PF Steps-1 - practice steps PDF

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PRACTICE FILE STEPS You are to act for the purchasers on the purchase of a residential Torrens Title property, completing all the necessary procedural steps. Upon completion of the practice file you will have satisfied many of the competencies required by the LPAB. Although you are not required to submit a hard copy file for assessment, I encourage you to create the file in hard copy to simulate what happens in practice and to provide yourself with a precedent for future reference. In practice you would keep your file in a manila folder. I have also included in your materials information on how a hard copy file is usually set up. I will be using Canvas to convey information to you so please check regularly for any Announcements there. You can post questions that you might have about the file on the Discussion Board which you will find at the end of each week on Canvas. Before posting a question please read your lecture notes and the weekly prescribed readings to check if you have already been provided with the information. You will also need to read the postings of other students and the responses made to those postings. You will be required to make file notes throughout the file. It is essential to keep good file notes in practice, as these are evidence of advice given to a client if there is a dispute at a later time. In our practice file it is a good way to show the assessor what you know (relevant to the step). Your clinical practitioner will assume the role of:  the vendor and the vendor's solicitor  the discharging mortgagee's solicitor  the incoming mortgagee's solicitor  various government instrumentalities  and, for further instructions, your client. Practice File Materials that are required for the PF steps each week are available on Canvas via a link in Activity Materials for that week. You will be required to maintain an office account ledger throughout this matter. The related legal bookkeeping will be an assessable part of this file.  

Mark each Assessable Step with the Step Letter on the top right-hand corner of each piece of work. The word “assume” is used at various steps to inform you what would usually happen in practice. Wherever "assumed" is used, you are not required to undertake the action referred to.

P RACTICE FILE DATES 

To simulate practice, the following dates must be adhered to in this Practice File.

Exchange of Contracts – 24 August 2021 Submit step 3 file note by 9am on 22 August 2021 via Turnitin Settlement - 10 September 2021 Submit Assessable Steps A-N - by 9.00am 12 September 2021 via Turnitin 

Other dates for your letters and file notes – please create your own date but it should be consistent with the timing in the file eg step 3 file note should be dated prior to step 4 letter requesting amendments and both should be should be dated prior to exchange.

Step 1: Obtain a manilla folder to keep the practice file in. 

Read Memorandum TP1 in week 2 Activity Materials.



Download and place in the file the Activity Materials relating to the Practice File that have already been uploaded in each week’s module.

To simulate practice new material will uploaded to Canvas as the matter progresses. Where additional material is to be uploaded during the transaction, it is indicated at the relevant PF step with an asterisk*. Step 2: a)

Read Purchasers’ Instructions, Sales Advice from Domain Real Estate and the draft contract. You may assume you have been given these documents by your supervising partner. Read the Purchasers’ Instructions carefully.

ASSESSABLE STEP A – FILE COVER Step 2(a) Complete the front cover of the file. (see TP1 for the information required there)

ASSESSABLE STEP B – COST DISCLOSURE Step 2(b) b)

The Costs Disclosure in week 2 Activity Materials is adapted from Legal Profession Uniform General Rules 2015 Schedule 1. o

Prepare Schedule 1 costs disclosure to your clients - you must use the Schedule 1 form posted in the materials on Canvas. o Assume that you have product costed your services at $1600.00 fixed fee for acting on the conveyance, including acting as the mortgagors’ solicitor. o Disbursements to be listed in the schedule are:  enquiries for the practice file - Dept of Education and Communities $30.00; Jemena Gas Networks - $70.00; Ausgrid - $55.00; Rail Corporation NSW - $65.00; Transport for NSW (Roads) - $60.00; Sydney Water (66 cert) - $16.00; Local Council (603) cert - $80.00.  the cost of the updated survey - $700  the council building certificate - $250.  final search - $25.

o

For the practice file, we will add GST to the costs only. We will not do GST accounting for the disbursements so do NOT add GST to them.

Assume you have sent the costs disclosure to your clients. Place it in your file.

ASSESSABLE STEP C – OFFICE LEDGER Steps 2(c), 9, 10 & 17 c) Insert clients’ details in the office ledger. It is the office record of monies paid out of or received into the Office Account. You will be posting entries into it at steps 9, 10 and 17 and you will refer to it to prepare a bill of costs later in the matter. The completed ledger comprises Assessable Step C.

d)

Assume you have file noted your telephone attendance on the vendor’s solicitor, K. Law, UTS Solicitors, confirming that you are acting for the purchasers.

STEP 3 FILE NOTE – This step must be separately submitted for assessment by 9am on 22 August 2021 via Turnitin. The prior Assessable Steps A-C are not to be submitted with the Step 3 File Note. Please submit them with Assessable Steps A-N later. Step 3:  



Assume that you have had a meeting with your clients. Assume you verified your clients’ identities, you explained the Client Authorisation required for PEXA, and your clients have signed the authorisation in week 2 Activity Materials and you have witnessed their signatures and signed also. Assume you then went through the contract with your clients.

File note your advice, explanation and recommendations to your clients in conference as to the meaning and effect of the draft contract including: a) b) c) d) e) f)

g) h) i)

j)

k)

l)

Check property, price and purchasers’ names on front page are correct Joint tenancy/tenancy in common cooling off period (so you can provide s66W certificate) identity of parcel to be purchased and access to the property survey report attached to the contract matters of quality inclusions/exclusions condition of building and any pre-exchange enquiries that you recommend client’s proposed use/uses of the premises/extensions (You should never assume that,simply because the premises are a residence, your clients intend to use them only for a residence.) availability of services eg electricity etc and explain drainage diagram. passing of risk and insurance source of funds and/or loan approval (It is essential that your client has written loan approval prior to exchange of contracts.) NSW revenue issues – relevant stamp duty liability on the contract for sale, advice on land tax adjustments under the contract and potential future land tax liability; eligibility for any government grant Federal revenue issues - CGT and GST implications under the contract and potential future liability. (note: the vendor is not a foreign resident so you are not required to advise on foreign resident CGT withholding and this is not a brand new property so you are not required to advise on GST residential withholding payment) vendor’s title vendor disclosure legislation documents that must be attached to the contract implied warranties implied terms additional clauses of the contract (33-38) – these are often referred to in practice as “special conditions”.

At the end of the file note, summarise your clients’ instructions to you to seek amendments to the contract from the vendor’s solicitor. Important for this step: Put yourself in your clients’ shoes. You must explain the contract in a clear and concise manner. Record your clients’ instructions to you throughout the conference. Assessors will be looking for the advice that you would give your clients if they were in a conference with you. It is not sufficient to make a file note, for example, “Discussed cooling off period”. The assessor will be looking to read what you would advise in respect of the cooling off period in this matter. Remember

that in practice the more detail you have on file the better protected you are if a client brings an action for negligence against you.

ASSESSABLE STEP D – LETTER REQUESTING AMENDMENTS Step 4 Step 4: Write a letter to the Vendor’s solicitor seeking the amendments to the contract which the purchasers have instructed you to request in step 3. Your amendments should include some amendments which are NOT just copied from the letter of the agreed amendments from UTS Solicitors. If you request that a clause be added or if you request an amendment to the wording of an existing clause, you must draft the wording you require. In your letter, explain your reasons for the requests. Write your letter before you receive the reply from UTS Solicitors. * A letter from UTS solicitors setting out the agreed amendments will be posted in Week 3 Activity Materials at the end of week 3. Print and file it. You must use it to make the agreed amendments to the contract in step 5. Step 5: Assume pre-exchange negotiations, searches and enquiries are satisfactory. a) make the agreed amendments to the contract by hand based on the UTS solicitor’s letter*. b) assume you have file noted your explanation of the agreed amendments to your client in conference. c)

attend on the execution of the contract with your clients.  Take on the role of your clients. The clients must both sign the front page and initial all the agreed amendments.  You sign as the witness on the front page and initial all agreed amendments.

d)

obtain a cheque for payment of deposit in favour of the depositholder (see cl2 and cl 1) from your clients. Cheques are in the week 2 Activity Materials (contract clause 2.4 – may be a personal cheque). Note that the letter from Domain Real Estate Pty Limited states that a $500 holding deposit has been paid to the Agent. This $500 should be deducted from the 10% deposit payable on exchange. No amendment to the front page of the contract is needed.

e)

if required by the vendor, sign a s 66W certificate to be available on exchange. The s66W certificate is in your workshop materials.

f)

place the letter from the CBA confirming loan approval on your file.

g)

assume you have file noted client’s instructions to exchange contracts.

h)

assume that you have file noted a telephone conversation with the vendor’s solicitor agreeing to exchange contracts by post. As the purchaser’s solicitor you will send the signed, undated contract to the vendor’s solicitor.

Step 6: Assume that your clients have accepted the CBA’s offer of finance. Read the letter from the CBA setting out its requirements.

(In practice, you should ensure that the mortgagee’s requirements can be satisfied within the time frame specified in their letter.)

ASSESSABLE STEP E – EXCHANGE OF CONTRACT Step 7 Step 7: You are now ready to exchange contracts. a)

The procedure for the postal exchange is as follows:

Write a covering letter to the vendor’s solicitor enclosing: • the contract correctly executed and initialled by your clients • the deposit cheque • the s.66W Certificate (in Practice File Materials) • ask the vendor’s solicitor to exchange contract and return the vendor’s signed counterpart. YOU SHOULD SUBMIT THE FOLLOWING FOR ASSESSMENT:  LETTER TO THE VENDOR’S SOLICITOR ENCLOSING THE DOCUMENTS LISTED IN STEP 7(a)  CONTRACT PAGES 1 AND 2 CORRECTLY EXECUTED AND WITH THE AGREED AMENDMENTS MADE AND INITIALLED BY YOUR CLIENTS  CONTRACT ADDITIONAL CLAUSES FORMING PART OF THIS CONTRACT WITH AGREED AMENDMENTS MADE AND INITIALLED BY YOUR CLIENTS  COMPLETED AND SIGNED S66W CERTIFICATE  DEPOSIT CHEQUE In practice you would send the entire contract. b)

Assume the vendor’s solicitor checks both contracts are identical, exchanges and dates them on 24 August 2021, informs you she has done so and mails the vendor’s signed and dated contract to you. *I will upload the vendor’s signed and dated contract page 1 in week 4 Activity Materials after 24 August 2021.

(After the exchange, each party to the transaction will hold a copy contract signed by the other party and this complies with the requirements of s.54A of the Conveyancing Act 1919. There is no need to have your client sign the copy you receive.) c)

Assume you have file noted a telephone call to your clients advising them that the contracts have been exchanged.

PLEASE DO NOT SUBMIT THIS STEP on 24 August 2021 - it should be part of the Assessable Steps A-N that you submit by 12 September 2021.

ASSESSABLE STEP F – POST EXCHANGE LETTER TO CLIENT Step 8 Step 8: Write a letter to your client to: a)

confirm exchange of contracts and inform the client of the due date for settlement.

b)

inform your client of the total duty payable to Revenue NSW on the purchase. (Calculate it using the calculator on the revenue NSW website) Explain it includes the ad valorem duty calculated on the purchase price and the nominal duty for the transfer and counterpart contract.

c)

request client to arrange insurance cover of the property in accordance with the Bank's requirement in the Bank’s letter. (The relevant letter was sent to you and not the client so you must inform the client to ensure that the insurance has noted on it the bank’s interest as mortgagee).

d) explain they have caveatable interest and explain their options to protect it by lodgment of caveat or priority notice. Assume clients instruct you that they understand but do not want to lodge caveat or priority notice. (In practice, advice about insuring the property must always be made. Failure to advise as to insurance could lead to a negligence claim). Step 9: Assume you have requested and paid an information broker to order and provide you with the post exchange enquiries listed in step 2. You may assume the cost of each enquiry at step 2 includes the broker’s fee. Record an entry in your office ledger for the fee for each enquiry. (this forms part of Assessable Step C) You do not need to complete any other details. The results of these enquiries and certificates are already with your Week 4 workshop materials. Place them on your file and read them. (In practice, information brokers are usually contracted to make enquiries and supply any other additional services online.) Step 10: Assume that you have applied for an updated survey report from Surveyors & Co and assume you have applied to the local council for a building certificate. Record an entry in your office ledger for the fee for each of the survey and the building certificate. (this forms part of Assessable Step C) The new survey report and the local council building certificate are with Week 4 Activity Materials. Place them on your file and read them.

ASSESSABLE STEP G – FILE NOTE OF POST EXCHANGE ENQUIRIES Step 11 Step 11: Make a file note of your observations and conclusions about the results of all post exchange enquiries and the Land Tax certificate, any change in the survey and the meaning and effect of the building certificate. Read Land Tax Certificate and results of all enquiries carefully. NB: If Land Tax Certificate shows charge vendor may be required to clear it cl16.6. If the Council s603 or Sydney Water s.66 certificate discloses an outstanding amount on the account this amount should be paid or allowed in full by the vendor on settlement. The same is also the case with late payment interest payable and arrears of rates from previous years.

Step 12: Requisitions

(If the parties are using the old contract for sale of land 2004 edition or the later contract for sale and purchase of land editions with no requisitions attached, the purchaser would send their requisitions on title to the vendor’s solicitor. Requisitions are part of a purchaser’s enquiries and answers should be checked as closely as searches or enquiries. Any answer which discloses material prejudicial to the client should be referred to the client immediately for instruction and any requisition either not answered at all or obviously incorrectly answered should be referred back to the vendor’s solicitor for appropriate action.) In the Practice File the requisitions are attached to the contract. Cl 5.1 provides that if requisitions are attached to the contract, the purchaser is taken to have made those requisitions. The vendor's replies are in the Week 4 Activity Materials. Print and read them and place them in your file. (In practice, if necessary, you would make further requisitions.)

ASSESSABLE STEP H – FILE NOTE OF ADVICE ON MORTGAGE QUESTIONS Step 13 Step 13: a)

Your clients have brought to you the mortgage documents which they have received from the CBA. Assume the Schedule attached to the mortgage contains the provisions setting out the principal, the rate of interest and when interest is payable. The relevant provisions for this exercise are in the Week 4 Activity Materials.

Read Annexure A and prepare a file note of the advice you give your clients on the following (you must refer to the relevant mortgage clauses) and place it on the file: i.

Your clients intend to build a second storey onto their new residence after completion under the mortgage terms and conditions contained in Annexure A, will your clients need the CBA’s consent? Why, or why not?

ii.

Your clients ask you whether the CBA has any remedies pursuant to the terms and conditions contained in Annexure A if their payment of council rates falls into arrears. Explain the remedies that you consider are available to CBA.

b)

You may assume that you have file noted your advice on the rest of the mortgage and that your clients have properly signed the mortgage documents.

c)

You may also assume that you have checked that you have all the CBA's requirements (listed in its last letter) and sent them to the CBA with the mortgage documents. (In practice, you would send them to the Bank with a covering letter. In practice, the Bank would need about 7 days after receipt of all its requirements to settle.)

See the PEXA Transfer Guidelines in your Practice File Materials for the steps - and timing which you may assume you are undertaking in the electronic workspace. Step 14: Duty Assume:  that each of your clients has provided you with a completed and signed Revenue NSW Purchaser Declaration and the required certified identification. 

that you have prepared a duties assessment with Revenue NSW using your firm’s Electronic Duties Return system



you have received a NSW Revenue Assessment Number.

(Note: Electronic Duties Returns is an online service of Revenue NSW that allows clients to process duties transactions in real time and pay duty by way of periodic remittance.)

Step 15: Completing the Transfer in the electronic workspace – PEXA The parties have agreed for this matter to be a proposed electronic transaction on PEXA (see contract page 2). Assume the following necessary actions have been undertaken on PEXA. 

Kay Law for vendor (referred to as Proprietor on Title – “POT”) has created the workspace and invited you as solicitor for the purchasers (Incoming Proprietor – “IP”) and NAB (Mortgagee on Title “MOT”) and input a settlement date and time.



You have reviewed and accepted the invitation and set...