Getting your residential property ready for sale is all about ticking the numerous boxes to ensure that once you have an interested buyer, the transaction goes smoothly and hopefully without delay. Crucial to this, of course, is ensuring that you have all the requisite certificates up to date. In this context, as you would expect in the haste of taking a property to market, sellers can miss a few things. In this podcast, Olenska Calvo, a Solicitor at Big Law, will be discussing the requisite certificates that you need to sell your property.
Transcript
At Big Law, we’re big on providing you great legal help. If you have a family law, business law, bills and estates, commercial law, or conveyancing issue, we’re here to help. Now, here is your podcast.
Dan: Getting your residential property ready for sale is all about ticking the numerous boxes to ensure that once you have an interested buyer, the transaction goes smoothly and hopefully without delay. Crucial to this, of course, is ensuring that you have all the requisite certificates up to date. In this context, as you would expect in the haste of taking a property to market, sellers can miss a few things. In this edition of the podcast, I’m talking with Olenska Calvo, a Solicitor at Big Law, and we’re discussing the certificates that you need to sell your property.
Olenska, what certificates do you need to sell your property?
Olenska: Dan, the standard REIQ contract is the contract most commonly used in Queensland for the sale of properties. And that contract has some obligations for sellers to provide certain certificates. Now, those certificates are the smoke alarm certificate, an ATO clearance certificate, and the pool safety certificate.
Dan: Great. Why does a seller need a smoke alarm certificate? I suppose, what are the consequences of not actually having one?
Olenska: In 2022, there was some new legislation introduced to do with smoke alarm certificates, and it’s required for all sales of property. Now, that legislation requires the smoke alarms to be interconnected, photoelectric, hardwired. If they’re not hardwired, they must be powered by a non-removable lithium battery with a 10-year lifespan. To prove that those smoke alarms are compliant with that legislation, the sellers of property are required to provide a certificate from a qualified electrician to confirm their compliance. If the seller doesn’t provide a certificate proving that compliance, then the buyer under the contract is actually entitled to a reduction of 0.15% of the purchase price.
Dan: Wow, okay.
Olenska, tell me about an ATO clearance certificate. What are they and what are the consequences of actually not having one of these?
Olenska: The ATO clearance certificate confirms that a seller of property is an Australian resident for tax purposes. The standard REIQ contract and the Australian Tax Office require that the certificate to be provided by a seller if the property being sold exceeds $750,000. However, it is important to note that that requirement is changing from the first of January, 2025. It will now affect from that date all properties regardless of the purchase price. That $750,000 amount is being reduced to zero. It affects all sellers of property from the first of January, 2025. The form to obtain that certificate is lodged online through the ATO website and either a seller’s solicitor or the accountant can assist in obtaining that certificate. If that certificate is not provided, then the buyer must withhold and pay 12.5% of the purchase price to the ATO. Now, that percentage is also changing from the first of January, 2025, and it’ll be increased from 12.5% to 15%. It is really in the seller’s best interest to get that certificate sorted as soon as possible so that that percentage isn’t withheld and paid to the ATO.
Dan: Now, Olenska, it’s summer here in Australia at the time of recording this podcast. Obviously, a lot of buyers may well be looking for a property that’s got a pool. Let’s talk about these pool safety certificates. Firstly, what are they and what are the consequences of not having one of these?
Olenska: The pool safety certificate is only required for homes or properties with pools. If the seller is selling a property that’s a home with a pool, then they will need to get that sorted. Or if it is a property within a body corporate scheme, then that’ll be the body corporate’s responsibility to obtain that certificate. Now, the pool safety certificate is obtained by a qualified pool inspector, and they’ll be checking that the pool is compliant with the current pool safety regulations. Now, somebody can purchase a property or you can sell a property without a pool safety certificate. However, if a seller chooses to do that, they’ll need to give the buyer a notice of no pool safety certificate. However, usually the seller’s real estate agent will assist and make inquiries at the time of listing the property for sale to find out whether a pool safety certificate exists or if it doesn’t. If the seller decides to go down the route of selling the property without a pool safety certificate, it will then be up to any prospective buyers to decide whether or not they’re willing to proceed with the purchase, notwithstanding that there isn’t a certificate.
And then the buyer then has 90 days after settlement to obtain that pool safety certificate.
Dan: Now, it goes without saying that when it comes to property, obviously, buyers and sellers want a quick settlement. How do these factors that we’ve just spoken about, if they’re outstanding and not addressed quickly, do they impact on a potential quick settlement?
Olenska: Yeah, they certainly do, Dan. I guess it’s important for buyers and sellers to really bear in mind these obligations when determining a settlement date and negotiating the contract, particularly the ATO clearance certificate and the smoke alarm certificate, which have a monetary consequence through the seller’s. You don’t want to be in a position where you’re a seller and you’re potentially settling quickly, but you’re not You haven’t paid the entire purchase price because you haven’t got those certificates sorted. I think if you’re a seller and you’re looking to sell your property, you should begin the process of obtaining those certificates as soon as possible so that you not having to deal with these things last minute to get your settlement sorted.
Dan: And Olenska, how can the team at Big Law help both buyers and sellers?
Olenska: I think If you’re a seller and you’re looking at selling your property, if you can get in contact with us as soon as possible so we can have a discussion about where to and how the best way to proceed is with getting these certificates and getting your home or property ready for sale, then that’s certainly a good idea. So we can help explain these things to you and work with you towards that goal. But also if you’re a buyer, letting us know when you’re looking at purchasing a property so we can check the contract to make sure that you’ve got a right under the contract with some of these things. For instance, including a due diligence condition or if you are looking at purchasing a property with a pool, seeing does a pool safety certificate exist, so you know about that at the time that you’re putting your offer in rather than leaving it to the last minute and checking those things when you’re already under contract.
Dan: Olenska, thanks for joining me.
Thanks for listening. Need further information? Visit us at biglaw.com.au.
