You are interested in buying a property, or land to build. You get a copy of the Contract or have a copy of the Contract forwarded to your solicitor. What next?
10 Steps to take when buying property
- Do you have your finances ready for purchasing a property? This should be a resounding YES! You need at least pre-approval before you start looking so you know what your budget will be. Once you have found your property you should aim to enter the Contract with a Cooling off period in place so that you can secure unconditional approval from your lender before Cooling Off expires. Many lenders will no longer provide unconditional approval until contracts have been exchanged. If there is no Cooling off period in place or you purchase at an auction (when contracts become immediately binding), there is a big risk to you if you have not received formal approval for your loan.
- Pre-purchase building inspections: Organise (or ask your solicitor to organise on your behalf) a pest and building inspection and if it is a strata property, an inspection of the strata records. Identifying issues with the property early means you may be able to negotiate on a reduction of the purchase price. Do a visual inspection of the property and make a list of anything that doesn’t work, any damage identified or missing items. You will compare this checklist with your final inspection to ensure that no damage has occurred to the property during the settlement period.
- Is this property right for your purposes? Tell your solicitor what you plan to do with the property. Will you live in it, use it as an investment, tear down, is it your first home, will you build, and what are the timeframes around this?
- Understand what the contract is telling you. Ask your solicitor to explain the provisions of the Contract and what is particularly relevant to you. The vendor is legally required to disclose certain matters in the Contract, including whether:-
(a) The land is subject to any adverse affectations;
(b) The land contains any part of a sewer belonging to a sewerage authority;
(c) The land contains a building or structure that would justify the making of an upgrading or demolition order;
(d) Any amounts are payable in respect of positive covenants; and
(e) What is the status of the land in respect of environmental planning and development matters.
- Do further property searches. Ask your solicitor whether you need to order certificates from Council or other authorities to confirm that there are any proposals affecting the property. If there have been improvements to the property, check with Council whether DA approval was obtained or a building certificate has been issued. If not, you may need to discuss your options with your solicitor around this. Remember, purchasing certificates to confirm the true status of the property are additional costs imposed by the third party authorities.
- Negotiate Contract terms in your favour. Have your solicitor explain if they recommend negotiating any amendments to the Contract on your behalf, and whether they suggest any further enquiries of other authorities such as council, Environmental Protection Agency.
- Decide how you will hold the title? Are you purchasing on your own, or with other purchasers? Will you hold the title with other purchasers as joint tenants or tenants in common? Are you purchasing under a self managed super fund, through a company or will someone be purchasing the property as your trustee (making you the apparent purchaser)?
- Organise your deposit and confirm exchange of contracts. Your solicitor may be able to organise a 5% deposit on your behalf, or use of a deposit bond. Once the deposit is paid and you confirm with your solicitor that you wi
- Keep in regular contact with your solicitor and lender and prepare your finances for settlement. Check the progress of your loan documents. Get legal advice on the loan documents if needed. Sign all documents well in advance of the settlement date. Check with your solicitor about progress of their searches for council rates, water rates and strata rates. Have your solicitor advise you about what you will need to pay at settlement in respect of rates. If your loan wont cover the full amount required for settlement, then organise the transfer of additional funds to your solicitor’s trust account. Don’t forget, you will require extra funds to pay the rates to the next period, stamp duty, your solicitor’s fees, bank fees, title lodgement fees and (for online conveyancing) PEXA fees. Yes it adds up!…You said you were prepared to purchase a property?
- Do your final inspection, then sit back with a latte until you get a message or call from your solicitor that the property has settled. Make sure that you do a final inspection. Organise this with the agent. Use your checklist from Step 2 to ensure that there have been no breakdowns or damage to the property from the date you entered into the contract. Make sure the vendor has vacated the property and handed over all keys and remote controls to the agent. Then sit and wait to hear from your solicitor. You do not need to attend settlement and by July 2019 all settlements will be completed online.
Congratulations – you are now a property owner.
Then you have to move in! That involves another checklist….