Jul 4, 2024 | General Advice, Property Law
If you are a borrower, guarantor or lender, you may be required to seek independent legal advice prior to signing mortgage documents. Loan and mortgage documents will often require an Independent Solicitors’ Certificate to prove that you have received legal advice from a solicitor prior to signing your documents.
If you need to execute mortgage documents, it is important to know that this process involves more than a simple signature.
What is a mortgage?
A mortgage is a type of security for a loan used to purchase a property. There are a number of parties involved in this form of legal agreement.
- A lender loans funds to the person or business wishing to purchase the property with the expectation that the funds will be repaid.
- A borrower receives funds from the lender with the promise of repayment.
- If a borrower defaults on their loan, a guarantor can make an agreement to repay the borrowers’ debt in the form of a guarantee.
Why do you need independent legal advice to sign mortgage documents?
A lender may request an Independent Solicitors’ Certificate to confirm that the terms of the mortgage and loan have been explained to, and understood by, the borrower or guarantor. It is the solicitor’s responsibility to advise the signatory of the conditions of the loan and mortgage to ensure that all parties comply with their obligations.
Accordingly, an Independent Solicitors’ Certificate verifies that the borrower or guarantor has been informed of their rights, liabilities and obligations under the conditions of the loan agreement and mortgage.
What legal advice will my solicitor offer on mortgage documents?
Solicitors must comply with the Legal Profession Uniform Legal Practice (Solicitors) Rules 2015 when providing advice on loan and security documents.
Your solicitor should verify your identity and provide evidence of advice in the form of an approved Law Society of NSW declaration or acknowledgment.
Your solicitor may advise you on the following areas:
- The costs and interest incurred by the borrower in failing to make regular payments on time.
- The legal obligations of the guarantor in rectifying the borrower’s default on payments to the lender.
- Potential legal action against the borrower or guarantor for non-compliance with the terms of the loan agreement. This may include the possession and sale of the borrower or guarantor’s property to satisfy outstanding debts to the lender.
N.B. Your solicitor is not qualified to offer financial advice. Queries related to the financial aspects of the mortgage documents should be directed to a financial advisor or accountant.
How can I prepare for an appointment with my solicitor?
To avoid any complications when executing your mortgage documents, we recommend the following:
- Familiarise yourself with the terms of your loan or guarantee documents.
- Provide your solicitor with copies of your documentation in anticipation of your appointment.
- Explain the relevancy of the documents to all parties involved.
- Prepare a list of questions to clarify with your solicitor prior to signing your documents.
How can Etheringtons Solicitors help?
Becoming a borrower or guarantor can be a risky process if you are not aware of your rights and obligations. If you require independent legal advice on your mortgage documents, we recommend contacting our office in North Sydney on (02) 9963 9800 or via our online contact form.
Jun 25, 2024 | Employment Law, General Advice
On 1 July 2024, the superannuation guarantee rate is set to increase from 11% to 11.5%. In accordance with the Superannuation Act 1916 (NSW), the superannuation guarantee rate will increase and remain at 12% after 1 July 2025.
(N.B. Superannuation guarantee rate increases use the fiscal year of 1 July to 30 June rather than the calendar year of 1 January – 31 December)
What is a superannuation guarantee?
Superannuation guarantees are contributions made by an employer to an employee’s superannuation fund, a fund which supports an employee’s retirement. This fund slowly accumulates with each pay packet and is accessible when you reach your ‘preservation age’ and retire.
Below is a list of when you can access your super fund entitlement:
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Your date of birth
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Age you can access your super (preservation age)
|
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Before 1 July 1960
|
55
|
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1 July 1960 — 30 June 1961
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56
|
|
1 July 1961 — 30 June 1962
|
57
|
|
1 July 1962 — 30 June 1963
|
58
|
|
1 July 1963 — 30 June 1964
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59
|
|
After 1 July 1964
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60
|
The meaning of ‘retired’ also depends on your age and working status:
- Under 60 – You must have finished working and have no intention of working again to access your super.
- 60 to 64 – You can access your super when you leave or stop working for an employer.
- 65 – Even if you are still working you can access your super.
How is superannuation guarantee calculated?
Superannuation guarantee is calculated by multiplying your ordinary time earnings (gross salary and wages) by the current superannuation guarantee rate.
If you wish to access your super prior to your ‘preservation age’, you can check your eligibility on the Australian Taxation Office website.
Which employees are eligible for super contributions?
Employees who are eligible for super contributions are:
- Employees 18 years old and over.
- Employees under 18 years old, who work more than 30 hours per week.
(N.B. For super payments prior to 1 July 2022, employees must have earned $450 or more in a month to be eligible).
What does this mean for employers?
Employers must make superannuation guarantee contributions by the quarterly due dates (28 days after the end of each quarter). It is important to note that some funds require contributions to be made monthly. The quarterly due dates are listed below:
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Quarter
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Period start
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Due date
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1
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1 July
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30 September
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|
2
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1 October
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31 December
|
|
3
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1 January
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31 March
|
|
4
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1 April
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30 June
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SuperStream is the electronic method that all employers must use when paying employee superannuation guarantee contributions to super funds. Employers must meet the SuperStream requirements to ensure their employee data and super payments are electronically linked.
How can employers prepare for superannuation guarantee rate increases?
It is important to check that your payroll provider has updated the guarantee rates at the correct time (1 July).
Employers should also review their employees’ contracts to check which remuneration structures they have.
- Inclusive structure: An employee with an inclusive remuneration package will include superannuation contribution payments. This means employees may have their pay reduced to accommodate for contribution increases.This reduction cannot place the employee below the minimum statutory or award entitlements and must comply with their contract terms. An employer may decide to increase an employee’s inclusive remuneration package in order to safeguard their pay.
- Non-inclusive structure: If an employee is paid superannuation guarantee contributions on top of their pay, employers will need to notify employees of rate increases and budget for the upcoming change.
Contact Us
If you require advice on superannuation contribution rate increases, it is crucial that you speak with an authorised financial advisor.
If you would like your employment contract reviewed or believe you are entitled to a higher super contribution, please contact Etheringtons Solicitors on (02) 9963 9800 or via our online contact form.
Dec 16, 2022 | General Advice, Property Law
The rate of young first home buyers has declined in New South Wales as buyers take more time to save funds for transfer duties (also known as stamp duty). Despite this, the Australian Bureau of Statistics (2021) indicates a 10-year national 72% capital gain on property prices. These high property prices, coupled with significant transfer duty fees, have contributed to a decline in homeownership across NSW, dropping from 70% in the 1990s to about 64% in 2022. Fortunately, a newly introduced scheme by the NSW State Government will further ease prospective first home buyers into the market.
Receiving assent on 11 November 2022, the Property Tax (First Home Buyer Choice) Act 2022 provides first home buyers with the choice between paying upfront transfer duty or an annual property tax. According to the NSW Government, “The scheme will offer support to about 97 per cent of all first home buyers, or about 55,000 people per year.”
Existing Laws – First Home Buyer Assistance Scheme
The current First Home Buyer Assistance Scheme was introduced on 1 July 2017. These existing laws entitle first home buyers to a concessional rate of transfer duty or an exemption from paying it altogether.
For new and existing homes under $650,000, first home buyers can apply for a full exemption, avoiding any transfer duties. For new and existing homes valued between $650,000 and $800,000, first home buyers can apply for a concessional transfer duty rate dependent upon the value of their home. In addition, when purchasing vacant land, first home buyers will not be required to pay transfer duty when the land is valued at less than $350,000. Where the vacant land is valued between $350,000 to $400,000, first home buyers will receive a concessional rate.
New Laws – Property Tax (First Home Buyer Choice)
The Property Tax (First Home Buyer Choice) Act 2022 will take effect from 16 January 2023 and, therefore, only apply to contracts that are exchanged on, or after, 16 January 2023. During the transitional period of 11 November 2022 to 16 January 2023, eligible first home buyers will still need to pay stamp duty if their purchase transaction settles before 16 January 2023. After this date, they may apply for a refund of the duty.
It is important to note that this scheme acts in addition to existing laws. Some first home buyers in NSW may already pay zero stamp duty or a concessional rate of duty under the First Home Buyer Assistance Scheme. The introduction of First Home Buyer Choice will not impact these stamp duty savings.
Under First Home Buyer Choice, first home buyers in NSW can now elect to pay either an upfront transfer duty prior to the completion of their property purchase, or an annual property tax. This property tax is levied each financial year, starting from the day after the property has been transferred into the buyer’s name at a pro-rata basis.
Eligibility to the First Home Buyer Choice
First Home Buyer Choice is only available on homes (new and existing) priced up to $1,500,000 or vacant land worth up to $800,000. Although there is no income threshold, eligibility to this scheme is determined upon the following requirements:
- The buyer must be over 18 years old
- The buyer must be an Australian citizen or permanent resident
- The buyer (and buyer’s spouse, if applicable) must not have owned any residential properties in Australia as an individual (as opposed to a company or trust)
- At least one of the buyers must move into the property within the first 12 months for a continuous period of 6 months.
Different rates for different types of ownership
The amount of property tax payable will be based on the land value of the first home buyers’ home. If the buyer wishes to use the property as an investment rather than owner-occupied (or vice-versa) RevenueNSW must be informed within 3 months of this decision in order to apply the appropriate property tax rate.
The tax rate for owner-occupiers for the 2022-23 and 2023-24 financial year is $400 plus 0.3% of land value. The tax rate for residential investors during the 2022-23 and 2023-24 financial year is $1,500 plus 1.1% of land value. In the following financial years, the tax rate will be indexed in line with average annual incomes, though the maximum increase in any given year is capped at 4%. In short, if the land value rises, so will the property tax.
When the property is sold
Once a buyer opts to pay the annual property tax and settles their purchase, the property will remain subject to the property tax until it is sold or transferred. The buyer cannot change to the stamp duty option after settlement.
When someone who is not eligible for First Home Buyer Choice purchases a property from someone who is paying the property tax under the First Home Buyer Choice, the purchaser will not be subject to property tax, but they will be subject to stamp duty.
Which is the best choice?
Each first home buyer should obtain independent advice from a financial or accounting professional. It is important that buyers not only consider their current financial position and the national economic outlook, but also how long the buyer intends to keep their property. As opposed to a single upfront transfer duty, annual property tax payments continue to accumulate the longer the buyer owns their property. To further assist first home buyers in making their own comparisons, an online property tax calculator is available through Service NSW.
Contact Us
To ensure you make the right decision and maximise the benefit of the First Home Buyer Choice scheme, it is best to seek professional legal advice. If you would like to discuss your property matter with a legal professional please contact us on (02) 9963 9800 or at [email protected]
Jul 13, 2022 | Building and Construction Law, General Advice
If you’re the owner of a property that has a swimming pool, you need to be aware of your obligations in relation to your pool. Personal swimming pools must be compliant with NSW regulations. These regulations and who they apply to are discussed below.
Who must be compliant with these regulations?
The regulations apply to all swimming pools and spa pools that are capable of being filled with water to a depth greater than 30cm and are used for swimming, wading, paddling or any kind of human aquatic activity.
Every pool owner must register their pool with the New South Wales Government Swimming Pool Register and also must have a compliance certificate from either their local council or a private swimming pool certifier. This is particularly important if a swimming pool owner plans to sell their property, as a certificate of compliance (or non- compliance) must be attached to the contract for sale. A failure to do so can result in a purchaser being able to rescind the contract.
Certificate of Compliance
A certificate of compliance can be issued by either the local council or a private certifier. In granting the certificate, the certifier will consider a number of safety items, such as the fence and enclosure surrounding the swimming pool and the closure on the gate. The objective is to ensure that children do not inadvertently get into the pool area without the intervention of an adult.
Once either the council or the certifier have assessed the swimming pool they will provide you with a certificate of compliance. The certificate of compliance can be attached to a contract for sale and it will remain valid for three years from the date of issue.
Certificate of Non-Compliance
If the local council or a certifier inspects your swimming pool or spa and they determine it is not compliant, they may issue you with a non-compliance certificate. This certificate lists the reasons that the pool does not comply with the regulations and the items that need to be corrected before a certificate of compliance can be issued.
If the pool is deemed a risk to public safety, the swimming pool owner must rectify the non-compliant issues within a certain amount of time.
If the pool is not deemed to be a risk to public safety, the owner must still attend to the issues of non-compliance within a reasonable time period. However, if the pool owner is selling the property and they have not yet rectified the issues of non-compliance, they must attach this certificate of non-compliance to the contract for sale.
The effect of this is that it passes on the obligation to rectify the issues of non-compliance to the purchaser. The purchaser will have ninety days from the date of completion in which to correct the issues raised in the certificate of non-compliance and to receive a certificate of compliance.
If you would like any further information about swimming pool compliance, please contact our friendly solicitors on 9963 9800.
Jul 7, 2022 | General Advice, Property Law
Etheringtons Solicitors Note: In June 2022, the NSW Government announced legislation to reform transfer duty within NSW, moving to an ‘annual property tax’ system. These changes will take place over a number of years. For more information, click here.
If you are currently in the process of buying, looking or saving for a house, there are extra costs beyond the property’s price tag that you need to know about.
1. Transfer duty (previously known as stamp duty)
When you purchase a property in NSW, you are required to pay transfer duty. This is a tax on property which varies depending on the value of the property. Generally, the more expensive the property you are purchasing, the more transfer duty you will pay. Transfer duty must typically be paid with 30 days of settlement, and may be a big upfront cost. It is important to factor your transfer duty costs into the other upfront costs you will need to make.
Some websites will help you calculate an estimate for what your transfer duty will be, to help you plan.
2. Pest and building inspections
Before purchasing property, it is recommended that you have pest and building inspections to determine the property’s condition. These inspections are especially important for older properties which might have long term problems that are not evident in a general inspection. Make sure you appoint a qualified person such as a licensed builder, surveyor or architect.
3. Mortgage registration
You are required to pay a fee to formally register your mortgage in NSW. This mortgage registration payment is required by the state government to register the security for a home loan. This is important as it allows any potential buyers to check claims against the title of your property.
4. Loan application or establishment fee
When you take out a home loan, you may be required to pay an establishment fee. However, some lenders will waive this fee, so it is worthwhile to around and see what your options are.
5. Mortgage insurance
If you are borrowing more than 80% of the property value, you may be required to pay ‘Lenders Mortgage Insurance’ (LMI). The lender’s valuation of the property determines this fee.
Further Information
It is important that buyers are aware of any additional costs which may be required when purchasing a property. If you have any questions or concerns, we can provide additional information and advice to you regarding your situation. If you would like to discuss your concerns with a legal professional please contact us on (02) 9963 9800 or via our contact form.
Jul 3, 2022 | General Advice, Property Law
The 2020 bushfires across Australia had devastating effects on the lives of so many Australians. Many lost homes, treasured possessions or most terribly, a family member or friend.
In the aftermath of this natural disaster, we had clients call us to seek advice on their rights in respect of their home insurance. Some overlooked paying their insurance premium. When they were told to evacuate their homes, they rang their insurer to check that their policy was current and were told that they had not paid the premium and therefore the policy had expired. They asked to pay the premium immediately to renew the policy. However, their insurer refused to renew the policy due to the high risk of bushfires in the area.
Notice Provided by Your Insurer
The Insurance Contracts Act 1984 provides that an insurer must notify an insured customer in writing no later than 14 days before the expiration of their policy stating that their policy will expire if not renewed or negotiated in that time.
It is important to note that if the insurer did not provide this notice, even though you did not renew your policy, the policy is taken to continue as if you had renewed for the period of the original policy. So it is important to check first whether you have received this notice.
Special Circumstances
You might be able to show that there were special circumstances that made it impossible for you to renew your policy. These may include that you were overseas, or severely ill and in hospital.
Seeking Legal Advice
It is important to be fully aware of your insurance renewal date and ensure your insurer is keeping you accurately informed about the status of your policy.
If you would like further information regarding building insurance or general litigation or insurance advice, please do not hesitate to contact one of our experienced litigation solicitors on (02) 9963 9800 or via our contact form.
The team at Etheringtons would also like to extend our heartfelt sympathies to all those affected by the recent bushfires and commend the hard work and sacrifice by the fire fighters.
