Property Purchase – Looking for that dream home or perfect investment?
Many of our clients, particularly first-time home buyers, come to us in the early stages of their property purchase. Often, a client will be bewildered with the long string of sales negotiations and the conveyancing process in general.
Understandably, they do not know at which stage of the process the property they have searched so long for, is actually ‘theirs’, nor understand why additional investigations are recommended despite the many documents already attached to the contract.
Above all, purchasing a property is exciting but is usually also stressful. Having an expert property lawyer by your side can make a significant difference. Also, an understanding of the conveyancing process, before jumping into the market, can help alleviate some of the uncertainty.
Following are our top tips to help get you market-ready for your property purchase:
Importance of Checking your Finances
If you are borrowing for your property purchase, you should have your loan pre-approved before you start window shopping.
In truth, the market is scattered with numerous lenders and brokers, but you only need to be comfortable with one! This being said, whoever you choose, they should have sufficient knowledge to secure a loan package with a good interest rate, and one that meets your individual needs. Additionally, they should be able to advise you on the current stamp duty grants and concessions and assist you with the entire loan process from start to finish. In short, from lodging the application through to booking your matter in for settlements.
A common cause for people missing out on securing their property purchase is the time it takes to obtain finance approval. So, have everything ready to go. It is then a matter of getting the property valued and obtaining final approval.
In addition, don’t delay signing loan documents and providing information to your lender. This will also delay settlement of your property purchase, and may result in unnecessary inconvenience and the risk of penalty interest being charged under the contract.
Therefore, pre-approval of your loan is essential before your property search begins and will give the edge you need in a competitive market.
Understanding the conveyancing process
The timeframe between stepping through the door of your potential new home and settling your property purchase is short. A basic understanding of the conveyancing process is therefore important so you can make informed decisions at critical times.
There is no need to have a thorough knowledge of contract and property law – that’s the job of an expert Property Lawyer! However, understanding of the conveyancing process in general, and some of the key terms will help you feel at ease with your property transaction.
Following are some of the essentials:
All contracts for the sale of land must be in writing and available for inspection before a property is listed. If you are interested in purchasing a property, you should be able to request a copy of the contract from the agent or seller.
Furthermore, the contract must contain certain documents relating to the property such as a title search, plan, copies of recorded interests, drainage diagram and planning certificate. Your lawyer will ensure that the contract has all prescribed attachments and will assist in explaining these to you. He or she will recommend any additional enquiries and investigations you should make and can arrange pest and building, or other reports on your behalf, before committing to the property purchase.
The exchange of contracts is the formal process of binding the seller and buyer to the transaction. The process varies slightly between jurisdictions as do the statutory rights for a purchaser to ‘cool-off’ (rescind or cancel) the contract within a specified period after exchange. To sum up, your lawyer will explain the relevant legislation in your jurisdiction and, if applicable the effect of waiving your cooling-off rights.
Remember, an exchanged contract is legally binding and therefore it is important that you are completely satisfied with the property and that finance has been formally approved. Equally important, and if necessary, is that your lawyer requests special provisions in the contract to allow you to rescind if certain terms are not met.
Failing to complete your purchase after exchanging contracts has serious consequences including forfeiture of the deposit and the risk of being sued by the seller for losses sustained, for failing to fulfil your obligations under the contract.
Your lawyer will liaise with your lender to ensure all pre-settlement requirements are met and work towards settlement of your property purchase.
Additional searches and investigations are carried out to obtain rate assessments for settlement adjustments and to ensure that the land is not subject to any adverse affectations which, in limited situations, may entitle you to rescind the contract. The law in this area is particularly complex and each property is unique. Your lawyer will be able to advise you on the depth of investigations to be made.
Shortly prior to the settlement you should arrange a final inspection of the property to ensure that it is neat and tidy, with items removed and practically in the same condition as when it was first inspected.
Completion of purchase occurs when the legal and bank representatives meet to exchange the balance of the purchase price for the title deeds to the property. With the introduction of electronic conveyancing, settlements can now take place on-line.
After settlement, the council and water authorities are notified so that future rate notices are issued in your name. The title deed will be retained by your lender until the mortgage is repaid.
The Importance of Communication
Communication is key to a smooth property purchase transaction. The good thing about a conveyancing matter is that the parties’ objectives align i.e. the seller wants to sell and the buyer wants to buy. It’s that simple. The role of the parties’ lawyers is to facilitate the transaction. Additionally, to ensure their respective clients are well informed and their interests protected.
Lack of communication is an obstacle to a seamless transaction. So try to avoid this at all costs. Occasionally, a buyer and a seller will negotiate terms without the knowledge of the agent or lawyer. Consequently, this agreement is not always reflected in the contract and provides little scope to clarify misunderstandings or to ensure enforceability. Matters may then become unnecessarily protracted. If you have reached certain agreements with the seller, you should make sure you bring this to your lawyer’s attention so appropriate advice can be provided, and the terms included in the contract.
A good property lawyer will keep lines of communication open. This will ensure any misunderstandings are addressed quickly and that the parties can anticipate settlement on the due date, with minimal stress.
In summary, this article is a general guide to a standard residential conveyance. Your property purchase may be off-the-plan, a strata or community-title dwelling, or you may need to bid at an auction to secure your dream property. These matters will require additional considerations and an experienced property lawyer will be well-equipped to guide you through the process.
The conveyancing process moves quickly, and it is important that all parties are on the same page. Complications can and do arise but can generally be resolved by a fair and reasonable approach between the representatives for the buyer and seller.
If you or someone you know wants more information or needs help or advice, please contact us on 02 9955 6692 or email email@example.com.