Over the last 12 months many of my friends and family have gone through the process of purchasing a property. I am commonly asked what items they should be aware of when purchasing so after considering the different types of property purchases that are made, the below items are what we feel need to be considered for a successful transaction.
1. Engage a conveyancer or solicitor
The conveyancing process usually will be what kick starts your legal journey to property ownership so it’s important to engage a solicitor or conveyancer who will be able to take care of the legalities for you. But what’s the difference? The SA division of the Australian Institute of Conveyancers explains it well:
“Registered conveyancers are experts who specialise in conveyancing work … Some conveyancers are qualified solicitors but many are non-solicitors who have completed specialist tertiary education in conveyancing. In fact, many law firms employ registered conveyancers to undertake their conveyancing work.”
While there are DIY conveyancing kits available, these are useful only for the most straightforward property transactions. Even the simplest transactions can become complicated by legislation and regulations, making DIY a riskier move on your big investment. While using a conveyancing firm will generally be a cheaper option, many people prefer the added comfort of a solicitor or law practice. Should anything go awry with the transaction there is expertise available in house to deal with it quickly and efficiently, potentially saving you a lot of money and stress. You’ll want your conveyancer to consider things like local or national planning controls, permitted uses, heritage overlays and body corporate constraints. And like any transaction, if you have any concerns or additional knowledge regarding the property you’re buying, communicate them to your solicitor or conveyancer to ensure the best outcome.
2. Know the sales process
Conveyancing in Australia varies slightly from state to territory. And so does the sales process. For instance, there’s no cooling-off period for auctions (which are popular in the big cities), but with private treaty sales it’s different. And it’s even possible to buy via ballot. So make sure you know and understand the different sales processes before you start.
3. Check the title
Freestanding houses in Australia typically have a freehold Torrens Title. But other types of title exist for different property types and come with their own legalities. Strata Title was introduced to Australia in 1961. It’s a system for handling the legal ownership of a portion of a building or structure including apartments, townhouses, villas, commercial offices, factories, warehouses, retail shops and more. Before 1961 buyers used Company Title to effectively purchase shares in a building, and some older buildings remain under Company Title. Each system has its own pros and cons, as well as its own legalities. So if you’re buying an apartment, villa or townhouse, it’s important to do some research first to make sure you’re familiar with how it works as well as conducting a strata search. You’ll need to adhere to bylaws, take into account the fact you will be paying regular levies for maintenance and other expenses and enjoy the responsibility of voting at annual general meetings run by the strata management company and electing an executive committee. There’s also leasehold or community title. Your conveyancer can guide you.
4. Do the paperwork
Again, the legal paperwork associated with buying property varies slightly from state to territory. The process usually includes these key events and documents:
The vendor’s solicitor prepares a contract note or contract of sale concerning the property’s information and detailing exactly what is for sale. The settlement date should be specified – normally 30, 60 or 90 days. It can be very complex – for example, with properties sold off the plan. A contract usually has other documents attached, including a zoning certificate, drainage diagram, a plan for the land, and a Certificate of Title that confirms current ownership and whether there are any encumbrances on the property.
The contract is effectively made binding when it’s signed at “exchange”. This takes place either at the auction, or after a private treaty sale price is agreed, ￼and a deposit is usually paid at this time.
Settlement is usually six weeks after contracts are exchanged (but the date is specified in the contract) and is when you pay the remaining amount for the property. Stamp duty typically has to be paid within 30 days of settlement, but varies by state or territory.
Is a document to be finalised at settlement by your conveyancer.
If you’re raising finance for your property via a loan, your solicitor or conveyancer will need to supply certain documentation to your lender.
Type of ownership
When buying a property with someone else, you can usually own it in one of two ways: joint tenants, or tenants in common. It is wise to seek advice from your accountant to determine the best structure for you as changing the holding structure after settlement may incur stamp duty.
5. Do the inspections
The building inspection process is an important part of the legal checklist for buying property. For instance, the electrics and plumbing need to have been installed to certain requirements, and any renovations should have been approved by council. It’s also important to check the boundaries are in the correct position. A proper building and pest inspection can find potential faults where you might not have seen any. As long as you do your homework, and tick off your legal checklist, owning real estate grants you many freedoms – to buy, sell, renovate, invest and bequeath, or just to enjoy.