*A vendor sells a property that was built by her predecessors on title in 2003, and the predecessors were owner builders who failed to take out the relevant insurance but did obtain an occupancy permit. Does the vendor need to comply with s137B of the Building Act ie. the requirement for insurance?
No, because s137B(2) refers to “a person who constructs a building” as being obliged to comply with this section. As the vendor didn’t construct the building, there is no apparent obligation to comply.
I am selling my unit which shares a common area with another unit on the block. There is no active owners corporation (body corporate) and I do not hold any public liability insurance over the common land. Can I proceed to sell my unit without the relevant insurance?
No, Section 6 of the Owners Corporations Act 2006 provides that an owners corporation or vendor must take out public liability insurance for the common property with a cover of not less than $10M. Similarly, Section 11 of the Sale of Land Act 1962 provides that the owner of a property cannot sell a property unless there is an insurance policy in place in accordance with the Owners Corporations Act 2006. If a property is sold in contravention of this section the purchaser can avoid the contract at any time up until settlement. The consequence for a vendor selling a property means that it will be necessary to arrange public liability insurance in respect of the common property with a cover of not less than $10M and the Policy will need to be in place prior to the sale of the property. If you proceed to sell the property at auction or privately without having the insurance in place, the purchaser will have the right to avoid the sale at any time up until settlement. In saying this, pursuant to Section 7 of the Owners Corporation Act, in a subivision of only two lots, the legislation provides an exemption in relation to insurance and the owners of each lot may arrange their own building reinstatement and public liability insurance. In that situation, there is no requirement for a Vendor to provide Owners Corporation insurance for the benefit of the Purchaser.
* Law Institute of Victoria Diary 2005. Any information contained herein should not be relied upon and you should always obtain your own legal advice.
Capital Gains Withholding Tax
Why do I need to provide a Withholding Tax Certificate at settlement when i am an Australian Citizen?
If your property sells for $750,000 or above (the government has lowered the requirement for production of a Withholding Tax Certificate from $2M to $750,000 as at 1 July 2017) such sale will now be treated as a sale by a “foreign resident” for taxation purposes. Regardless of whether you are an Australian citizen or permanent resident, the ATO’s new legislation means that you are deemed to be a foreign vendor unless you provide a clearance certificate for any property sold for more than $750,000. This is also still applicable even in situations where the property being sold is your principal place of residence.
A clearance certificate, once issued, is vendor specific and is valid for 12 months.
If you fail to provide a Withholding Tax Certificate prior to settlement, the purchaser is obliged to withhold 12.5% of the sale price and remit it to the ATO. If this occurs you will only be able to reclaim that amount if you are not required to pay the tax, but you will need to wait until the end of the next financial year to do that. Therefore, it is in your interest to make an application for the Capital Gains Withholding Tax Clearance Certificate in the early stages of selling your property.
You can read more about this on the ATO Website: