Generally it is our strong recommendation that prior to exchanging contracts or bidding at an auction you should first obtain:
If you are buying a strata title property then it is most important that you obtain a report on the affairs of the Owners Corporation prior to exchange.
When you purchase a property you do not have the benefit of any "warranties as to quality" in the contract. Accordingly if you discover any structural or other defects in the property after exchange then you will probably have no right to compensation and no right to get out of the contract. On the other hand the contract does contain "warranties as to title". In other words if you discover after exchanging contracts that the title to the property is other than as represented in the contract then you may have the right to rescind and have your deposit refunded, or you may have the right to claim compensation.
If you decide to purchase a property that has been shown to you by more than one selling agent then it is most important that the contract is in a form that will not make you liable to pay the sales commission. Most contracts for sale of land are prepared in a way that could make you liable to pay a sales commission if you were initially introduced to the property by one selling agent and subsequently purchase the property through another agent.
If you are purchasing the property with another person then you should consider carefully whether you should buy as joint tenants or tenants in common. It is important to discuss with your fellow purchaser the difference between the two types of ownership. If you decide to purchase as tenants in common then you must decide on your respective shares in the property. This will often be determined by your family or marital status.
If you are purchasing the property together with another person strictly for business purposes then it most likely that you will want to be tenants in common. If you are purchasing with your spouse or life partner then you will probably want to be joint tenants, however if you or your spouse or partner have children from a previous marriage then it may be best that you purchase as tenants in common.
When purchasing a property you must think carefully about the inclusions to be shown on the contract. The vendor cannot be compelled to leave fittings, items of furniture or other chattels at the property unless they are specified in the contract as "inclusions". You should also consider those items in the property that you don't wish to have and you should ensure that they are specified in the contract as "exclusions" so that the vendor is compelled to dispose of them prior to completion of your purchase.
You will not really have an accurate picture of what you are purchasing unless the contract for sale of land includes an identification survey. The survey should be "current" in the sense that it should have been carried out after the most recent improvements were added to the land. The survey will show you where the improvements are located relative to the boundaries. It should also show you where the fences sit relative to the boundaries and whether there are any encroachments across the boundaries. It is generally the case that you cannot object to these types of irregularities after exchange of contracts and accordingly an identification survey should be sighted by you prior to exchange.
We generally recommend that prior to exchange of contracts you sight a Council Building Certificate for the property. Such a certificate may be taken by you as an indication that the improvements on the land were built in accordance with approved plans and comply with current building regulations. The local Council will generally not issue a Council Building Certificate for a property if the property contains illegal structures or structures constructed without Council approval.
Accordingly it is our recommendation that you require that the vendor provide you with a Council Building Certificate or else explain why they are not willing to do so.
Often a vendor is not willing to make application for a Council Building Certificate because they know of some non-compliance. Often non-compliance is relatively minor such as dilapidated pool fencing or an unapproved garden shed or pergola.
If you are purchasing a property and the vendor has refused to provide a survey and Council Building Certificate then you must be prepared to run the risk that there are illegal structures on the property and that your financial institution will not require those documents prior to advancing your home loan. If you exchange contracts without a survey and Council Building Certificate and then discover that your financial institution will not provide the loan then you are risking losing your deposit and being sued for losses incurred by the vendor.
The contract for sale of land will specify a completion period which is the time between exchange of contracts and completion of the purchase. This period is normally six (6) weeks however it is open to negotiation and there maybe reasons why you might want a different period or a specific completion date.
When you purchase a property the contract must include a sewer service diagram which should be checked to ensure that improvements are not constructed over the sewer main and that connections from the building to the sewer main do not pass through neighbouring properties without appropriate easements. If you intend to carryout building works on the property you should ensure that the sewer main is not located where you intend to build.
Storm water which flows off the roof of the buildings on a property and off the driveways and other hard surfaces should be disposed of in accordance with the local Council requirements. Such storm water must never be piped into the sewer pipes. Generally Councils require that storm-water be discharged into the curb, into a natural water course, into storm water easements in neighbouring properties or sometimes into "absorption trenches". When purchasing a property you should investigate the destination of the storm water.
The contract for sale of land will include a Council Planning Certificate which will disclose the zoning of the property and whether the property is affected by Council's policies in respect of a number of different matters. The entire Planning Certificate should be considered with care particularly if you are purchasing with the intention of developing the land or carrying out construction works.
Most contracts for sale of land include various special conditions which normally are for the benefit of the vendor. It is important that before exchanging contracts you have an understanding of all of the special conditions to ensure that they are not onerous or otherwise unsatisfactory. Like all parts of a contract the special conditions are negotiable.
Risk in the property will pass to you on completion and accordingly it is essential that prior to completion you have in place building insurance. Normally your lending institution will advise you of the amount of cover they require. The lending institution will also require that they be shown as an interested party on the policy.
Stamp duty represents the most substantial expense for you in relation to your purchase. Remember that there is stamp duty payable on the contract for sale of land and stamp duty is payable on any loan documents relating to your purchase. It is generally essential that purchasers factor stamp duty expenses into their budget.
When you negotiate the purchase of a property it is important that you make a note of any works that the vendor promises to do. For example your vendor may promise to remove building materials and rubble from under the house or fix pool fencing or carryout unfinished painting. You will have little chance of enforcing such promises unless they are included as special conditions in the contract prior to exchange.
If you are a first home buyer then you should make yourself familiar with the rules regarding the First Home Owners Grant and the stamp duty concessions that may be available to you.
If you are purchasing a property and you are not an Australian Citizen or do not have permanent residency then you should check whether you need to obtain prior approval from the Foreign Investment Review Board.
Do not assume that you will have the benefit of a cooling off period when you purchase real estate. You will only have the benefit of a cooling off period if the vendor elects to give you the right to rescind the contract. Never exchange contracts, sign any documents or hand over any money unless you are crystal clear as to whether you are binding yourself to a contract. If you enter into a contract to purchase land and then are unable to complete or do not wish to go through with the purchase then it is most likely that you will lose your deposit and you may be sued for other losses incurred by the vendor.
The contract that you sign to purchase a property should include details of all easements, covenants, restrictions on use, rights of way, by-laws and the like associated with the property. It is strongly recommended that you understand your rights and obligations in respect of these features of the property.
If you are buying land from an unregistered plan of subdivision or a home unit from an unregistered strata plan then there are particular dangers for you because the property may be ill defined and you are likely to be bound by the contract for purchase without having actually physically seen what you are buying.
Purchasers of vacant land from an unregistered plan of subdivision are particularly at risk if the roads and services have not been constructed within the subdivision at the time of exchange of contracts.
Purchasers of home units from unregistered strata plans run the risk of having to deal with building defects as one of the first owners in the property. The contracts for the purchase of such properties should contain protections as much as possible. In some cases purchasers from unregistered plans may be able to delay payment of stamp duty. This concession does not apply to the case of vacant land or non-residential properties.
It is probably prudent for you to prepare a detailed budget of all of the expenses you will incur when purchasing a property. You should identify all of the possible items of expenditure throughout the transaction and allow generous amounts for each, allowing for worst case scenarios.
Potential costs may include stamp duty on the contract and transfer, stamp duty on loan documents, loan application fees, valuation fees, mortgage insurance, strata inspections report, building report, pest report, legal fees and disbursements, geo-technical engineers report, survey, Council Building Certificate, insurance and removalist's cost.