Q & A on 2GB discussing property law 8-12-15
Tuesday, 8 December 2015
CS – Chris Smith /PS– Paul Sant /C1,2,3, etc – Callers
CS Turner Freeman Lawyers and our Legal Matters segment about this time each and every Tuesday and I have a $100 Westfield Voucher to give to one of our callers this afternoon. A $100 Westfield Voucher. It is property law today. So if it is anything related to some kind of transfer you are doing from property, a purchase of an investment property, you’re not sure of something off the plan, maybe something related to the staking out or rezoning of an area. Maybe you’d like to ask Paul a question on an aspect on that. And also acquisitions, we’ve got WestConnex under way. We’ve got various acquisitions of land associated with the WestConnex and various light rail routes and there are some very upset people. What are your legal rights when it comes to acquisitions? And you can catch all the kind of advice you hear on his particular segment through your local newspaper where Turner Freeman holds their Legal Matters column and they’ve got legal topics covered like compensation and negligence law, family and employment law, wills and estate law and superannuation and disability claims. 131873 is the telephone number. Don’t miss out if you’ve got a question, don’t leave it too late, usually there are people hanging on the board at the end and I get quite disappointed for them but the earlier you get in, the more likely it is your question will get answered by Paul Sant this afternoon. Paul. Thank you so much for coming in.
PS Thanks Chris.
CS I wanted to bring up this acquisition. Today we’ve heard from David Borger from Western Sydney Business Chamber that we’ve now got a new light rail or should I say, light rail route through Western Sydney and when you look at the route just so that people can understand it, it starts from Strathfield in the East, goes through Sydney Olympic Park, through Camellia, which is east of Rose Hill Course. It hits a junction on the, near the Rose Hill Race Course precinct. It then goes north to Carlingford via Rydalmere and then it goes west via the Parramatta CBD up to North Parramatta and down to Westmead just so people can get an understanding of where it’s going. There are some areas where there are corridors that the Government already has in their possession, but most of the area will have to be acquired to some degree. What happens when the man knocks on the door or leaves a letter in your letterbox and says your house has been earmarked for acquisition? We will value it for you and get back to you. Apart from panicking, what else can you do?
PS Act. That’s what you’ve got to do. Act. The Government has got rights to compulsory acquire property. So if they want to put a road where your house is, there is very little you can do about it. It’s going to happen. Once they’ve decided this is the route we are going to take, we want your property. Usually they’ll send you a letter saying, listen your land, your property is within the area that we are going to acquire, we are going to arrange a valuation, we’re going to come back to you with a figure. So what they do is they try and negotiate a settlement, which is you know, which is good. You don’t get a letter saying, hey you’ve got 60 days get out. That comes later.
PS It does literally.
CS So they get a valuation……
PS Yes they’ll do a valuation…..
CS Will the Government valuate?
PS No they are independent .. they use independent guys now.
CS And you should do the same no doubt?
PS Yeah, because they will get a Valuer and then watch you and write to you and say, right we are going to off you….. this is the amount of money the market value of the land, because it’s not just the market value, it’s a whole stack of stuff, market value, special value, if there’s a special benefit that you’ve got, severance, if you own say the block next door and that value of that land is going to be affected because you are going to be losing this block disturb them. So they pay for the legal fees. They pay for you to getting another valuation. They pay your stamp duty costs of buying another property. Your removalist costs. There’s a whole stack of stuff they……
CS Which they are obliged to pay for?
PS Under the Act. Under the Land Acquisition Just Terms Compensation Act, 1991, they are obliged to pay. Send you a letter detailing. Then the worst thing you can do is stick it in the bottom shelf and forget about it. That’s just dangerous stuff. What you then do you usually then go see a lawyer….. they come and see a lawyer. We’ll arrange usually our own Valuer. We’ll get them get their valuation, then we can start negotiating and then we usually negotiate a deal. Now the problem is if you do nothing, at a certain point in time the Government says we want it whether you’ve agreed or not, we are taking it now because…..
CS And they can….
PS And they can and once they gazette it, then literally I think you’ve got about 60 or 90 days ……. the land’s theirs…..
CS So the advice is to go in and be part of the negotiation. If you want to protest, go and protest and hold a big placard and put a big sign in your front yard, do all of that but make sure you spend time negotiating before it becomes too late…
PS Yes that’s right. Once it’s gazetted then you’ve got a 90 day window to go to the Land and Environment Court.
PS And that’s it the land’s theirs. The Governments taken it.
CS Interesting. Maybe you’re in this situation at the moment right now going through it. Maybe can shed some light on what you have experienced. 20 minutes to 2 o’clock. Steve, go right ahead. Paul Sant is listening.
Caller 1 – Steve
Steve Good afternoon Paul.
PS Yes Steve.
Steve I had an investment property I’ve had for 5 years and I’m looking to actually move into that property to make it my own residential property
Steve I’m wondering what the tax ramifications are on that in regard to the equity that I have built up in the property?
PS Um, that’s more of a tax question, but the tax implications arise when you then sell the property. If it was used primarily. If it was used for all the period of time as an investment property, you would pay tax on the profit you make from the purchase price to the sale price, less you know real estate costs, stamp duty deductions that sort of stuff. If you’ve moved into it. Now let’s assume you are in it…. you have it for 10 years and you’ve rented it for 6 and you’ve lived in it for 4, then the way I understand it is 6 tenths of the profit is liable to capital gains tax.
PS So it’s a proportionate on the use that you’ve had during the ownership of that property.
Steve Okay, excellent.
PS And it only kicks in when you sell.
Steve No worries excellent.
PS So you sell it at the right time …..
CS You’ve got what you wanted. Roger. A question for Paul – go right ahead.
Caller 2 – Roger
Roger Yeah, good morning – or good afternoon Paul and Chris.
CS Good afternoon.
PS Good afternoon.
Roger My wife was working for a guy and we loaned him some money for his business. He promised to repay the debt personally. The business has folded. His property is now up for sale. Am I legally entitled to put a caveat on the property to recover our debt?
PS Um, the property. Is that his residential property?
Roger His residential property.
PS No. The only way you are entitled to maintain a caveat and the caveat doesn’t recover that – all the caveat does is to stop him from dealing with that property.
PS You have to have a right either pursuant to an agreement or some right created in law on that property. Now usually if I’m doing a Deed of Loan for someone, we will create a clause in the deed that says that the borrower grants a caveatable interest to the lender to lodge a caveat on the property where it protects…. But if you haven’t got that by merely borrowing from someone, you can’t do it. What you have to do is to enforce your…. get an order from the court and then you may be able to enforce it by way of lodging a caveat or a writ on the property depending the amount of the judgment, but….
Roger He gave us a personal guarantee…..
PS In writing?
Roger No – verbally to my wife and I.
PS Yes. it’s still not…… it doesn’t still create….. just because he’s…… that means he’s personally guaranteeing the loan, you might get a judgment against him personally but again that on its own will not give you a caveatable interest. You can create a caveatable interest however if you actually did work or yeah – you did work on that property and you could have gained yourself an interest. For example, I don’t know build an extension or something and the guy hasn’t paid you, then you can probably lodge a caveat, but there are…… and if you lodge a caveat without justification you could well be up for damages. People talk about lodging caveats left, right and centre. but you’ve got to know what you’re doing.
CS Yeah, he probably needs to get some advice in terms of recouping his money in another direction.
PS Yeah, get the judgment and then you’ve got something to play with.
CS Geoff, go right ahead.
Caller 3 – Geoff
Geoff Good afternoon Paul and Chris.
Geoff I have a home insurance question. My neighbour claims that if a true from his property falls on my property, then his insurance company isn’t viable for the damage to my property and I have to claim from my insurance, is that correct?
PS Good question, depends on the terms of the insurance policy. I’m not sure if that’s right because….
Geoff It sounds right ……..because I was thinking of no-claim insurance… You know like car insurance…
PS No, no, no it doesn’t work in these cases. But if the tree is on his property. I’ll give you an example many many years ago. A tree from a neighbouring property was uprooting my client’s driveway and we sued him and his insurance company paid to fix his driveway. Same reason there. The tree’s on his property and usually your home insurance covers for damage which is caused by something situated on your property. I think what he’s trying to do is avoiding having to pay…. you know…
Geoff The excess
PS The excess fee yeah…
Geoff I think he was claiming though that his insurance company couldn’t pay for damage to another property and that it was up to say, in my case my insurance to pay for it…. which …….
PS Well you can always go through your insurance company which will probably be your first port of call and make a claim back from his insurance..
Geoff Yeah, okay. That sounds right to me.
CS Good on you Geoff. Thank you very much for that. Julie in Campbelltown go ahead.
Caller 4 – Julie
Julie Oh hi, good afternoon.
CS Good afternoon. How are you.
Julie Good. Just a quick question. I have an investment property and it’s rented out through a real estate. I was wanting to put in the backyard of that property a really big children’s claiming frame, you know monkey bars, swings, two storey type of big outdoor setting, do I need to legally somehow safeguard myself from being sued or something like that if one of the children of the tenants was to hurt themselves?
CS Good question.
Julie Where do we stand for those types of things?
PS I wouldn’t
Julie I’ve been wanting to put a fence around it like you do with it like the pool or what’s the go?
PS No, I wouldn’t. And this is a very good reason to do something like that. I wouldn’t be doing it.
PS You’re just asking for trouble.
CS You’re trusting to a great degree on the kindness of your tenants.
PS And also the common sense of the tenants.
PS You know people do strange things.
CS All right Julie. Thank you. We’ve got to take a break. I’ll come back with more of your calls for Paul Sant. Our Legal Segment this afternoon. A $100 Westfield Voucher of course to one of our callers between now and 2. Chris Smith across Australia.
CS 10 minutes away from news at 2 o’clock. So many people want to ask questions on the subject of property law. Paul Sant from Turner Freeman is here with us this afternoon. Margaret go right ahead.
Caller 5 – Margaret
Margaret Yes. Good afternoon Chris and Paul.
PS Good afternoon.
Margaret Yes – the Government is currently encouraging us seniors to downsize. Could you please explain the difference sort of property titles that retirement villages offer and what sort of security of tenure do the residents have?
PS Ah, good question. It will go on…. the answer could go on for a long long time. Retirement villages usually have a lease. A leasehold tenure. You lease the accommodation for usually 99 years. The provisions… I mean usually you’d have to pay a bond even to acquire that lease and then they take a certain amount per week for the facilities that they provide. Different agreements provide ….. I mean it’s just a variety of stuff like, for example, if the value of your unit goes up, are you entitled to any capital gains?
Margaret Yes… Yes…..
PS Well some say yes, some say no.
PS Some ….. you take a percentage. You really have to look at it and compare them.. they are so different they are incredible…
PS The big but there for me is the entitlement to any capital gain because the nursing home gets the gain, instead of you know you might have paid $800,000 to get in, they now get a million dollars to get in, they get an extra 200 plus they’re taking x percentage out of your bond for the first eight or ten years or whatever it happens to be.
Margaret Oh, right.
PS So you really….. you need to just look…. if you are looking at different nursing homes, just compare the provisions that apply when you……
CS Then there’s that bond that you put down which depending on where you can be quite an amount of money Margaret.
Margaret Really? Oh and what sort of security of tenure do the residents have in a retirement village?
PS Well the accommodation is your rights actually are regulated by I think there is a commissioner for or a ……..an independent body set up to regulate retirement villages. So they can’t actually kick you out unless there are good reasons.
Margaret Right. Yeah.
PS Now if you cause trouble left, right and centre. They will definitely get you out and the commissioner will approve it.
CS Yeah. Margaret, I’ve got to move on now. I want to get to as many as I possibly can. It’s one of those things where you almost need to take your contract which you get from the retirement home to an accountant or a lawyer to have a read through it to understand it. Because I know I’ve got one for mum and it’s about 24 pages in length.
PS Geez that’s a small one….
CS Is it?
PS I’ve seen bigger than that.
CS Yeah. Margaret, thank you very much for your call. Holmes. Hello.
Caller 6 – Holmes
Holmes Hello Paul and Chris. Thanks for taking my call.
CS That’s okay.
Holmes I’m just wanting to know, we own an investment property. Actually it’s interest only and my son has been renting it from us and we are wondering if they can take the loan over for what we borrowed rather than…. if we can just transfer the loan to them?
PS You can’t transfer the loan to them unless you transfer the title to them. To transfer the title to them you must value the property and pay stamp duty.
Holmes So you’d have to value it?
PS But….Yes – you’ve got to….. as if you’re selling it to them. Now whether you are actually taken a whole coal of cash or not, that’s another issue. You have to value it. You have to pay the stamp duty. You transfer the title and then they can refinance depending upon capacity into their own name.
Holmes All right. Thank you very much.
CS All right Holmes. Thank you.
PS Just be careful on that issue by the way. You are renting it to your son. It’s probable a capital gains tax asset. You may be up for capital gains.
CS Yeah. You see the tax man about that one. Steve. Go right ahead.
Caller 7 – Steve
Steve Yeah g’day boys, how are you?
CS Good thanks.
Steve Good Good. Mate, we’ve just exchanged contracts on selling the property. The cooling off period was about to expire last week and the buyers are extending the cooling off period 5 days to 10 days……
Steve And also drop the deposit to a 5% deposit.
PS Yep. Quite usual.
Steve We agreed to that. Now the cooling off period finishes tomorrow.
Steve However, yesterday they rescinded on the contract stating that the pest inspection – the place is infested ………
PS Whatever reason – it doesn’t matter for a reason – they are entitled to rescind – you’ve extended the cooling off period – but they forfeit their .25%.
Steve That’s correct. There’s nothing else I can do?
PS No mate. They’ve got the…….. once they’ve extended the cooling off they can pull out for whatever reason…. they don’t have to be legitimate otherwise, they just changed their minds full stop. They can. They forfeit the .25%.
CS Back to the drawing board Steve.
CS And a $100 Westfield Voucher to you mate just to get you through this terrible period.
Steve Thank you. Thank you very much.
CS You’ll be right. There’s always another buyer around the corner.
PS Although less and less.
CS Yes exactly. Steve, stay right there and we’ll put you through to Carla and we’ll get you the $100 voucher. Who will we take… we’ve only got a change for one more. Sam. Go ahead.
Caller 8 – Sam
Sam Oh yes I can go on…. Hi guys.
Sam I’ve got um joint name on our property with my late wife. Is there any time plan to remove her name from the property or not?
PS No there isn’t but you look you need to do it… Don’t let it sit there. It’s going to create a problem because if you then pass away, you have to …… it’s got to be done double and whilst you are alive it is very easy to do a Notice of Death. You produce a death certificate, fill out the Stat Dec, it gets done very simply.
Sam Do I need a lawyer to do that or not please?
PS Have you got a mortgage on the property?
Sam Yes there is a mortgage ….
PS No –you best get a lawyer because you’ll need to deal with the mortgagee as well.
Sam Yeah I rang the ….. our lenders and said that they don’t care. So what about…..
PS Well they do care because they won’t produce the title…
Sam Oh okay – so they gave me the wrong information then.
PS No they will have to get involved mate.
CS Yes… Sam all right – all the best. Interesting question but you’re right, it becomes more complicated when both on the title have passed away.
CS Yeah. All right Paul. Thank you very much and a merry Christmas to you and thank you for your contribution to the program throughout 2015.
PS My pleasure.
CS You’ve been very very helpful to us and thank you very much to Turner Freeman for the chat today. Property law – we’ll do it again next week when Warren Moore hosts the program. Plenty coming up in the show including a move by a Sydney council to ban bamboo….