Whether purchasing a home or venturing into development, it is vital that the exhilaration of purchasing a property doesn’t stop you from undergoing important research, checks and steps before signing that tantalising contract. This guide will assist you in ensuring that you are able to enjoy your property, rather than face the annoyance of the many pitfalls that may arise.
As a home buyer, it is easy to be largely or solely concerned with the area you wish to buy in, the space available, affordability and possible mortgage repayment. For an investor, key characteristics of the property may include leasing potential, yield, capital gain potential, development prospects and tax implications. However, it is crucial that further due diligence is taken to avoid surprises and ensure that all the information regarding the property is correct and not misguiding or omitted.
So what do you need to look out for??
As a home buyer, ensure that the vendor will grant ‘Vacant Possession’ at settlement. ‘Vacant Possession’ occurs in residential and commercial lease transactions when a property is sold, a lease is granted, or a tenant is vacating. It involves the transfer of the land title to highlight your right of possession over the property. If you are leasing a property, it is important to review the conditions of tenancy, and if unsure of their implications, consult your solicitor.
Disputes over fence lines and trees over properties have long been regarded as a common cause of a headache. To avoid future stresses, it is important to check the measurements of the property to look for possible encroachments such as drains or trees. Further information regarding the land, such as easements, covenants or restrictions, will be found on the properties Land Title (for more information on how to understand your title, please follow this link). Ensure any confusion or doubts regarding your land identity are addressed with the vendor before signing a contract.
Stop. Check your planning certificate. Your ability to use your property is regulated by the council, and the property may have stipulations regarding height, conservation, or alterations to heritage listed properties. It is important to review town planning, and the possibility of building permits for your property, to ensure you do not receive the unwelcome surprise of not being able to renovate your dream home.
Although the legal process largely concerns the transfer of the property, not the property itself, if the property you are looking to purchase is less than seven years old, there is a legal obligation to disclose building permits, insurance warranties and owner-builder building survey reports. Reviewing these documents may save a future annoyance at the cost of improper insurance or dodgy building practices that may become your problem following contractual sale.
Caution: with not all contracts subject to building inspection and pest report, it is absolutely fundamental that you ensure careful inspection of the property. To address the possibility of flooding, water council’s offer maps regarding the likelihood; and to address road widening, you can refer to the Melways Directory. With the possibilities of nuisances such as dry rot, termite infestation, rising damp and blocked pipes, careful inspection of the house and surrounding area may assist in reducing the chances of any unpleasant surprises.
Any property that shares a common subdivision will be subjected to an Owner’s Corporation; a body that commonly manages the property. Important aspects of an Owner’s Corporation to consider include:
- Special rules on ability to use or alter the property
- Fees (such as for insurance and maintenance)
- Existence of a sinking fund to cover future capital expenditure
- Plans for future maintenance costs and repairs that you will be liable for
- The existence of any litigation currently affecting the corporation and its members.
All information can be found in the Owner’s Corporation Certificate and is likely to be accompanied by the minutes of the last Annual General Meeting (AGM).
Waking up on the first morning in your property to realise you cannot have a shower as water connection did not accompany the land transfer, may be a nasty shock. To avoid any surprises, ensure you check if electricity, gas, water, telephone and sewerage services are connected. This is particularly important to check in rural areas and should not be presumed.
Rates and Outgoings:
As your property will incur costs from the Council, Water Company, Land tax and Owners Corporation, it is important to obtain the corresponding certificates and check the fees.
Valuation and Negotiation:
With the terms ‘fees’ and ‘surprises’ being common in the real estate realm, to avoid the burden of excessive costs, it is important to do the research required to ensure you get the best deal possible. Methods such as looking at comparable sales, attending auctions in the area, conducting online searches for auction results in the postcode or engaging a qualified valuer may assist in evaluating the affordability of a property.
It may be important to ask questions regarding the reason(s) for the sale, how long the property has been on sale and why they are asking that amount to avoid being overcharged.
Overwhelmed by the many steps?
With the heavy weight of costs associated with purchasing a property, ensuring that you carefully address each issue will be well worth the headache of an unwanted surprise following purchasing a property. If unsure of the information you are receiving, or believe that something looks a bit strange, our team is available to address any enquiries.
Law&Co’s Titlexchange is fast becoming the market leader in conveyancing across Australia. With competitive, fixed fees across a number of standard packages and simple bolt-on services to suit your individual conveyancing needs. Transparent, simple and painless conveyancing is the order of the day so that you can get to settlement in the quickest way possible. Would like to find out more about how we can help you with your property transfer? Arrange a call with one of our lawyers today.