Buying a property will probably be the most important and expensive purchase you will ever make. At Tranter Lawyers, we will ensure that throughout this often confusing and complicated process you are kept fully informed, and that you get what you contracted to buy.
Purchasing a property involves a number of steps:
- Once you have decided to buy a particular property, you will be required to pay a holding deposit to the real estate agent. This does not mean that the seller is obliged to sell you the property or that you are obliged to buy the property. Both the buyer and the seller may withdraw from the sale at any time before contracts are exchanged.
- In the event that you do not purchase the property, you will have the deposit refunded to you.
- You must tell the agent the name of the solicitor who will be acting for you on the purchase. The agent will then pass on to your solicitor the relevant details of the sale.
- Gazumping is the term used to describe the situation where after an initial deposit is paid to the seller (and before contracts are exchanged), the seller receives and accepts a higher price for the property.
- In such a circumstance, the first buyer is entitled to receive a refund on the initial deposit, however is not entitled to be compensated for any money spent on legal advice, inspection reports, etc.
- If you need to borrow money to purchase the property, Tranter Lawyers can help you arrange finance.
- Your solicitor will obtain copies of the contract for sale and various certificates in order to check the title of the property. If you have arranged finance, the solicitor must have a copy of the written loan approval.
- You may also be advised to obtain pest, building and survey reports. If any problems are discovered before exchange takes place, negotiations may be undertaken by the parties and agreement on special provisions made. If problems are revealed after exchange, there will be less options in dealing with the difficulty.
- As a large number of houses are infected by termites, it is worth having a pest inspection in order to determine whether there are any termites in the houses or if there is any damage caused by termites.
- A survey report will identify the land described in the title with that described in the contract; identify the land itself with that described in the contract; identify whether there are any encroachments on the property or whether any structure on the property encroaches upon another property; and identify whether local government legislation and restrictive covenants are complied with.
- A building report will look at the condition of the property and identify whether it is structurally sound.
- The contract to purchase the property is made once the buyer and the seller exchange contracts (that is, exchange a copy signed by one party for a copy signed by the other). Exchanging contracts is an important step as it is at this point that the contract becomes legally binding.
- At the exchange the balance of the 10% deposit must be paid to the seller. This money is usually held by the real estate agent in trust until the completion of the sale.
- After exchange there is a five-day “cooling-off period”. This means that you have five business days to back out of the contract should you discover any defects with the property or have any problems with obtaining finance. If you do use your cooling-off rights, you must forfeit 0.25% of the purchase price. The cooling-off period can be waived by agreement between the parties. There is no cooling-off period in the case of an auction sale.
- After exchange the contract and transfer document will have to be stamped, and duty paid. Duty must be paid within three months of exchange or before settlement (whichever is first).
- After exchange, enquiries are made of several government departments in order to check whether, for example, there are any proposals by government to resume the land.
- We will send to the vendor’s solicitor Requisitions on Title, which is a list of requirements and questions regarding the property or the title, and statements about the vendor’s obligations or the purchaser’s rights.
- In preparing for settlement, we will check whether there are any Council rates, water rates and levies outstanding. The vendor will provide cheques for these at settlement. So that each party pays for only the time they have ownership of the property, an adjustment will be made between the buyer and the seller on a pro-rata daily basis.
- Settlement usually occurs six weeks after the exchange of contracts, and it is at this point that the buyer will become the legal owner of the property.
- At settlement the balance of the purchase price and any other adjustments must be paid.
For specific advice contact our Maitland Property Lawyers.