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Why Consult Your Conveyancer First
You need to know what you can and cannot do when dealing with an agent. You should be aware of your cooling off rights as well as the costs involved. Your conveyancer can assist you with any matters arising out of the purchase of property.
Contract for Sale of Land
The law provides that a Real Estate Agent must have a complete contract for the sale available at all times for a purchaser to look at and obtain legal advice on.
The contract contains the details of the property, inclusions, exclusions and will have a zoning certificate, title search, any dealings referenced in the title search as well as a sewer diagram attached.
The contract determines the date of settlement which may be negotiated between the parties.
Building and Pest Reports
Before you commit to a purchase you should decide whether you want any inspections done. We would recommend inspections to determine whether the property is sound and also is free of pest infestation which could affect the property structurally. You should use an inspector who carries Professional Indemnity Insurance and preferably someone who has been recommended to you.
Before committing to the purchase of a unit, townhouse or villa that is part of a strata scheme you should obtain an inspection of the records of the Owners Corporation. The report will detail insurances in place, levies, financial position of the scheme, special levies that have been struck and any ongoing maintenance issues.
Whenever possible you should obtain unconditional loan approval during the cooling off period for the property you intend to purchase. Unfortunately this sometimes isn't possible, especially in auction situations.
Exchange of Contracts
Contracts may be exchanged either by the estate agent or by the conveyancer and may be by auction or private treaty. Once contracts are exchanged and any cooling off period has expired both parties are bound by the contract.
Cooling Off Period
If the agent exchanges contracts the sale will usually be subject to a 5 day cooling off period during which the purchaser can change their mind about the purchase. If this happens the purchaser forfeits 0.25% of the sale price to the vendor.
The purchaser may at any time Waive their cooling off rights by providing a s66W certificate prepared by their conveyancer after they explain the effect of the certificate before it is handed to the vendor's conveyancer or solicitor.
There is no cooling off period if the property is sold by auction.
Payment of the deposit is an essential term of the contract and should be paid on or before the contract date or else in accordance with any other contract terms. Any holding deposit paid to the agent forms part of the deposit, which is usually 10% but may vary. If the deposit is not paid or a cheque is dishonoured the vendor may rescind the contract at any time until such time as the full deposit has been paid.
A deposit bond or bank guarantee is an alternative to a cash deposit and the deposit becomes payable by the underwriter in the event the purchaser defaults. If a deposit bond is used in lieu of a deposit then at settlement the deposit is payable in addition to the balance of the purchase price.
Risk associated with the property passes to the purchaser at settlement or at the time the purchaser takes possession, whichever is earlier. Your lender if you have one will normally require evidence of insurance before settlement can take place.
The vendor is responsible for the care and upkeep of the property until settlement and it should be kept substantially in the same condition, subject to fair wear and tear. In the event the property is substantially damaged before settlement the purchaser has a right to rescind within 28 days of becoming aware of the damage.
Stamp duty is paid on or before settlement and your lender will require evidence of payment at settlement.
If you are buying off the plan, that is a property not yet constructed, then stamp duty is payable up to 15 months after exchange of contracts.
Your conveyancer should contact your lender to book settlement. Just prior to settlement the lender will provide the amount of available funds which available for settlement. Any shortfall will need to be in an account with that lender who should have an authority to draw from the funds in that account to effect settlement. Any shortfall should be in the account and available the day before settlement.
You the purchaser are entitled to a final inspection of the property that should be arranged through the agent. The inspection should be just before settlement, either the day before or the morning of settlement. You should look for any damage or items missing that were included in the contract.
Make a list of all who should be contacted and let them know of your change of address.
If the property is tenanted you must ensure the tenant is given at least 30 days written notice by either you as landlord or by the managing agent. Your conveyancer will verify that the appropriate notice has been given. The sale cannot be finalised until the property is vacant including all possessions.
Unless special arrangements have been made you will not have access to the property until after settlement has taken place. Most settlements take place in the afternoon so removalists should be booked with this in mind. Allow time for the agent to be notified that settlement has taken place by the vendor's conveyancer. They need to authorise the release of the keys to you.
Buying a property with an Existing Tenant
If there is a current lease in place then you take over as landlord immediately and there is no requirement for a new lease. You are bound by the terms of that lease. Rent paid by the tenant is adjusted at settlement, usually by the managing agent. Your conveyancer will determine what and how adjustments are made.
The agent will be advised by the vendor and the keys will be released to you the purchaser.
Council, Water and Strata levies are adjusted between the purchaser and vendor at settlement. Your conveyancer will account to you for the proceeds of sale after adjustments.
Change of ownership details will be sent to the various authorities including Council, the water authority and the Valuer General.
Title will be transferred into your name by your lender however the new Certificate of Title is held by the lender while they have a mortgage over the property.
If you are buying property as an investment you should consult your accountant to determine if Land Tax is payable.
Things to Consider when purchasing:
Purchasing Enquiry Form:
With a law firm conveyancing background, Jacqui has your conveyancing needs covered, Sydney and Inner West.
Licensed Conveyancer. Lic. 05007249. Justice of the Peace. Member Australian Institute of Conveyancers (NSW).