Buying A Property

General ConsiderationsBuying Off the Plan
   

These notes are not intended to be an exhaustive guide to buying a home and particular properties may demand alternative or additional considerations, for example strata title, new subdivisions, company share homes or Buying off the plan. The notes are based on the law in the State of Victoria and other jurisdictions may give rise to additional or different considerations.

Please read the disclaimer.

See also: Owning Property
"9 Things Every LGBTQ+ Homebuyer Needs to Know" US 09 OCT 17

GayLawNet®™ Buying Property
Updated on 19 October 2017 at 1107L (GMT/UTC +11)

General Considerations

Agents, Brokers

In some jurisdictions agents and brokerage firms are able to legally represent both buyer and seller in any given transaction. However, they generally have a duty to disclose all the information they possess to the buyer. There may also be statutory requirements requiring the vendor to provide the potential buyer with all relevant information concerning the property. In any case, it is important that buyers do their own careful appraisal of the property being considered.

On 21 November 2016, the Supreme Court of California held1 that the Agent had a duty to learn and disclose all facts materially affecting the value or desirability of the subject property.

1. Hiroshi Horiike v. Coldwell Banker Residential Brokerage Company, et al. No. S218734 PDF 157.20kb 21 NOV 16. [ Also available on GayLawNet(R)(TM) here]

Finance

The first step is to determine just how much you can afford to pay for your home. If you will be borrowing funds, do see your bank or lending institution to determine whether any necessary qualifications or limitations will affect your borrowing ability. Make sure you know what loan application fees apply and how much any mortgage insurance will cost (if applicable).

In any contract for the purchase of your new home other than at auction, it is important to ensure that the Purchaser's Finance details are completed, preferably allowing not less than 14 days for approval, which approval should be obtained in writing from the lender.

Government transaction taxes may be a significant cost, varying with the purchase price. For example, "stamp duty" in Victoria and in most other States in Australia on residential real estate transactions, is A $100,000 property will attract stamp duty of $2,150 and the stamp duty on a $200,000 property is $7,070 (as at 12 February 2012).

There may be Federal and State government assistance plans for first home buyers and other exemptions and you should enquire as to any entitlements that may assist you in the purchase or relieve you of certain government fees and taxes.

The US-based online website SmartAsset provides calculators and tools to enable the ascertaining of "How Much House I Can Afford", "Rent vs. Buy", "Mortgage Calculator". "Mortgage Rates", "Closing Costs Calculator" and "Down Payment Calculator".

Choosing Your Home

Inspections can be fun and being able to imagine how the home will look when you have got it decorated just how you like it is a valuable ability. Apart from the number of rooms and obvious features there are other questions:

There are so many matters to keep in mind you should give consideration to using an independent pre-purchase inspection service such as the RAIA Archicentre Pty Ltd who will provide a comprehensive report for an inspection fee of between $500.00 and $750.00. You may seek the inclusion of a special condition in the contract making the sale conditional on the receipt of a satisfactory report within (say) 10 days.

Auctions

With your finance pre–determined, if the property you have chosen is to be auctioned, you really should attend other auctions beforehand and decide what tactics you will adopt or whether you wish your lawyer or a buyer's advocate to bid on your behalf. Without signalling your interest to the agent, you may seek to have your lawyer inspect the Contract of Sale and the Vendor's Section 32 Statement.

Before Signing A Contract



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Insurances

Building Insurance

As soon as you have signed a Contract and paid the deposit, contact your insurer and request a cover-note be issued to protect your interest in the property. Ask for and write down the cover–note number.

Your lender may require you to produce a Certificate of Currency of Insurance noting the lenders correct legal name as an interested party and, if so, you should request your insured to provide such a certificate as soon as possible so that settlement is not delayed.

Term Life and Incapacity Insurance

If you are borrowing a significant sum to finance the purchase or buying together with your partner, it may be prudent to consider a "term" life insurance and an incapacity insurance. See: Incapacity, Wills, Death & Inheritance.

Cooling Off

With some other exceptions, provided the contract has not been entered into within 3 days of a publicly advertised auction and the price is less than $250,000, you may end the contract within 3 clear business days of signing it if you change your mind.

What happens next?

You should receive a copy of the Contract and Vendor's Section 32 Statement originally signed by the Vendor/s. If you do not, demand such a copy from the selling agent and take these papers to your lawyer without delay.

In every conveyancing matter, your lawyer will:

and where there is no lender:

You have the task of arranging for connection or transfer of all the utilities (gas, electricity and telephone) and the major task of your removal to your new home after settlement. Keys to the premises are usually made available for collection from the selling agent after settlement has been notified.

Your lawyer will also discuss with you the impact that your purchase may have on your Will, make any necessary changes and keep all documents in safe custody on your behalf.

Questions

You should feel free to ask your lawyer about any matter that is concerning you or which you do not understand. Buying a home is a major investment about which you must feel entirely comfortable. Owning you own home will give you a great feeling of pride and security and I wish you every success in your search.

BUYING OFF THE PLAN

Price

Check with an/other local agent/s as to how much the refurbished property may bring in the current market and see how this compares with the price being asked by the seller.

Refurbishment Specifications

The quality of fittings is important and if a unit is already refurbished for inspection by potential buyers, make sure the fittings are acceptable to you and that the Contract has a warranty that fittings of the same or equivalent quality will be provided at the expense of the seller.

Insurance

The Contract should provide that the seller will maintain a current insurance cover over the property and all the fittings and allow you to end the contract if the property is substantially damaged prior to settlement.

If you are borrowing a significant sum to finance the purchase or buying together with your partner, it may be prudent to also consider "term" life insurance and an incapacity insurance. See Incapacity, Wills, Death & Inheritance

Body Corporate and Outgoings

Ideally, there will be statement of Body Corporate fees chargeable to the property being purchased, and/or a warranty that such fees will not exceed certain sum for at least the first year of occupation. Some buyers report having experienced substantial increases in such fees and maintenance sinking funds.

Rental Income Guarantees

If you are considering an investment purchase, be wary of rental income guarantees. Check the local market carefully.

Finance

If you will be borrowing funds, before signing a contract that is not conditional on your obtaining the loan, do see your bank or lending institution to determine whether the loan will be available even though the settlement of the purchase may be many months away.

Deposit

Often the seller has the right to invest your deposit in an interest bearing account to the benefit of the seller.

Caveat

Usually you will not be able to lodge a caveat on title to protect your interest.

Stamp Duty

There is a stamp duty concession for the value of a refurbishment to an existing building and significant stamp duty savings may be available. There must be a new subdivision, the seller must be the first registered proprietor, the transfer to a buyer must be the first after registration of the plan of subdivision, no other contract for refurbishment can be entered into and various statutory declarations must be provided which the contract should specify that the seller undertakes to provide at the seller's cost.

Date of Settlement

The Victorian Subdivision Act requires the subdivision to be registered within 18 months, unless a different time interval is specified in the Contract. Check the time allowed and discuss this with your lender.

Costs

Costs are likely to be higher than usual because of the protracted nature of these purchases (sometimes settlement will not take place until some eighteen or more months have elapsed). Numerous letters and telephone contacts will probably be necessary and additional title and other searches may be required, all of which lead to increased costs.

Utilities

The Contract may or may not specify that appropriate wiring will be installed for telephones and television. You have the task of arranging and perhaps paying for the connection of all the utilities (gas, electricity and telephone).

Questions

You should feel free to ask your lawyer about any matter that is concerning you or which you do not understand. Buying a home is a major investment about which you must feel entirely comfortable. Owning you own home will give you a great feeling of pride and security and I wish you every success in your search.


Further information maybe obtained from the Land Channel, Victoria site.



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