BSBCNV615: Case Study Real Estate

Scenario

Janet and Ben Green are new clients of NBI Conveyancing and are consulting the team about the apartment they recently purchased for 900,000 dollars. This apartment is an energy efficient gem located in the heart of the city. The apartment has solar power for heating and does not have any air conditioning.

The residents in the block of units rely on an external tank for water. The complex does not have any parking facilities, but there is a lockable bike storage for residents to use.

It has a great community garden with planted herbs and vegetables for complex residents to use and enjoy.

The Owners Corporation fees are around $500 a quarter and are priced reasonably below the average market rate for a complex of that size. The council rates are $2000 per annum.

The vendor in this scenario is Eco Buildings of Australia Pty Ltd and they were the original developers of the complex. They hold the title for 6 apartments in the building and have been managing the complex for the last few years.

Janet and Ben opted for an extended settlement date as they live in a small family home owned by their Janet’s grandmother and would like some time before they commence their mortgage payment on the new apartment.

Ben is a software developer with a reliable income and runs a small digital agency. Janet is a yoga instructor with an unreliable income. They have two cats, Tabatha and Ginger.

Ben and Janet’s funds for the property will be financed through Loany Wealth with the loan amount being $600,000 and Janet’s grandmother funding the balance. Settlement for the property is due on 27th December.

The title register statement shows the property is attached to a registered mortgage to Westwealth Bank (for $780 000), and a caveat lodged by Eco Building Materials (claiming an amount of $25000). As well as the register statement, the vendor’s statement also has attached council and water rates and land tax certificates and Owners Corporation information as required by the legislation, except the copy of the relevant Owners Corporation rules. The contract of sale is in the standard form with no extra special conditions. Your supervisor asks you to prepare a file note with reference to appropriate legislation, contract terms and/or cases, in relation to these queries raised by your purchaser clients.

Questions

a) You have just received a road construction notice from the vendor, dated two days after the contract was signed. Can Janet and Ben elect to end the contract? If they proceed, can they deduct the price of the road construction charges from the amount due at settlement? Explain your answer in a short paragraph.

b) In a short paragraph, identify and explain the requirements that would need to be satisfied in accordance with the Sale of Land Act to the release of the deposit to the vendor. Can the purchasers object to the release of the deposit? You can refer to the appropriate legislation within your state.

c) Explain to Ben and Jane why you need to conduct your own title search and not rely on the vendor’s statement. In your explanation the purchasers’ explain what type of information is included in a title search result. You will need to include a minimum of three (3) items that are included in a title search result.

d) The vendor has a large land tax bill of $3400 which concerns both Ben and Jane. Would they have to pay any of it considering they plan to live in the apartment as their home? Will the vendor be able to claim reimbursement of any of the council rates and body corporation fees which they have paid in full? Advise Ben and Janet accordingly. You do not need to make any calculations to answer this question.

e) Ben and Janet conduct an inspection of the property and report back that the length of the property seems to be a bit over a metre shorter than the title plan indicates. This will mean that community garden is a little closer to the fence than they should be. How will this affect the claim? Explain your answer in a short paragraph.

f) Summarise the requirements of two financial institutions, NAB and The Bendigo Bank, in applying for and creating a mortgage on behalf of the purchaser. You will need to conduct online research to access the lending requirements for both banks.

g) In the case study scenario if settlement is delayed by a week because the purchasers’ bank has lost their mortgage documents, Janet and Ben want to know the possible consequences that may result under the contract? Advise them.

h) Ben and Janet call your team in a panic and advise them that that they want to end the contract because the Body Corporation rules prohibit more than one animal, and the zoning will not allow their plans for an “at home” business. They were planning some weekend work offering dog grooming and pet minding services. Can they rescind the contract? You may refer to s32 of the Sales of Land Act.