Before you start looking for a property …
- Buying real estate is both exciting and nerve-racking. It is also, for most people, the most expensive asset they will buy in their life. When deciding on the solicitor you wish to use I recommend you consider the following issues:
- Is the cheapest quote necessarily value for money?
- What legal services are included in the quote (for example, does the quote include witnessing your signing of mortgage documents and assisting you with the Banks requirements)?
- What quality of service will you get?
- Ask your solicitor what legal fees, stamp duty on the contract, and search costs you will have to pay.
- Ask your financier or mortgage broker what bank and government fees and charges will apply to your loan.
Signing the Contract
Once you have found a house, unit or land you want to buy, the general process is as follows:
- The real estate agent prepares the contract;
- There is no set percentage you have to pay as a deposit;
- You should have the Contract checked by your solicitor to make sure your interests are protected. Usually the contract will be a standard contract, however there are standard conditions and special conditions which might need to be included depending on your circumstances. These can be discussed with your solicitor;
- Once you have had the contract checked by you solicitor, you may then sign the contract as your offer to buy the property.
- If the seller signs the contract then it is a binding Contract.
Once the Contract is signed
- As soon as the seller signs the contract you must arrange your own insurance cover on the property.
- The real estate agent will forward your copy of the contract to your solicitor when the deposit/part deposit has been paid.
- You are responsible for arranging any building and pest inspection for the property
- You are also responsible for promptly proceeding with your finance application.
- Once your finance is approved your financier will prepare mortgage documents for you to sign.
- Your solicitor will arrange searches of the property and the documentation to transfer the property into your name
- Your solicitor will arrange settlement and you do not need to attend (settlement is actually not at all exciting nor worth attending!).
- After settlement you are entitled to collect the keys from the agent
Some important information
- There are strict time frames that apply for your building and pest inspections, finance approval and any other conditions in the contract. If these strict time limits are not met you may find yourself in legal difficulty including the seller having the right to withdraw from the contract and/or the seller having the right to sue you and/or you losing your deposit.
- The strict time frames also apply to the settlement date. If you cannot settle on the date nominated in the contract the legal difficulties referred to above and other consequences may also apply.
- If you are buying a house or unit to live in you will have a stamps declaration to sign to obtain the concessional rate of stamp duty. If it is your first home you may be entitled to an additional concession. There are particular requirements that apply for you to be entitled to the concessional rate of stamp duty. There are three particular issues to be aware of that you must comply with to be entitled to the concessional stamp duty rate:
- You must move into the property within 12 months of settlement;
- You must live in the property for at least 12 months;
- If there are tenants in the property or a lease back to the seller, the tenants or seller must vacate within six months of settlement.
If any of the above do not apply, then you are not entitled to claim the concessional rate of stamp duty.
There are numerous potential scenarios that may apply to you when you are buying property. The above is intended to be a general guide only and it is important for you to get legal advice about your own particular circumstances.