The Importance of Having a Will

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The Importance of having a Will

After you have bought your house and moved in, the final part of any property transaction should be the preparation of a Will. If you already have a Will then now is the time to review it. In fact, after you have completed any major financial transaction or had children you should review your Will to ensure that it reflects your changing circumstances. In the event that nothing has changed you should still revise your Will regularly.

But what is a Will and why is it so important?

A Will is a formal legal document through which you express your final wishes and determine the distribution of your property when you pass away. This means through your Will you will decide and control who gets your property, known as your estate and how much of your estate the beneficiaries are entitled to.

Unfortunately nearly half of all Australians do not have a Will. And for those who do have a Will it may not be a true reflection of their wishes. Some people also take short cuts when doing their estate planning, such as using an online will or a Post Office Will kit. Often mistakes are made rendering these cheap Will alternatives invalid.

If you die without a valid Will the law decides who gets your assets. This is called ‘dying intestate’.

These laws apply to everyone and do not take into account an individual’s wishes or situation.

Should a person die without a Will (and assuming that person had no children), their domestic partner will inherit the estate. A domestic partner can be either a legal spouse or a defacto (of either sex) who had been in a relationship with the deceased for a minimum period of 2 years.

In the event that the intestate deceased had children, a spouse or domestic partner is only entitled to the first $100,000 of the estate plus one third of the balance. The remaining two thirds of the estate will be distributed equally amongst the surviving children. This is not a good outcome for the domestic partner of the Deceased and invariably leads to expensive court proceedings.

Should the intestate be single and have no children the next in line to inherit the estate is the parents. Following this formula the next in line is the siblings, followed by grandparents, aunts and uncles, great-grandparents, nieces & nephews, first cousins, great nieces and nephews, first cousins once removed, second cousins and finally remote kin.

When there are no surviving relatives or they cannot be located, the estate passes to the government.

In order to deal with the deceased’s estate, someone will need to apply to the Supreme Court for a grant of ‘Letters of Administration’. In most instances this person is the spouse or next of kin. If no such person exists, the Court will appoint any person it thinks fit.

Once Letters of Administration has been granted, the person making the application becomes known as the ‘Administrator’ and will then deal with the deceased estate in accordance with the law.

The major shortcoming of dying intestate is that your assets will not be distributed in accordance with your wishes. Someone who you would want to provide for may in fact miss out entirely on an inheritance.

Expensive disputes inevitably arise when a person dies intestate. These disputes inevitably pit family members against each other.

The purchase of a property provides an opportune time to draw up a will or update an existing Will.

As always this article contains general information only and should not be relied on for detailed advice related to your particular circumstances. Should you require such advice, please contact your lawyer.

Adam Zuchowski is a principal property lawyer with Network Legal & Associates, which includes an experienced Wills & Estate team.

Contracts of Sale

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The key to contracts

Anyone buying or selling property is required to enter into a Contract of Sale.

The Contract of Sale in the context of a property transaction is the single most important document. It sets at the rights of the parties and provides the parameters or a map as to how the transaction will be conducted. Should a dispute arise, it will determine how that dispute is resolved.

Ordinarily the seller’s lawyer will prepare the Contract of Sale and for that reason it will be heavily weighted in the sellers favour. As the majority of property in Victoria is sold via public auction, at the conclusion of that auction the winning bidder is required to execute an unconditional Contract of Sale. Thus the purchaser is very rarely provided with the opportunity to amend the Contract of Sale.

Clearly this is a very important document, but what actually is a Contract of Sale and why is it required?

The Instruments Act requires that any agreement for the sale of land be recorded in writing. Any other agreement, such as a verbal agreement is not enforceable.

When a real estate agent provides the Contract of Sale, they are required to use the form of contract contained in the act.

This contract will contain all the essential terms of the transaction including details of the purchaser and seller, the day of sale, details of the price and deposit, including how and when it is to be paid, details of the property and chattels (those fixtures and fittings forming part of the sale) and settlement details.

Additionally the contract will also contain all the prescribed general conditions and if necessary, any required special conditions.

It is worth noting that lawyers are permitted to use their own form of contract.

When a real estate agent refers to the submission of a written offer to the seller, what they are actually requiring is that a Contract of Sale is filled out with all the above details and then the purchaser’s signature on that contract.

By signing the contract a purchaser is confirming that they intend to be bound by it. The real estate agent will then submit that contract to the seller. Should the seller be happy with these terms he or she will then also sign confirming acceptance of your offer.

As this stage the contract crystalizes and comes into existence. This means that there is a binding and enforceable contract between the parties.

Part of the contract documents must also include, what is known as a Section 32 Statement or Vendors Statement. The name is derived from section 32 of the Sale of Land Act, which obligates a seller to provide to the purchaser certain information about the property being offered for sale.

Interestingly the Act requires the seller to provide the buyer with the Section 32 statement prior to the execution of the contract.

In the event that the Section 32 Statement is incomplete, the Act provides the buyer with the ability to end the Contract of Sale and the refund all deposit monies. However the Act further provides that should a buyer be no worse off as a result of the non-disclosure, there is no ability to end the Contract.

As such a buyer should not automatically make the assumption that a technical breach will provide them a basis to end the contract.

As always this article contains general information only and should not be relied on for detailed advice related to your particular circumstances. Should you require such advice, please contact your lawyer.

Adam Zuchowski is a Principal Solicitor at Network Legal & Associates. Adam is well known for his work within the property sector and has previously written for many publications including a regular column in the Herald Sun.

Early Release of Deposits (Section 27)

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Deposit is the fail-safe

Ordinarily the deposit that is paid by a purchaser when they purchase a property is held by the real estate agent in their trust account and is only released to the Vendor when the transaction is complete.  That is, when the purchaser pays to the vendor the balance of the purchase monies and the vendor provides the title to the purchaser.

However in Victoria, section 27 of the Sale of Land Act uniquely provides in certain circumstances, a vendor is able to access the deposit funds prior to the settlement. This provides the vendor with opportunity to use those funds for such things as reducing debt or as a deposit for a replacement property, etc.

In order to obtain an early release of the deposit, the following conditions must be satisfied:

  1. The purchaser has accepted title or deemed to have accepted title;
  2. There are no further conditions enuring for the benefit of the purchaser;
  3. The vendor provides the purchaser notice in writing advising details of any mortgage, if applicable, or the existence of any caveats, again if applicable. Such a notice is known as a Section 27 Statement; and
  4. The purchaser is satisfied with the particulars provided and gives written notice to the vendor consenting to its release within 28 days of being provided the above particulars.

Should the purchaser fail to respond within that 28 day period, that is either expressly providing consent or an objection to the release, the act makes the assumption that the purchaser is deemed to have authorised its release.

For this reason, it is vitally important that a purchaser expressly respond.

In the event that a purchaser does consent to the early release, the real estate agent is then authorized by the act to deduct from the deposit any commission or selling expenses payable by the vendor and remit to the vendor the balance of deposit funds.

However a purchaser is legally entitled to and often does object to an early release.

If there are still conditions in the contract of sale enuring for the benefit of the purchaser or if there is excessively high debts secured against the property, for example in excess of 80% of the sale price, the purchaser is not obligated to and in all likelihood will not consent to the early release of the deposit.

As the act specifically makes reference to the phrase ‘any conditions’ it is worth noting that a contract of sale is subject to many conditions, the most basic being the obligation to deliver the property at settlement in the condition it was when purchased.

Viewed in this context, there will always be conditions enuring for a purchasers benefit right up until settlement is completed. As a matter of practicality it is impossible to satisfy this condition.

Should a Purchaser be so inclined, they posses the ability to refuse to an early release.

Clearly the drafters of the legislation did not intend for the above circumstances to arise, however until such time as the legislation is changed, a Vendor should not be reliant on the use of deposit funds.

As always this article contains general information only and should not be relied on for detailed advice related to your particular circumstances. Should you require such advice, please contact your lawyer.