The valuation process
The valuation process is the second key phase of the Voluntary Purchase and Demolition Program. NSW Fair Trading has contracted The Australian Property Institute (API) to coordinate the valuation process. The API will engage two independent companies to produce valuation reports for every property.
The valuation reports will value the whole property (land and improvements) and land only. Each property will be valued at market value as if it was free of loose-fill asbestos.
A dedicated case manager will work directly with the homeowner. Homeowners will not be responsible for the cost of the valuations.
For rural properties (over 2 hectares), the valuation reports will value the whole property (land and all improvements) and land without the affected premises and any building or structures on its curtilage.
The curtilage is the area, usually enclosed, that encompasses the grounds and buildings immediately surrounding the premises that are used in daily domestic activities.
When will my property be valued?
Flexible principles will be applied to the timing of the valuation process. In general, the criteria for valuation will be by date of registration, balanced with properties identified as 'at risk' from the air and dust assesment.
When organising the timing of valuations, grouping affected properties together geographically will also be considered to ensure Program efficiency.
What if I don’t agree with the valuations?
If you want to dispute the valuations, you can apply to the API for a Presidential Determination. The President of the API will appoint a senior valuer to carry out a new valuation of the property. The appointed valuer will consider the original two valuation reports and any submissions the homeowner makes. The valuation made under the Presidential Determination is the final price the NSW Government will offer you.
Before applying for a Presidential Determination, discuss this option with your case manager.
After the valuations, the homeowner will get a letter with the offers. The two independent valuations will be averaged and this will become the offer price.
Under Option 1, homeowners will be offered the value of the whole property (land and improvements).
Under Option 2, homeowners will be offered the value of the whole property minus the value of the land. For rural properties, homeowners will be offered the value of the affected premises and any building or structures on its curtilage. The curtilage is the area, usually enclosed, that encompasses the grounds and buildings immediately surrounding the premises that are used in daily domestic activities.
Attached to the letter that identifies how much they will be offered under each option, homeowners will receive an Option Election Form. The homeowner will need to return this form to the Government to indicate which option they want to proceed with.
If a homeowner chooses Option 1, the Government will prepare a Contract for Sale of Land and send it to the homeowner's nominated legal representative. If a homeowner chooses Option 2, the Government will prepare a Licence Agreement that permits the Government to enter the property, demolish the affected premises and remediate the land.
The Option Election Form is not binding and homeowners will not be legally required to proceed with any option until they have signed either a Contract for Sale or a Licence Agreement.
It is recommended that eligible homeowners obtain independent legal advice on the sale of the affected property. The Government will provide affected homeowners with $1,000 in financial assistance to obtain legal advice.
Do I need to vacate my property during the valuation?
No. You don’t have to move out of your property during the valuation process. You are only required to move out of your property by the date specified in the Contract for Sale or Licence Agreement.
The purchase process varies depending on which option the homeowner chooses.
If a homeowner chooses Option 1, the purchase will closely follow the same process as a standard residential property transaction.
One main difference is that the NSW Government as the purchaser will prepare the Contract for Sale of Land and send it to the homeowner’s nominated legal representative. The homeowner will then have the opportunity to review the contract and obtain advice from their legal representative on the contract’s terms.
There will be two copies of the contract, one for the homeowner and one for the Government. The homeowner and the Government will each sign their copy before they are swapped or ‘exchanged’. This will likely be done by post and will be arranged by the homeowner’s legal representative.
The other main difference from a standard residential property transaction is that there will be no deposit paid to the homeowner on exchange because the whole purchase price will be paid on the day of settlement.
Homeowners will not be disadvantaged as deposits paid in standard residential property transactions are held in trust by a real estate agent or legal representative and can’t be accessed by the owner until the sale is complete.
Deposits are paid in standard residential property transactions to prevent the owner suffering a loss as a result of the purchase defaulting on the contract.
The Government will not default on contracts.
A homeowner can elect to proceed with Option 2 or to withdraw from the Program at any time prior to exchanging contracts. However, once contracts have been exchanged, the homeowner will be legally required to proceed with selling their property to the Government.
A standard settlement period of six weeks will apply to all homeowners from the date of exchange. The homeowner’s legal representative and the Government will use this period to prepare all the documentation necessary to transfer title in the property.
If a homeowner wants to request an extended or reduced settlement period, they must not sign the contract until they have discussed this with their legal representative. The Government will only consider varying the settlement period in exceptional circumstances.
During the settlement period, representatives from the Government may inspect the property in order to start planning for demolition. To enable this, the homeowner will be asked to sign a Deed of Access. This gives permission for Government representatives to enter the property to inspect it and carry out necessary testing to plan the demolition.
The homeowner is required to vacate the property prior to the day of settlement.
Unlike standard residential property transactions, the homeowner is not required to remove all personal items from the property. If a homeowner thinks particular household items are contaminated with loose-fill asbestos, they should leave it inside the property for the Government to dispose of properly. All other personal items should be removed. For more information, see Removing household contents.
Any LFAI-affected items left at the property at settlement will be forfeited and disposed of by the Government.
On the day of settlement, a pre-settlement inspection will be undertaken and the condition of property will be confirmed to be in accordance with the Contract of Sale. Any property variations to the contract, such as the removal of fixtures or fittings, may impact the timing of the final settlement. The homeowner’s legal representative and the Government will exchange the necessary payments and documents for title in the property to be transferred to the Government. The homeowner’s legal representative will provide them with the purchase funds following settlement.
If a homeowner chooses Option 2, the Government will prepare a Licence Agreement that permits the Government to enter the property, demolish the affected premises and remediate the land.
In order to prepare the Licence Agreement, Government representatives will need to inspect the property to prepare a Demolition Register.
The Demolition Register will identify the parts of the property that will be damaged or destroyed in the process of demolishing the affected premises. The Demolition Register will be attached to the Licence Agreement.
The Licence Agreement will then be sent to the homeowner for their review and signature. It is recommended that homeowners obtain independent legal advice on the terms of the Licence Agreement.
The Government will provide affected homeowners with $1,000 in financial assistance to obtain legal advice. More information is available here Assistance and support for owners and tenants.
The Licence Agreement will not specify a date by which the homeowner must vacate the property. However, once the Government has arranged for the demolition of the affected premises, the homeowner will receive a letter from the Government stating by what date the homeowner must vacate. This will generally be 6 weeks from the date of the letter.
A homeowner can elect to proceed with Option 1 or to withdraw from the Program at any time prior to the date on which they are required to vacate the property. However, once that date has passed, the homeowner will be legally required to proceed with the demolition of the affected premises under Option 2.
When vacating the property, if a homeowner thinks particular household items are contaminated with loose-fill asbestos, they should leave it inside the property for the Government to dispose of properly. For more information, see Removing household contents.
Any items left in the affected premises will be forfeited and disposed of by the Government. Any items that are left outside the affected premises (e.g. inside a detached shed) are left at the homeowner’s risk and this should be agreed with the case manager prior to vacation. Once the homeowner has vacated the property, they are not permitted to return to the property until the demolition and remediation of the land is complete, unless agreed with their case manager in advance.
After the date of vacation identified in the Government’s letter, the Government will take over the site and pay the homeowner the purchase amount within five business days. Once the land has been remediated after the demolition, a clearance certificate will be issued indicating that the land is free of loose-fill asbestos.
Following this, the remediated land will be returned to the homeowner. It is expected that the homeowner will not have access to their property for approximately 4 months.