Installment Contracts – Applying For the First Home Owner Grant

At Aylward Game Solicitors we offer experienced advice and tailored document preparation in relation to Installment Contracts and various types of Option Agreements.

Unlike standard REIQ contracts for the sale of residential houses, units or land where settlement generally occurs within a short period of time and occupation is taken on completion of the contract, Instalment Contracts generally run for an extended period of time and occupation is taken at the start of the contract with an agreed amount of instalments made to the owner over the life of the contract to pay the balance of the purchase price.

Once an Instalment Contract has been signed and been in existence for approximately one year, many sellers and buyers start to ask the common question:  Can I receive the First Home Owner Grant (“FHOG”) yet and how do I apply for it?

There is no standard answer to this question as the time when a buyer can apply for and receive the FHOG varies and is different with each Instalment Contract. The public OSR ruling for claiming the FHOG under Instalment Contracts sets out the requirements that a buyer must meet in order to be eligible to apply for (and subsequently receive) the grant prior to completion of the contract. An extract we have taken from that OSR ruling sets out the following:-

“
a.    The contract has been in existence for at least one year.

b.    The purchaser is not in default under the contract so the vendor has no right to cancel the contract.

c.    The purchaser has occupied the home as their principal place of residence under the contract.

d.    The purchaser has paid to the vendor an amount of not less than the amount of the grant or an amount which is equal to at least 10%  of the purchase price, whichever is the greater. In calculating the amount paid to the vendor, any of the following can be taken into account:

i.   any deposit paid by the purchaser to the vendor 
ii.  any interest paid by the purchaser to the vendor
iii. any other amounts which have been paid and deducted from the balance of the purchase price”.

Furthermore, the public OSR ruling sets out that a grant paid prior to completion of an Instalment Contract will be paid subject to certain conditions being met.  An extract of those conditions of payment is as follows:-

“
a.    The contract will be completed and will not be cancelled or terminated.

b.    Following payment of the grant, the purchaser will meet the residence conditions: 

i.    For contracts entered into before 1 January 2004, the residence condition is that the purchaser will remain in possession of the home as their principal place of residence and will continue in possession following completion of the contract.⁷ 
ii.   For contracts entered into on or after 1 January 2004, the residence conditions are that the purchaser will remain in possession of the home as their principal place of residence and will continue in possession following completion of the contract for a continuous period of at least 6 months.⁸

c.   Within 14 days of non-compliance with conditions (a) or (b), the purchaser will notify the Commissioner of non-compliance and will repay the grant”.

Once a buyer has satisfied all requirements set by the Commissioner they will either apply for the FHOG themselves or have their solicitor assist in the application, then once successful in receiving the grant funds they will be paid to the relevant party/s in accordance with the terms of their respective Instalment Contract.

There are many factors and conditions which apply to claiming the FHOG under an Instalment Contract, and we advise not all of those conditions are covered in this Article. Determining an individual’s eligibility to receive the FHOG requires a full review and assessment of each individual contract document together with an assessment of the supporting evidence (as applicable) and ultimately the Commissioner will make a final assessment as to whether or not an application is approved. Full details of OSR’s public ruling can be found on the Office of State Revenue website (for convenience we include the following direct link):

http://www.osr.qld.gov.au/legislation-rulings/public-rulings/fhog/fhoga019-1.shtml

If you wish to discuss or require assistance in applying for a First Home Owner Grant, then please contact our conveyancing manager Libby Dessaix or our Solicitor Mark Game at (07) 3236 0001.

The information contained in this article is correct as of publication date 13 March 2014. The information is a guide only and is not to be taken as legal advice and at all times we recommend you seek independent legal advice regarding your own individual circumstances from your legal representative.