Buying residential property
Buying a home or investment property takes a lot more time – and carries a lot more risk – than selling one. This is primarily because the seller has an informational advantage over the buyer from the very beginning: he or she already knows everything about their property (good and bad).
As a buyer, therefore, you will need to take extra care both during the negotiation process and during the pre-settlement process as mistakes can prove to be very costly, or even disastrous. Never do your own conveyancing unless you know exactly what you are doing. Conveyancing lawyers make the process look “easy”, but only because they have developed robust systems and processes behind-the-scenes to ensure that everything becomes hassle-free for their clients – well, at least most of the time!
Some of the key considerations for a buyer are:
- Did the seller and their real estate agent provide you with all the legally required disclosures?
- Is the seller entitled to sell the property? For example, if the owner is actually bankrupt, then the right to sell actually rests with the liquidator or trustee-in-bankruptcy.
- Is the contract legally binding? For example, if the seller is a company, there must be signatures from at least two directors, or a director and company secretary (unless it is a sole directorship).
- Are you buying the correct property? (This sounds silly but mistakes often happen, particularly in the case of units where a street address is an insufficient identifier).
- Are all the fixtures and other inclusions that you think are included really included?
- Is there any charge registered against the property that will severely interfere with your ownership rights (such as mortgages, easements, caveats, leases, etc.)?
- Is there any money owing on the property (eg. land tax, council rates, water charges, etc.)?
- Are there any zoning and planning regulations, or other restrictions, affecting the property?
- Do you need finance to complete the sale? If so, you should insert “Buyer’s sole discretion” in the finance section of the contract, and not “Sufficient to complete” as agents like to put in.
- Is the property structurally sound? (Your contract should be made subject to a satisfactory building inspection.)
- Is the property free from termites and other destructive pests? (Your contract should be made subject to a satisfactory pest inspection.)
- Is the property subject to a QCAT tree order, pool fencing order or other dispute?
Note that this is not intended to be an exhaustive list. There may be many other important considerations in a particular case, such as for a unit or apartment.
You should be aware that the property is at your risk as, the buyer, from 5pm on the first business day after the contract date – so take out building insurance (known as a “cover note”) on the property as quickly as possible.
If you’re selling another property at the same time, you really should avoid making the contract subject to the sale of your property. You are really just setting yourself up for a lot of stress because this doubles the level of complexity in the entire transaction. It is better to sell first – and get that out of the way – before you buy another property.
We would generally recommend inserting a “due diligence” clause into each contract. This will serve as your potential “get out of jail” card if you need to back out of the contract for reasons other than finance, building or pest. There are also a many other measures you can take to protect your interests, such as through the use of relevant special conditions.
Finally, and despite what real estate agents tell you, you should never sign a contract unless a lawyer has reviewed it on your behalf. There are many subtle risk areas in a contract, and real estate agents won’t necessarily know – or care, as they do not act for you – about them.
Winthrop Mason Lawyers can assist you by:
- Reviewing your contract of sale for any potential legal risk areas;
- Advising you on your rights and obligations, and any necessary steps to protect your interests;
- Negotiating the terms of the contract, including imposing special conditions, on your behalf;
- Conducting all the usual searches, and additional searches, relating to the property;
- Drafting the Form 1 and Form 24 transfer documents, and any other necessary documents;
- Liaising with your lender to ensure that all the necessary paperwork is prepared and signed;
- Advising you in relation to the terms and conditions of your loan agreement;
- Liaising with the seller or their solicitors during the conveyancing process;
- Drafting or perusing the final settlement statement to be relied upon at settlement;
- Attending to settlement on your behalf to complete the transaction;
- Ensuring that the Title Registry records are properly changed post-settlement.
We offer a fixed fee pricing on conveyancing so you will know exactly how much the whole transaction will cost from the very beginning. For a no-obligation initial consultation, go ahead and give us a call.