The process of buying property is an exciting and sometimes overwhelming time.
With the right guidance and advice from your lawyer or conveyancer, the process can be easy and stress free.
Here are our top 5 tips when buying a property:
# 1 – Review the Contract for Sale of Land
It is important you understand your rights and obligations under the Contract for Sale of Land (‘Contract’). We strongly recommended you discuss the Contract with your lawyer or conveyancer before signing it. If you don’t agree with any of the terms in the Contract, you may negotiate for the terms to be changed before signing it.
# 2 – Invest in Inspections
Invest money in a building and pest report when buying a house. These reports will give you a better idea of any structural issues with the building or pest issues that you may wish to avoid. If you find only minor issues, you may wish to negotiate a lower purchase price to take into account the cost of fixing the same. Alternatively, you may wish to negotiate that the owner fixes any minor issues. Negotiations must occur before signing the Contract.
Similar reports are available when purchasing a unit.
# 3 – Understand your Finance and Cooling-Off Options
Ensure you have your finance in order prior to making an offer. If you are not purchasing through an auction, the cooling-off period begins once you and the Vendor (person selling) sign the Contract. A cooling off period is the period during which you can cancel the purchase. The rules regarding cooling off periods vary in each State and Territory of Australia. In New South Wales it is usually 5 business days. If you elect to cancel the purchase during the cooling off period, termination fees apply.
If you are purchasing a property through an auction, you should have your finance approved before bidding as there is no cooling-off period.
The Vendor may ask you to waive the cooling-off period by signing a section ‘66W Certificate’. We recommend that you only do this after you have discussed the Contract with your lawyer or conveyancer; your finance has been approved and all certificates and inspection reports have been considered.
# 4 – Decide upon Joint Tenants or Tenant in Common?
If you are purchasing with another person, you may wish to consider whether you hold the property as joint tenants or tenants in common.
Joint Tenants: The property is held by two or more people in equal shares. If one dies, the deceased’s share will pass to the surviving co-owner of the property (this is known as ‘the right of survivorship’). This is a great option for partners who wish for the property to pass without the stress involved of applying through the Court for a Grant of Probate.
Tenants in Common: The property is held by two or more people in equal or unequal shares. If one person dies, the deceased’s share will pass to the beneficiaries named in that person’s Will. This is a great option if parties invest different amounts into the property and wish to record and safeguard the differing proportions and to ensure the deceased share isn’t automatically passed to the surviving co-owner.
# 5 – Be Prepared for the Exchange of Contracts and Settlement
The exchange of Contracts is where two copies of the same Contract are signed by the Vendor and Purchaser, dated and then swapped so that each party holds a copy of the Contract signed by the other. At this time you will usually be required to pay a deposit. Whilst 10% of the purchase price is usual, you may wish to negotiate a different amount prior to signing the contract. Exchange is when the commitment to buy the property becomes legally binding.
You may wish to take out insurance on the property from this point and up to settlement, if you are not aware of the Vendor’s insurance policy terms.
Settlement is when each party (usually their legal representatives) involved in the purchase meet to exchange cheques and documents necessary to transfer the property into your name. We recommend conducting a final inspection prior to settlement to ensure the property is in the same condition as it was when you exchanged Contracts.
Stamp duty is payable by the purchaser when purchasing real estate in New South Wales. Stamp duty is payable within 3 months of signing the Contract or by settlement, whichever occurs first.
Written by Hayley Reeve & Rebecca Harper
This information is general in nature, applicable to the purchase of property in New South Wales and should not be taken as legal advice. Please ensure that you contact one of our qualified lawyers or conveyancers to obtain specific legal or conveyancing advice suited to your particular circumstances.