Purchasing Property - Frequently Asked Questions

Purchasing Property – Frequently Asked Questions

What should I do before signing a Contract to purchase property?

Before signing a Contract, you should:

·       Speak to your mortgage broker or bank manager and determine if your offer to purchase should be ‘subject to finance’.

·       Consider whether you should arrange pest and building inspections at the property before signing the Contract or make your offer ‘subject to pest and building inspections’.

 ·       Ask a solicitor or conveyancer to review the Contract and the Section 32 Statement relating to the property on your behalf.

 ·       Make all appropriate enquiries about the property.

What enquiries should I make about a property before making an offer to purchase or signing a Contract?

Subject to limited disclosure requirements imposed on vendors, the principle of ‘buyer beware’ applies when purchasing property.

This means that purchasers should make all necessary enquires about a property before committing to purchase. If a purchaser discovers a problem or defect with a property after signing a Contract, the purchaser may not be able to withdraw from purchasing the property or claim any compensation from the vendor.

The enquires that a purchaser should make will depend on the specific type, location and characteristics of the relevant property. However, purchasers should consider whether the following enquiries may be appropriate:

Is the property affected by any registered or unregistered easements?

An easement is the right for somebody other than the property owner (for example – a neighbouring property owner or Authority) to use part of the property for a particular purpose.

For example, a common easement is a drainage, sewerage or pipelines easement that allows Council or the water authority to use the part of the property affected by the easement for the purpose of laying and maintaining water and sewer mains. Another common type of easement is a carriageway easement that allows another person, usually a neighbouring property owner, to use the part of the property affected by the easement as a driveway or for access purposes.

You are usually prevented from constructing any buildings or structures over the part of a property affected by an easement and should inspect the property to ensure that no buildings or structures are constructed in breach of any easement affecting the property.

Is the property subject to any restrictive covenants or other restrictions?

A restrictive covenant is a type of restriction registered on the Title to a property that limits the way the property can be used and developed. For example, a restrictive covenant may prevent the subdivision of a property or may require that any house built at the property be constructed of certain building materials.

You should review the Title documents to determine if the property is affected by any restrictive covenant and inspect the property to ensure that there has not been a breach of any restrictive covenant affecting the property.

Do the fences and boundaries at the property match the Title boundaries?

It is possible that the fences and boundaries at the property may not accord with the Title boundaries and that a building or fence may encroach on or from a neighbouring property.

You can check the boundaries of the property by visiting the property, measuring the boundaries and cross-referencing those measurements to those shown on Title documents

Has any house or other structure at the property been constructed illegally without the consent of Council and/or any other relevant authority?

If there are any illegal structures at the property, you may later be required to repair or demolish them. If you suspect that any building or structure at the property may have been constructed illegally, you should contact Council for information about whether the building work has been approved and completed with all required approvals. 

Are all building and structures at the property structurally sound and free from pest infestation (termites)?

You should consider arranging pest and building inspections at the property to determine whether all building and structures at the property are structurally sound and free from pest infestation.

Are all services and utilities (water, sewerage, electricity, gas, telephone) connected or available for connection at the property?

Any services or utilities that are not connected at the property may be unavailable for connection or you may be charged a fee to have them connected.

Is any development proposed at a neighbouring or nearby property?

The development of a neighbouring or nearby property, for example a subdivision or unit development, may cause disturbance or impact your enjoyment of the property.

You should contact Council and determine if any nearby properties are the subject of any planning permits or development proposals.

Can I change my mind after I sign a Contract?

Yes – but only if the cooling-off period applies to your Contract.

The cooling-off period is the legal right for a purchaser to change their mind (for any reason), withdraw from a Contract and receive a refund of their deposit (minus a small fee) within three (3) clear business days of signing a Contract.

However, the cooling-off period does not apply to all Contracts. For example, the cooling-off period does not apply to a property purchased at auction or within three (3) days of a publicly advertised auction.

If the cooling-off period does not apply to your Contract, you will not be able to change your mind after you sign the Contract. If the cooling-off period does not apply to your purchase, your Contract may still be subject to certain conditions (for example – the Contract may be ‘subject to finance’) however these conditions will not allow you to change your mind for any reason and will only allow you to withdraw from the Contract in limited circumstances.

What is a Section 32 Statement?

The law requires that vendors disclose certain information about a property before the property is sold. The vendor is required to provide this information in a disclosure document known as a Section 32 Statement (also referred to as a Vendors Statement).

A Section 32 Statement will include important information about a property including a title search, details of any easements and covenants affecting the property, planning and zoning information and details of any building permits issued in the last seven (7) years.

We recommend asking a solicitor or conveyancer to review thhe Section 32 Statement before making an offer to purchase. 

What is the difference between a lawyer and conveyancer?

Both lawyers and conveyancers are legal professionals that can provide conveyancing services to those purchasing property.

Although lawyers and conveyancers can both provide conveyancing services, lawyers can provide additional legal services whereas conveyancers are only permitted to provide conveyancing services.

You can appoint either a lawyer or conveyancer to be your legal representative when purchasing property.

What will my lawyer or conveyancer do on my behalf?

When acting as your legal representative on your property purchase, your lawyer or conveyancer should:

·       Review and provide advice on the Contract of Sale & Section 32 Statement;

·       Liaise with your mortgage broker and/or lender in preparing for settlement of your purchase;

·       Prepare a statement of adjustments apportioning outgoings between you and the vendor and arrange for any outstanding rates and outgoings to be paid at settlement;

·       Prepare a statement of account outlining the total amount required to complete settlement;

·       Apply for any stamp duty concession or exemption and arrange for the payment of stamp duty on your behalf;

·       Prepare the legal documents required to transfer ownership of the property to you and lodge those documents with the Land Titles Office; and

·       Notify Council, Water Authority, State Revenue Office and Owners Corporation manager (where applicable) of your purchase of the property following settlement.

What is the difference between buying a property by private treaty or at auction?

A property can be purchased at public auction or by private treaty.

The main difference when purchasing property at auction is that the property is purchased ‘unconditionally’. This means that your offer to purchase cannot be ‘subject to finance’, ‘subject to pest and building inspections’ or subject to any other condition. The cooling-off period will also not
apply to a property purchased at auction.

Before purchasing at auction, you should ensure you have received approval of finance, arranged pest and building inspections (if necessary) and have made all necessary enquires about the property.

Should I make my offer to purchase ‘subject to finance’?

If you are borrowing from a bank or lender, you should consult with your bank manager or mortgage broker to determine if it necessary for your offer to be ‘subject to finance’.

A Contract that is ‘subject to finance’ will allow you to withdraw from the purchase and recover your deposit if your application for finance is unsuccessful.

If the Contract is not ‘subject to finance’ you will be unable to withdraw from the Contract if your application for finance is unsuccessful. If you cannot raise the funds necessary to purchase the property, you risk losing your deposit and being sued for losses suffered by the vendor.

You cannot make your offer ‘subject to finance’ if you are purchasing a property at auction.

Should I make my offer to purchase ‘subject pest and building inspections’?

Pest and building inspections are used to determine if a property has any building defects or is subject to pest (termite) infestation.

We advise all purchasers to arrange pest and building inspections before agreeing to purchase a property. If you are unable to arrange pest and building inspections before signing a Contract, you should consider making your offer ‘subject to pest and building inspections’.

A Contract that is ‘subject to pest and building inspections’ will allow you to withdraw and recover your deposit if your pest and building inspections reveal a major building defect or pest infestation.

If the Contract is not ‘subject to pest and building inspections’, you will be unable to withdraw from the Contract or receive any compensation if you later discover building defects or pest infestation at the property.

You cannot make your offer ‘subject to pest and building inspections’ if you are purchasing a property at auction.

Do I have to pay a 10% deposit when purchasing property?

The deposit payable when purchasing is negotiable.

It is common for a vendor to request a 10% deposit, however this is not a legal requirement and you can negotiate a different deposit amount with the vendor.

What is settlement and when should my settlement occur?

The settlement date of your contract is the date on which:

·       You pay the balance of the purchase price to the vendor; and

·       Ownership of the property is transferred to you.

The settlement date is negotiated prior to the Contract being signed and can be agreed as a specific date (for example – 1 July 2022) or a particular timeframe (for example – 30 days from the date the Contract is signed).

If you are borrowing from a bank or lender, you should negotiate a settlement period of at least 30 days as your lender will generally require at least 30 days to prepare for settlement.

What is stamp duty, how much is it and when do I have to pay it?

Stamp duty is a government tax payable on the purchase of property.

Stamp duty is payable in addition to the purchase price and is required to be paid on the settlement date of your contract.

Stamp duty is calculated on the market value of the property however there are a range of stamp duty exemptions and concessions available if you satisfy certain criteria. For example, you may be eligible for a stamp duty exemption or concession if you are a first home buyer, pensioner or if you are purchasing a property that will be your principal place of residence.