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Video: Property Law and Conveyancing with Matthew Brook, SPG Lawyers

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Read the full interview here:

– Good day everybody. James from mrkts.com.au here and today we are very lucky to be joined by one of the partners of Short, Punch, and Greatorix, a local firm on the Gold Coast. His name is Mr. Matthew Brook. Matthew, how are you?

– Good James, yourself?

– Good to see you. I’m well, thank you. Thank you for coming in. So, today we’re going to start with a brief CV in under one minute, Matt. Give us a bit of your history.

– So, I was born and bred on the Gold Coast.

– Beautiful.

– Studied at university on the Gold Coast, went to school on the Gold Coast and started at Short, Punch, and Greatorix which is one of the Gold Coast’s largest property law firms in 2008. So, I graduated from university in 2007, got my practicing certificate in 2008, and haven’t been back since. So, practicing as a partner in the property section of Short, Punch, and Greatorix, our firm has got about 20 solicitors and we’ve been practicing for about 40 years as a firm.

– So, a little bit about the different disciplines. I know that law is a very, very broad industry. And people here really try to understand property, but it’s a good thing to understand law as the legal disciplines. So, if you could give us the very basic run-down of what the different ones are and what would effect buyers most?

– Yeah, no problem. So, I’ve got a sister-in-law who is a medical practitioner and she says to me, Matt, what’s the difference between a lawyer doing A and a lawyer doing B. I’ll say, now think of it like medicine. If you go and see a doctor and ask to see someone who is going to help you out with a scratch that’s different to going and seeing a doctor who is going to help you out with something like your feet. It’s just a different type. So, in law you’ve got all different types of lawyers. I think of us in the commercial property law field as being the lucky ones. We’re dealing with buyers and sellers who are wanting to get to a common purpose of achieving a goal. And so, particularly with property conveyancing, you’ve got a seller who wants to sell their property and will get money at the end of that deal and the buyer who wants to buy a property. And generally they only buy it because they like the property. And we’ll get a property that they’ll really love at the end of the deal. So, putting people together to do something that they both want to do. The other types of law you can do is criminal law. So, if your doing criminal law you’d be acting for someone who is being accused of doing something. Family law, so family law is often when there is a dispute between the family group.

– Which can incorporate some property or commercial law?

– It can. So, family law can incorporate if there is a property settlement.

– Yeah

– The parties to that property, to that family or dispute, selling or transferring property between themselves.

– Okay.

– Generally, if you went to a family lawyer, if they had a practitioner in their firm who could assist with conveyancing activity, they would do the conveyancing but most family law firms who specialize only in family law would get someone else to assist with conveyancing.

– Okay.

– Because family law and conveyancing are a little bit different. And then other types of things, other types of law you can get into is litigation. And litigation is the one that no one wants to really learn about and you only go there if you’re in trouble or you’ve been hard done by.

– So, that’s the movie one?

– That’s the movie one.

– Okay. Understood. Excellent. Thank you for that. Let’s discuss property. And commercial law. I know that it falls under that realm. So, do people really need a lawyer when they’re buying a property?

– I think so, absolutely, 100%. There is over 20 different types of legislation that can affect buying a property in Queensland. And it’s a minefield. And even us as lawyers, we’re continually learning. Every year we have to do 12 hours of continually learning practice and we put thousands of hours into learning what the laws are. Every day we learn something new. We’ve got lawyers at our firm who’ve been practicing for 40, 50 years and they learn something new everyday. You just can’t keep up. So, in terms of, do I need a lawyer? Yes, I would say you need a lawyer. Because there are so many things out there that you might not know about that a lawyer could assist you to know about. And if you hadn’t known about that you might have changed the way that you put an offer in to buy a property or were going to sell your property.

– Very important to make sure that you’re across all of the pitfalls that are possible, I suppose.

– That’s right.

– At what point should the purchaser or the seller engage a lawyer in the process?

– Yeah, so depends what type of property you’re selling or what type of property you’re buying. Generally, if you’re buying or selling a house that’s already an established house the Real Estate Institute of Queensland has a pro form of contract called an REIQ contract. That REIQ contract has been designed to be fair to both the seller and the buyer. And has fields in there to prompt the seller or the buyer as to what they want to insert in terms of the price, what type of deposit will you be paying, do you need finance to buy the property, would you like a building and pest inspection, when would you like the settlement date to be, and a number of other questions which would cover current law. So, generally with a second-hand property that’s being sold by a competent real estate agent, a seller or a buyer don’t approach their solicitor until they sign the contract.

– But the negotiation would happen away from the solicitor.

– That’s right.

– They agree on terms and then you enter the piece.

– That’s right. If you were a first home buyer, or someone who maybe wasn’t sure about the contract, it’s always a good idea to call the solicitor for an opinion on whether the contract is suitable for you. The solicitor can very quickly read an REIQ contract, they’re very used to them, and can advise you on what’s in that form of contract. Now, if the contract’s a different form of contract, and you might have heard the term off the plan? If you’re buying a brand new property that hasn’t been developed yet, developers often don’t use an REIQ contract because they have their own particular form of contract which suits the development. Now if you’re buying an off the plan in that type of scene where you’ve got a contract which isn’t the REIQ, it’s always good to have a lawyer have a look at it. They can let you know what’s in that contract.

– So, you enter the sales office for charts, or you enter the agency, you’ve decided, okay, this is somewhere I want to live, it might take a little bit longer but I’m happy to move in at that time, 12 months, whatever be the construction timeline. And then, before I sign, I just want my solicitor to have a look at the disclosure statement and the contract of sale.

– That’s right. And the off the plan disclosure statement can often be, you know, two or three reams thick.

– It can.

– So, it’s very daunting for people looking at the disclosure statement to understand what’s in it just in a cursory look when they walk into a real estate agent’s office. So if that is sent to a solicitor, a solicitor can have a look at the contract, a look at the disclosure statement and they can get back to the buyer and say, look, these are the things you need to be aware of, which are in the contract. And they might point out things they haven’t thought about.

– Correct, but understanding that the solicitor is there to make you aware of what is in the contract. They are not necessarily telling you what to do, but they are making you aware of what you are reading and what you are signing.

– That’s right.

– Understood. We mentioned before the term conveyancing. What is conveyancing?

– Yeah, so, good point. Conveyancing in Queensland and Australia is a very, very safe way of transferring your property from one person to another. In Queensland, we have a system called the Torrens title system and that means that everything that, every piece of property that’s owned by someone in Queensland is registered in Mulberry Court, the titles office. Now, when you sell your property, you give the buyer a transfer of your property in the titles office. And the buyer gets registered in the titles office as the owner of that property. Provided that’s done correctly, no one can take that title away from you. So, it’s very important to have a lawyer assist with that process and that’s called a conveyance. Where we sell and purchase a property from one party to another.

– Okay.

– Yeah.

– So, what pitfalls do first home buyers commonly run into? Or what are they commonly facing?

– Yeah, so, as a solicitor, we find the doctor Google problem a big problem.

– Yeah.

– We often get first home buyers coming to us and say look, I’ve Googled how do I buy a property, what do I need to be aware of? And they come to us with things which are based on different states or different countries.

– Okay. So good?

– So, you really have to be aware of you’re buying a property in Queensland, you’re going to only have regard to the Queensland laws. Now Queensland law is different to all of the other states in Australia. So, it’s not a federal-based conveyancing system, it’s a state-based conveyancing system. The only thing that is a federal-based system is the Foreign Investment Review Board rules. So, if you are a first home buyer somethings that commonly are faced is that generally a lack of information as to whether you can buy the property. If you’re an Australian citizen, or a permanent resident, there’s generally no prohibition on you buying a property in Australia. If you’re not an Australian citizen, or a permanent resident of Australia, generally you need to obtain first, a Foreign Investment Review Board approval and that means applying to the government, paying a fee to the government, and the government assessing as to whether or not you can buy the property.

– So, if you see signage around a place that says FIRB, Foreign Investment Review Board.

– Yeah, Foreign Investment Review Board. Now generally, development properties, if you’re buying off the plan purchase, the developer can go to the government and get a pre-approval for the building and the pre-approval means that you don’t need to go through the process of finding out if you need to get FIRB approval. Sorry, you don’t need to go through the process of finding out whether you’ll get FIRB approved from the government, it’s an automatically approved building.

– It’s like a blanket approval.

– Like a blanket approval. That’s right. Now other things that a foreign buyer might need to know is that there is an additional stamp duty called AFAD Duty. Which is now an additional seven percent of the purchase price. Now people just aren’t aware of this. And this applies to New Zealanders in some situations, as well. So, it’s very important that if there’s a foreign buyer buying a property, they find out what fees and charges are going to apply to them buying the property.

– Wow.

– This is this AFAD seven percent.

– Alright.

– So, if you were a New Zealand person signing a contract in New Zealand, you will have to pay this seven percent AFAD Duty. So, there are ways a New Zealand citizen can not pay that AFAD Duty, it’s just important to get legal advice. It’s the right way to do that.

– Because, what we’re discussing right now may change, you never know. There’s a federal election coming up in May, so even though this is state-by-state it can sometimes be swayed. So, once again, seek your solicitor’s advice.

– We see these things change out all the time.

– Because you’re researching and always looking.

– That’s right.

– Understood.

– Now, You’ve asked what pitfalls do first home buyers face. I believe that often first home buyers can be a bit accepting of what they’re told by the real estate agent or told by other people around them. And they might tend to believe something that if they had bought a property before, they would know the process and maybe be aware that that may be not the case. So, it’s just generally a lack of information available and look, hopefully, your firm can provide this great information.

– That is why we’re here. That’s what we’re trying to do. So yes. We’ve noticed also when we’re operating at a development, people come in and they ask questions that we really believe that if they do some research they’ll be able to figure out themselves. Same problem.

– Yes, that’s right.

– And we can solve them, I hope. Understanding what conveyancing is, we’ve also been made aware by some of our members, that there are lawyers and then there is conveyances and they notice that there is a difference in price. More budget conveyancing and then more firms like yourself.

– Yeah.

– What’s the difference between those or do you have any case studies on the use of those budget conveyancing firms?

– Yeah. Generally, with conveyancing, and like anything in life, I think you get what you pay for. So, if you’re going to go to the cheapest place you can find, you’re not going to get the best service. If you go to a law firm which has a reasonable fee, and has a good track record, you generally get the reputation of being a good law firm with a good track record through treating people the right way, doing the right thing by them. We’ve had some horrible situations where clients have gone to budget conveyancing firms, had issues with the conveyancing, that just haven’t had the time and resources to commit to them, and then had to come to us to say look, can you help me out? For example, one of those issues is for a first home buyer, very daunting, there’s a tax called Land Tax. And when the buyer bought the property, there was a search done of the property and it showed that there was $12,000 owing of Land Tax. Unfortunately, the conveyancer who was helping them out didn’t ensure that was paid out at the settlement and the poor buyer that bought the property was left the $12,000 bill for Land Tax.

– Okay.

– They came to us and said look, how can we help you out? That’s an issue that we were able to help the buyer out with and could sort that out but there’s a range of issues that if your professional that you’re engaging, and not just in law, in anything, can’t commit the time and resources to help you, you’re really not getting the best result you can. So, they might be the cheapest, but you’re certainly not going to get the best value out of it.

– Correct. Now, that doesn’t mean that the first solicitor that you approach is the one that want, make sure that you go and speak to many of them and you’ll find the one that fits your purpose and suits you. But it’s always good to ask the right questions. In the sale process or the purchase process, what is the lawyer’s role in those processes?

– Yeah, so, we’ll be engaged only to act for the seller or only for the buyer. And it’s important for the parties to realize that we have to act in the best interest of the seller or the buyer. So, sometimes we’ll get a phone call from the other side. So, say we’re acting for a buyer, the seller might call us up directly and say, why are you being so difficult? And we’ll have to say to them, look, unfortunately we have to act for the buyer and we’re acting in the best interest of the buyer. We can’t just go and approve finance, because the buyer doesn’t have the finance application approved yet. You’ll have to speak to your own solicitor and they can then make a request of us as to how we’re proceeding with that application. Our role as a conveyancer is to insure for the seller that the seller gets the purchase price at settlement, and that the buyer gets the clear title to the property. And that means that the buyer gets the property without any mortgages on the title, or without any hidden nasties that they don’t want. For example, like the land tax adjustment we were talking before. To make sure that all the accounts are paid up until the day of settlement. Now the way we do that, is we review the contract when it comes in, and there’s particular dates under the contract. Every contract has a contract date and a settlement date. Often contracts have other conditions to meet. Now, conditions might be that the buyer wants to do a building and pest inspection or it might be that the buyer has to sell their property before they can buy this property. Or it might be that the buyer needs finance approval. So, we monitor those states and we assist the buyer to get through that process. And once that’s done, we’ll do searches of the property. So, the Queensland Law Society has a protocol we must follow. And that protocol sets out recommended and required searches for us to do. And those searches are to insure again, that there are no hidden nasties in buying the property. Once we’ve done those searches, we give a report to the buyer. The buyer can then read through our report and see any issues, we’ll point out any issues to the buyer associated with that report. Once that all ticks off, we’re then off to settlement. We prepare the settlement figures. We’re liasing with the buyer’s financier or the seller’s financier to make sure that they’re ready to go for settlement. And then we can settle the transaction. And look, on most occasions, we settle on the day that the parties set out in the contract to settle. In Queensland, it’s important to realize, unlike other states in Australia, that time is of the essence. And what sometimes a buyer doesn’t realize is if they don’t settle on that day, they can be in default of the contract. It is very important that we meet that exact day. So, once the contract is signed, it’s kind of like all of the wheels are in motion, and all the gears are moving simultaneously to try and get everyone, so we deal with the buyer, the financier, and often speak to the real estate agent to make sure everything can be done in time.

– And it snowballs from there.

– And it snowballs.

– Explain the cooling off period.

– Yeah, so, the cooling off period was introduced by the Queensland government so that when a buyer signs a contract, often they’re really, really excited. They want to buy the property, will sign as a spur of the moment thing, they get home, sitting in the lounge room at night and think, oh wow, I didn’t really mean to sign that contract.

– Change of heart.

– I shouldn’t have done that. That’s a change of heart. So, the cooling off period is a five business day cooling off period. It starts when the buyer receives the signed copy of the contract. Or the buyer’s solicitor’s side receives the signed copy of the contract. And it means the buyer can terminate the contract within the first five business days. If they terminate the contract, there is a small penalty to pay. But it’s basically a change of mind type arrangement. And it’s designed so that the buyer can find out a little bit about the property during that period of time. And so if the buyer wasn’t sure of how much the property is worth they can obtain evaluation of that property in that time.

– Does that exist during the auction process?

– No. So, it’s important for buyers to realize if they go to an auction, or they negotiate a contract shortly after the auction, then there is no cooling off period that applies. It’s completely as-is where is at that time.

– So, be aware.

– So, be aware. And usually, an auction contract is completely unconditional. So, it means once you sign that contract you’ve got to have your money ready on the settlement day.

– But don’t give up. Negotiate, if you can, some terms at the auction. See if you can get a lower deposit or a larger settlement time. So, if a buyer signs a contract and then decides it’s not the right property are they able to get out understanding the cooling off period exists?

– Yes.

– What happens?

– Yeah, so, a buyer is to able to determine that during the cooling off period if it applies to their property. Now this is assuming we’re a residential property. A cooling off period won’t apply if you’re buying a commercial property.

– Okay.

– But for a residential property it does apply. That’s the only occasion where you’re able to terminate the contract because you’ve changed your mind. The other conditions that you might have in the contract, if you’re lucky to have a building and pest condition, you’re only able to terminate if the building and pest condition comes back and it says look, there’s some significant issues in here for you. Otherwise, if there’s only minor issues with the property the normal contract says the buyer has to act reasonably. So, if the buyer acting reasonably couldn’t terminate the contract, you don’t have the right to terminate. Same as the finance condition. You hear a lot of people say, oh you can just turn that in to finance because it will be fine. And don’t worry submitting your finance application. It will be fine. You can just terminate. The contract requires you to use your endeavors to get finance approval. So, doing that means you complete the application forms with your broker or with your bank, you submit them and you try and give them the information they need to give you that finance approval. Now, if the finance approval comes back and you’re declined you can terminate the contract. If the loan comes back and they’re not going to give you as much money as you need to buy the property, again, provided you’re acting reasonably you can terminate the contract. But there is no as of right for a buyer just to pull out because they changed their mind.

– If a buyer signs a contract, decides it’s not the right property, unless it’s in the cooling off, they can’t get out. But what if the seller wants to not sell the property anymore? What is the catch?

– Good question. So, in other jurisdiction, for example the UK, there is a concept called a gazumping.

– Best name ever.

– So, if the seller found someone who was going to offer them more money, but the contract was not settled, the seller could ask, could require the buyer, who had already signed the contract, to pop off.

– Oh, okay.

– That’d be gazumped. The next buyer would come on and buy that property from the seller because the highest bid, or the highest price gets the property. So, just signing the contract doesn’t lock you in.

– That’s in the UK?

– That’s in the UK. Now in Queensland that’s not the case.

– Shame.

– So, as soon as the seller signs the contract, they’ve locked themselves in on those terms, and the seller doesn’t have the right to terminate. The only time the seller will have the right to terminate is if the buyer is not compliant with the terms of the contract.

– Default, in some way.

– In some way. So, for example, if they had a finance date and they didn’t tell the seller whether or not they’ve obtained financing by that date, a seller doesn’t have to be strung along. The seller can pull out of the deal. If you get to settlement and the buyer doesn’t come along with the money, again, the seller can pull out of the deal.

– Okay, that’s all we have time for today. Matt, thank you very much. You’ve been extremely helpful. Make sure you subscribe on the the Facebook page and mrkts.com.au’s group as well. You’ll join to find some very useful information. The SPG, the Short, Punch, and Greatorix law firm information will be there as well should you so require it. Thank you for your time. And we look forward to talking soon.

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