Reasons to Set Up a Trust to Buy Your Property

When you purchase a property, you can buy it in your personal name, a company name or even a trust.  The trust must be set up before hand and have a trustee to manage the trust (which could be yourself or a company you own).  Now, why should you undertake a complex procedure like this to buy a property? Well, there are several reasons why savvy investors do this and here are some of them that can help you decide whether you too should follow this strategy.

Asset protection

This is one of the top reasons why people opt for a trust to buy and hold their properties. The assets held by the trust are safe even if you have to declare personal bankruptcy. This means that your creditors can create a lien on your personal assets but not on those held through the trust. The property cannot be taken over in lieu of your debts by any creditor. Of course, there are conditions that apply, namely that the property should have been purchased via the trust a specific number of years before your bankruptcy situation. If you want to make sure that the property is protected for your future generations, this advantage makes a trust a good choice for you.

Fewer complexities in transfer

A trust makes it easy for you to ensure that the property passes on to your heirs quickly and without legal complexities in the event of your death. This is one good reason to consider if you expect someone to challenge the claim of your heirs to your assets in particular. Buying and holding your property through the trust makes your stance clear on what you want to be done with the property, and the procedure for transfer of rights is clear cut too with a trust.

Tax benefits

Of course, the tax benefits are a big plus point for buying and holding property via a trust. It may be possible to avoid a big chunk of taxes including capital gains and stamp duty when the property passes to someone within your family, provided it is held in a trust. This gives a significant financial benefit to your heirs.

Please note that it is important to decide on the buying entity before signing a contract or there could be potential implications, such as stamp duty issues. We also strongly recommend that you seek the advice of an accountant regarding tax and other financial benefits regarding trusts.

If you want more information or help with buying a property via a trust, approach a professional law firm in Queensland, Australia.

 

Unapproved Alterations When Purchasing Property

The old saying of ‘buyer beware’ still rings true when purchasing a house in Queensland.  This is especially important when it comes to unapproved alterations or extensions to a property.

When you’re considering buying a house it is important to be aware of where the risks and responsibilities of the purchase process lie at any given time, as they often shift as the process moves forward. Unapproved alterations and extensions to a property are one these shifting responsibilities.

Prior to signing the contract of sale, it is the responsibility of the seller to ensure that any alterations to the property have the required Council approval.  If no notice has been issued by the Council in relation to the work, then there is no requirement that the seller comply with the required approvals prior to entering into the contract.   Further, the seller is not legally obliged to disclose this material information to a buyer.

Former Queensland Fair Trading Minister Peter Lawlor described the situation as follows:

While a real estate agent needs to verify the material facts when selling a property and encourage the seller to disclose all information, there is no obligation or legal requirement for the agent or seller to conduct building and pest inspections, or conduct council approval surveys prior to listing a property for sale.”

Once the contract is signed, the responsibility for these approvals shifts to you; the buyer, who is left with having to deal with the unapproved structures.

You may think that you are protected under the pest and building inspection clause and you will be able to terminate the contract on these grounds.  This is not the case in Queensland.  These inspections are limited to looking at the structural integrity of the house as opposed to whether it has the required Council approvals.

While standard practice in a transaction is to conduct a building and pest inspection as part of the purchase process, an inspection of Council building approvals is not part of the standard process.  Regardless, once the contract has been entered into, any unapproved structures become the buyer’s issue if no notice has already been issued.  So unless the Council has previously issued a notice to the seller about the alteration, then the seller is under no obligation to make any disclosure to the buyer or to comply with the notice.  Hence the term ‘buyer beware’.

So what should you do?

If you have concerns that the property may have been altered or an extension added then it may be worthwhile seeking legal advice prior to signing the contract.  Don’t fall into the trap of becoming liable for any future notices in relation to the property.  This notice could include a requirement to apply for Council approval, carry out of any rectification works, or potentially to demolish the unapproved alteration to the property.

A lawyer can draft a special condition for the contract, which will make the purchase subject to the outcome of relevant searches; giving you a right of termination should any unapproved alterations or extensions be found.

Call us at Icon Legal on (07) 3399 6006 if you would like advice about purchasing a property.

FloodWise Property Report

The 2011 flood devastated many of Brisbane’s lower lying suburbs and had serious repercussions for the city’s property market.  Many buyers did not want to dip their toe (pardon the pun) into the market and purchase a property anywhere near the river.

While the flooding of 2011 did affect the property market, it has definitely bounced back.  After another year of heavy rain failed to result in any flooding (due to better flood mitigation procedures at the Wivenhoe Dam), buyers are more willing to purchase in the suburbs that were previously affected.

The Brisbane City Council offers a simple tool that aims to allay a buyer’s fear about buying a property (due to the fear of it flooding). To help restore buyer confidence the Brisbane City Council offers a free FloodWise Property Report, which is available as a tool on their website.

The report contains information of the flood height of 2011and various flood events that may occur and the likelihood of it.  It also shows the ground levels of the property and the required minimum habitable floor height. This brief report can provide valuable information to assist you in making a more informed decision of the flooding risks.

Visit flood.brisbane.qld.gov.au/floodwise_property_report to download a report on the property you may be interested in purchasing. It only takes a few minutes and the report is instantly available for download.

Whilst this report may give you an indication of how the property may be affected by flooding, further searches will provide more information about the property.   If you are concerned about flooding of the property, we recommend that you discuss this with your lawyer.

Call us at Icon Legal on (07) 3399 6006 if you would like advice about purchasing a property.