Buying property is a milestone in anyone’s life. It can appear to be a complex process, but as part of our conveyancing service we will guide you through the transaction and keep you informed every step of the way.
Trouncer Legal offers a comprehensive pre-purchase contract review service. Once you have found a property we can arrange for the real estate agent to send us a copy of the contract so that we can review the contract and advise you on the terms of the contract, any potential issues with the property or the contract and negotiate any changes that may be necessary to protect your interests during the transaction.
At this time we also recommend that you obtain a building inspection, pest report, and if applicable, a search of the strata records, to inform you of any potential issues with the house or unit that may result in excessive costs to rectify. We will also advise you in relation to the property’s zoning and recommend that you make enquiries with the local council regarding any building works that may have been carried out on the property. All of these enquiries are carried out prior to exchange because you will not be able to get out of the contract if you discover any issues with the property after you have committed to the purchase.
At this stage it is important that you contact your bank to obtain unconditional loan approval prior to committing to the purchase.
Exchange of contracts
Once you are happy with the property and the outcome of our enquiries and inspection reports, we will attend to exchange of contracts.
Once the contracts are exchanged, we will begin our investigations of the title by obtaining title and statutory enquiries. These enquiries ensure that the seller is able to legally transfer the property to you on the settlement date by informing us of any issues as to title due to, for example, any claims on the property by third parties or proposals for acquisition by government authorities.
Cooling off period
Usually, a contract will have a five business day cooling-off period during which you may decide whether or not you want to proceed with the purchase. This decision will largely depend on your ability to obtain unconditional loan approval and the outcome of any enquiries and inspections, such as building and pest inspections, we make during the cooling-off period.
If you exchange with a cooling-off period you will pay the deposit in two instalments: (1) 0.25% of the purchase price on exchange, which will be forfeited if you decide not to go ahead with the purchase; and (2) the balance of the deposit by 5pm on the fifth business day after exchange.
Sometimes, a seller will insist that you exchange contracts without a cooling-off period and you must obtain legal advice in these circumstances. We recommend that you do not exchange without a cooling off period unless you have already received legal advice on the contract, conducted all necessary inspections and enquiries and have obtained unconditional loan approval. The risk to you is that you will be committed to the contract from the date of exchange and will not be able to back out of the contract without forfeiting the full amount of the deposit and being subject to further claims for damages by the seller.
When a property is sold at auction there is no cooling-off period and you must be prepared to commit to the purchase and pay the full deposit on the day of the auction.
Stamp duty is imposed by the State Government on purchases of property in New South Wales. Your liability for stamp duty arises upon exchange of contracts and is payable within 3 months of that date. When purchasing property ‘off the plan’, the duty must be paid within three months from the date of: (a) completion of the purchase; (b) the assignment of the whole or any part of your interest under the contract; or (c) the expiration of 12 months after the date of exchange, whichever occurs first.
However, as most contracts have a settlement period of only 6 weeks, we arrange for payment of your stamp duty prior to settlement. We will calculate your stamp duty, advise you of the amount payable and ask you to bring in a bank cheque payable to the Office of State Revenue. Sometimes it is possible for stamp duty to be paid on settlement and, if you give your bank authority to do so, it can draw a cheque for stamp duty on your behalf.
You should consider whether any of the available exemptions or concessions to stamp duty may apply. If you are eligible for an exemption or concession, we will assist you to complete the relevant application form and submit that form to the Office of State Revenue.
It usually takes 6 weeks from exchange for settlement to occur, however this depends on the terms of your contract. During this time we will contact your bank and provide it with all of the necessary documents it needs to prepare your loan.
Prior to settlement, we will prepare a settlement statement which is the adjustment of rates and outgoings on a pro rata basis. The exact amount payable to the vendor is usually a little higher than the balance of the purchase price less the deposit paid. Closer to settlement, we will advise you of the exact amount required at settlement and, if there is a shortfall, we will notify you.
The settlement date under the contract is not a hard and fast date and, occasionally, you or the seller may be unable to settle the purchase on that date. If the vendor is not ready to settle, we will issue a notice requiring that the vendor settle within 14 days.
On settlement all money is handed to the seller in exchange for the certificate of title to the property. If you have obtained a loan for the purchase, the certificate of title will be given to your bank and will be held until your loan is repaid. If you are not obtaining a loan, then the certificate of title will be given to us and we will attend to registration of the purchase at the land titles office. Once a new certificate of title has been issued with your name on it, we can either hold it in a safe packet at our offices or give it to you.
Once the purchase is complete we will arrange for the transfer of council rates, water rates and strata levies, if applicable, and will pay any outstanding amounts so that you will not have to pay any rates until the next payment period.