Conveyancing

The Commercial and Industrial Property Tax Reform Bill (the Bill) was introduced into the Victorian Parliament on 20 March 2024. The reforms are expected to pass into law in early May before commencing on 1 July 2024.

LPLC is continuing to see conveyancing claims where practitioners have assisted clients transferring property to a spouse or domestic partner, with an exemption from paying land transfer duty under section 43 of the Duties Act 2000 (Vic) and have failed to provide adequate advice about the criteria for the exemption.

In 2023 the Legal Practitioners’ Liability Committee published an article highlighting important changes in Victorian Property Tax.

Since then we have received many enquiries about the Vacant Residential Land Tax (VRLT) which was also discussed in that article. To assist practitioners we have below provided short answers to some of the more common questions we have received.

Significant changes to the unfair contract terms (UCT) regime in the Australian Consumer Law commenced on 9 November 2023. Almost all Australian businesses are affected by the UCT regime and should review their standard form consumer contracts and small business contracts to ensure they do not include any 'unfair contract terms'. Legal practitioners providing contractual advice are expected to be aware of and understand the changes to advise their clients. Failing to do so may result in severe consequences for clients (including substantial penalties) and expose practitioners to professional negligence claims.

Practitioners should always be alert to signs that an elderly or vulnerable client’s transaction is being facilitated by another person with a direct or indirect interest.

The new Windfall Gains Tax (WGT) introduced by the Windfall Gains Tax and State Taxation and Other Acts Further Amendment Act 2021 commences on 1 July 2023.

In broad terms, WGT applies to land rezoned after 1 July 2023.

Practitioners need to be across the issues now, particularly if negotiating long term sale contracts, or options, that will settle after that date that may then be subject to the WGT.

We've put together information and resources to help lawyers understand the legislation, manage the associated risks and provide guidance about how to act now to avoid surprises later.

The exemption for transfers between spouses or de facto partners changed on 1 July 2017 but some practitioners have not kept up with these changes. There are now many more requirements to meet before an exemption can be obtained and practitioners need to advise their clients about them. It is important to always check requirements and not rely on your memory when it comes to duty.

Some clients think preparing a transfer of land between related or associated parties, or parties well known to the practitioner should be a simple and cheap job. Based on our claims and comments from practitioners at our LPLC Risk Management Intensives, preparing a transfer of land is anything but simple.

The most common mistake when it comes to claims involving duty, involves not understanding that land development, particularly applying for a planning permit before nominating a new purchaser, will result in a sub-sale and incur a second amount of duty.

Managing the receipt and payment of trust money is not a simple administrative task and needs careful attention by practitioners to avoid claims.

'Foreign purchaser additional duty' (FPAD) provisions have now been in place in the Duties Act 2000 (Vic) (Vic Duties Act) for over five years.

From 1 March 2020, the Victorian State Revenue Office (SRO) changed its approach to FPAD in the context of acquisitions of residential property made by 'family' discretionary trusts. The change of approach has meant there has been, and will be, an increase in discretionary trusts found by the SRO to be foreign trusts liable to pay FPAD when acquiring residential property.

Practitioners practicing in conveyancing matters need to be aware of the way the FPAD regime works for discretionary trusts so that clients can be advised of its application.

Practitioners should always be mindful of the potential tax consequences of a transaction. Each year the LPLC sees claims where the practitioner has overlooked the tax implications of a matter or considered that it’s not their role to advise on tax issues, or recommend that the client obtain tax advice from a tax lawyer or accountant.

Acting in a conveyancing transaction includes certifying that identity and authority have been verified and where there is a paper title, that it has been obtained and either destroyed or invalidated. These certifications need to be taken seriously and only given if they are true. In the case of Trani & Anor v Trani & Ors (No 2) [2019] VSC 723 the Court found a conveyancer was liable for providing false certifications as to identity and authority to the Registrar of Titles.

The Victorian Legal Services Board and Commissioner has published a guide, E-Conveyancing: Regulatory Guidelines that contains the regulator’s expectations of practitioners conducting electronic conveyancing.

Practitioners may need to make changes to their current conveyancing practices in light of the regulator’s expectations. This article highlights 3 important areas covered by the guide and offer some risk management suggestions.

Subject to finance clauses have always been a source of claims but attention needs to be paid to them more than ever in this current uncertain economic climate. There are two recurring mistakes we see in claims that are particularly relevant at the moment.

Every year LPLC sees conveyancing claims where the cause of the claim is defective section 32 disclosure. To properly advise clients practitioners need to understand the vendor disclosure obligations in the Sale of Land Act 1962 (Vic).

The announcement by Land Use Victoria that all land transactions will be conducted electronic by July 2019 is a timely reminder that practitioners need to implement a process to either destroy any paper titles or make them invalid in accordance with clause 6 of schedule 3 to the ARNECC Model Participation Rules.

The decision to serve a default or rescission notice requires a clear understanding of what outcome the client is trying to achieve. Ambiguous wording or poor communication risks ending the contract before the client wishes. This article looks at when to serve which, and some of the common pitfalls involved.

Here are some handy hints to help you navigate your next GST question. The starting point for all GST questions should be: is the vendor registered for GST or required to be registered?

When preparing a S32 statement section 32I of the Sale of Land Act 1962 (Vic) requires that a diagram location document, identifying the land and location, be attached. How do you determine what the diagram location document is? A particular section of the Register Search Statement holds the key.

Unregistered easements like water and sewer lines must be disclosed in a Section 32 statement. LPLC sees many claims involving section 32 statements where firms have only included the client's water bills. Including a client's water bills is not enough - water information certificates may show unregistered easements.

Keep limitation periods at the forefront of your mind when taking instructions to act in indemnity insurance claims. Read the policy wording carefully to determine when the insurer’s liability arises and clarify quickly when the damage occurred.

Subscribing to electronic conveyancing is not a ‘set and forget’ process but requires checking regularly that you are complying with your subscriber obligations, particularly in relation to client authorisation, verification of identity, right to deal, document retention and system security. Regular checking should also mean that you are well prepared for a compliance examination and the subscriber review process.

This article covers five key things purchasers want to know from their lawyer.

Because conveyancing matters comprise a lot of moving parts, and often seems to be a routine process, it can be easy to lose sight of what is important to your client. Here are 3 things your vendor clients really want to know.

Have you had vendor clients tell you their owners corporation is inactive because they have never had any meetings?

The following article discusses security concerns in relation to receiving payment instructions via email.

A critical issue for any purchaser of an ‘off the plan’ property is ensuring the actual property accords with what they intended to purchase. Therefore, when giving pre-contractual advice to purchasers, it is essential to identify any deficiencies in documentation that could hinder a proper assessment by the purchaser.

Conveyancing clerks and lawyers should not assume that what appears to be a straightforward conveyance actually is a straightforward conveyance. It is important to read and understand the contract of sale, section 32 statement and any other relevant documents before advising the client.

Practitioners asked to act in transactions where parents lend money to their children to help them buy a house should stop and think about the transaction. Who are they acting for? Who else could think the practitioner is looking after their interests?

LPLC receives enquiries most weeks about the Federal Government foreign residents withholding regime. This article suggests some resources practitioners can refer to.

LPLC regularly receives calls from practitioners seeking guidance about a potential conflict when acting for both the vendor and purchaser of real estate.

At this stage (24 March 2017) of the 2016/2017 financial year property claims, including conveyancing and leasing, account for about 31 per cent of the number of claims. This is up from 26 per cent for the whole of the 2015/16 financial year.

Practitioners need to be proactive where there are time pressures in contracts of sale.

Practitioners need to ensure purchaser clients understand their obligations when a contract of sale is conditional on obtaining finance.

LPLC receives claims from practitioners who act in the transfer of family farms to trustees where the transactions are not exempt from stamp duty.

Sometimes claims arise where a practitioner acts for both the vendor and purchaser in a conveyancing transaction.

Practitioners need to take reasonable steps to verify the identity of clients in order to avoid claims, as well as comply with common law obligations and Victoria’s electronic conveyancing Participation Rules.

LPLC regularly receives questions from practitioners about the release of deposits pursuant to section 27 of the Sale of Land Act 1962 (Vic). They are usually acting for the vendor and are frustrated that the purchaser has objected to the release or refused to sign the section 27 statement.

This article from 2016 looks at a claim where the practitioner acted for a vendor selling their home under pressure from their mortgagee.

This article from 2015 covers claims relating to the use of rebate clauses. In addition to exposing practitioners to a complaint, the use of rebates can also expose a practitioner to a claim.

LPLC continues to receive claims arising from practitioners acting in intra-family transfers.

Did you know that LPLC has published a checklist of policies for law firms? Policy number 20 is about providing client documents to the client or another firm.

Unfortunately there is no easy answer to the enquiries LPLC has received from practitioners seeking our view on whether a lease needs to be included in a section 32 statement.

This blog contains a case study of a land tax claim.

This article considers cases about subject to finance and the sale of land and contains some risk management tips for avoiding claims, including Putt v Perfect Builders Pty Ltd [2013]

This article from 2013 covers the Congestion Levy Act 2005 (Vic) and how it relates to the preparation of Section 32 statements.

We have seen circumstances where extensions to ‘subject to finance’ clauses were misunderstood. Many subject to finance clauses provide for an ‘approval date’, being the date by which the purchaser’s loan must be approved.

When acting as stakeholder, you need to check that any conditions for disbursing the money have been strictly met and keep appropriate documentary evidence.