any nuisance or hazard by issuing a notice to comply and ultimately seek an order in the Tribunal.
  • Penalties – the maximum penalty for breach of a by-law would increase from $550 to $1,100.

Collective sale and renewal process

Under the proposed reforms, 75% of owners can agree to end their strata scheme. This requirement has been reduced from a unanimous agreement of owners. The reforms set out a collective sale and renewal process that strata schemes would need to follow. Fair Trading would establish a Strata Renewal Advice and Advocacy Program to provide advice and referrals to owners. Additional protections are proposed for elderly and vulnerable owner-occupiers.

Dispute Management

Proposed reforms will expand the jurisdiction of the Tribunal to exclusively deal with the majority of strata disputes, including recovery of outstanding levies (the Owners Corporation may still apply to the Local Court to obtain a judgment debt), removal of members of the executive committee and strata managing agents, forcing elections of office holders, limiting matters that committees can make decisions about, requiring votes on certain matters and the issuing of orders to comply with by-laws or impose higher financial penalties for non-compliance.

Scheme management

The reforms propose the following changes to the way strata schemes are managed:

  • Executive Committee – under the reforms the executive committee of the Owners Corporation will be known as the “strata committee”. Strata Committee members will be required to declare any conflicts of interest in relation to matters to be considered by the Strata Committee and certain individuals will be prohibited from joining the Strata Committee;
  • Voting – options for voting methods will be expanded to include personal voting, electronic voting, postal votes or secret ballots;
  • Annual General Meeting – the reforms will require an AGM be held once every financial year, allowing the Strata Committee greater flexibility to determine when the AGM is held;
  • Service of documents etc. – papers for meetings will be allowed to be distributed via email;
  • Proxy farming – limitations will be placed on the number of proxies an owner can hold to avoid “proxy farming”;
  • Tenant participation – if tenants occupy more than half the lots in a scheme, they can elect a representative to attend meetings of the Strata Committee and speak on their behalf (but this does not include a right to vote).

Strata Managing Agents

Under the reforms a time limit will be applied to the appointment of a strata manager of 1 year at the first AGM and 3 year terms for new appointments and re-appointments at subsequent AGMs. Strata Managers will be required to disclose conflicts, including if they are connected with the original owner, if they have received third party commissions and are prohibited from receiving gifts or benefits for their services other than commission. The Tribunal will have greater powers to remove Strata Managers where they have refused or failed to perform their duties to an acceptable standard in line with their agreement.

What’s next?

The draft Strata Schemes Development Bill 2015 and Strata Schemes Management Bill 2015 were released for public consultation on 15 July 2015. Following the final consultation the Bills will be considered by the NSW Parliament perhaps later this year or in early 2016. Stay tuned.

For more information visit www.fairtrading.nsw.gov.au.

Genevieve McManamey is an Associate at Trouncer Legal and an experienced strata and property lawyer. Contact Genevieve today by phoning (02) 9481 9800, emailing admin@trouncerlegal.com or by filling out our contact form here.

When to buy and Sell Property

Everyone knows that property prices move in cycles, and of course it would be great to sell at the top of the cycle, or buy at the bottom. The trouble is, it’s very hard to pick the top and bottom of the market, even for the experts. If you’re looking to move from one house to another at the same time, it may not matter quite as much, because in general terms house prices may all move up or down together. However, that assumes you are buying in the same area, and in a similar price bracket.

That’s not to say that some people don’t make a lot of money, either by good management or good fortune. If you can buy cheaply at the bottom of a cycle, and sell at the top of a later cycle, you can do very well. Or you may sell at the top of a cycle, rent for a year or two, and get more for your money in a buyer’s market later.

On the other hand, things can change pretty fast in the market, and it is unwise to gamble with the family home. In the past, many families have sold up in Sydney, and moved to Queensland for a better life. After a few years when things haven’t worked out, they have wanted to return. But they have often found they couldn’t afford to buy back into the Sydney market. The same thing can happen to you while you rent.

The Sydney market may have been quiet for the past few years, and you may read that we are in for a period of low inflation. However, Sydney is still the leading real estate market in Australia, and is notorious for a sudden burst of price rises when conditions are right. If you are caught renting at the wrong time, it could be very, very costly.

You may think that it is fairly easy to pick the top and bottom of a cycle. Simply read the papers, keep an eye on things, and it will be obvious. I don’t think so (we would all be rich otherwise), and I think it is getting more difficult as Sydney becomes larger and more cosmopolitan. Here are some factors that I think you should bear in mind:

  •  There are more and more “markets” within the Sydney region. Prices for inner city units may be booming, while houses in the south-west may be static. Even in the same area, houses above $500,000.00 may be selling well, while houses under $250,000.00 may be selling slowly.
  • There is a greater range of housing. The standard quarter acre block has given way to a multitude of villas, townhouses, units and so on. Again, this means you need to be more careful when assessing price movements.
  • Remember that all markets are affected by supply and demand. Your local agent may say that sales in the last few months have been great, but this doesn’t mean that prices have been increasing at all. Conversely, if the local agent is quiet because he or she simply doesn’t have any decent houses to show you at all, this may be a signal that supply is tight, and prices will rise if the demand it there.
  • The information age in which we live means that there is a wealth of information, statistics and other material being produced all the time. The trouble is that statistics can be interpreted and manipulated forever, and at any one time there will be numerous economists, consultants, real estate experts and others predicting rising prices, and at the same time there will be others predicting quite the reverse.

The best advice is to remember that real estate should be a long term investment, not a short term gamble. It is true that prices tend to rise with inflation over time, but don’t ignore the fact that property values can also fall. The costs of buying and selling property mean that short-term “gain” is often illusory. Look at this simple example, where someone plans to buy a bargain for $600,000.00, and sell it quickly for $675,000.00, obtaining a loan of $500,000.00. For the sake of simplicity, assume it is too difficult to rent the property in the proposed time frame of 4 months.

Purchase:

Price:                                                   $ 600,000.00

Add:

Stamp duty house:                                  20,510.00

Loan fees:                                                     350.00

Valuation fees etc.                                        600.00

Legal costs:                                               1,600.00

Building/pest report:                                     500.00

Interest on loan @

8% for 6 months:                                    20,000.00

TOTAL:                                              $ 643,560.00

Sale:

Price:                                                   $ 675,000.00

Less:

Agent’s selling fee

@ 2.5%:                                                 16,875.00

Auction expenses:                                     1,500.00

Discharge of loan fee:                                   650.00

Legal expenses:                                        1,500.00

TOTAL:                                                 654,475.00

Purchase costs:                                    (643,560.00)

“PROFIT”:                                            $ 10,915.00

The above example is, of course, over simplified, but time and time again people get caught into thinking that properties will sell faster and easier than they do in practice, and it is the holding costs that are the killer. You may say a $10,000.00 gain is better than nothing, but remember there may also be capital gains tax, renovation costs and time and effort spent on the property. It all adds up to taking a major risk for little or no return.

MY TIP: BE VERY CAUTIOUS ABOUT TRYING TO PICK THE TOP OR BOTTOM OF THE REAL ESTATE CYCLE AND LOOK AT THE LONG TERM

Sebastian Trouncer is the founding partner of Trouncer Legal and has over 35 years experience in property law. Contact Sebastian today to discuss your sale or purchase by phoning (02) 9481 9800, emailing admin@trouncerlegal.com or filling out our contact form here.