Buying a new property is an exciting time. With so much at stake, economically and emotionally, it is notoriously risky if you don’t have the right information or advice.
Claiming your piece of the ‘Australian Dream’ is becoming harder and, with more at stake than ever, buyers should be aware that it will not be always easy nor problem free. Your best defence in keeping the dream from becoming a nightmare is to simply arm yourself with the best possible information and advice.
Below are some of the issues you should be aware of when buying a property whether it be a home, a strata unit or a business premises. This article seeks to provide a simple and easy to understand introduction to the issues involved in buying a property. However, as this is only an introduction, it is important to always get the right advice from your trusted property law specialist when seeking to buy a property.
Protecting yourself when buying a property
Put simply, conveyancing is the process of transferring the ownership of property from a seller to a buyer. Like any sale, this requires the creation of an agreement. In conveyancing this is the contract for the sale of land.
This contract will essentially set out the nature of the property that is being sold, the agreed price, the condition it is in, and other terms and conditions such as cooling-off periods and settlement dates.
The buyer’s role will consist of, essentially, ensuring their investment is a good one by arming themselves with the best possible information about the transaction and what they are buying. Buyers should be sure they understand the following issues.
Searches and Investigations
Making all the relevant investigations or searches on the property will be required during the process (see below for specific searches required for strata and business purchases).
These searches will involve being sure that:
- the seller holds title to the property they are selling;
- the property is in the condition that the seller claims it is in; and
- the property is a good investment and will be serviceable for years to come.
These searches will involve building inspections, strata record inspections and title searches. Your property law specialist will arrange all of these.
The Cooling-off Period?
Contracts for the sale of land will often include a “cooling off” clause. This clause gives you a period (often five days) in which to decide not to proceed with the contract.
A “cooling off” period can be shortened or lengthened depending on negotiation between the parties. The cooling-off period is an important period for a buyer and enables a short period in which to decide that the property purchase will not be worth going ahead with. Many sellers may insist that you waive the right to a “cooling off” period by insisting on a “Section 66W Certificate”.
Your lawyer will be able to advise you on the best way to proceed in relation to a cooling-off period.
Can the seller rescind on the purchase?
There must be a clause in the contract that allows the seller to rescind on the contract. Further, rescission must be made on the basis of ‘reasonable grounds’ and must not be an arbitrary or capricious act. If the seller of the property wishes to rescind, your lawyer will be able to advise you on how best to deal with the circumstances.
Purchasing a strata property
A strata property purchase will be essentially the same as a Torrens purchase (as most strata schemes are under the Torrens system), however, it should be remembered that when gaining strata property you will automatically become involved with an Owner’s Corporation. This will mean different property management and dispute resolution arrangements. It will also mean the payment of strata levies by the owner.
With a strata property purchase you will need to carry out searches on the records of the owner’s corporation to make sure you are not entering into a situation where the body corporate are not active or are poor at keeping the common areas of your property in a serviceable condition. A search will also reveal if there are any major, and expensive, problems with the property.
Examples such as the large Regis Towers strata scheme should serve as a warning to many strata property purchasers to make sure the scheme they are entering into is not stricken with issues that will damage the value of your property.
Buying a business premises
When buying a business premises there will be differences in terms of the kind of investigations you will wish to have carried out on the property. You will need to, in business language, exercise “due diligence”.
Aside from the usual title searches, other investigations will involve whether the property to be purchased will suit your business, what fixtures will be included, and whether purchasing the property will be more financially viable than leasing it. A property lawyer with commercial experience will be well placed to provide you with advice in making your business premises purchase a success.
Is a Lawyer Necessary?
The buying of a property is complex as well as risky. However, having a specialist property law lawyer act on your behalf in this process is virtually a guarantee that your purchase will go according to plan.
While you may think that you cannot afford the services of specialist legal services, consider whether you can afford not to. The purchasing of a property will be one of the largest investments you make in your life. During this period your lawyer becomes crucial in protecting your investment.
Whether investing for the future, or buying into the ‘Australian dream’, consulting a lawyer will enable you to feel assured that your investment is in good hands. For the kind of advice and expertise you can trust, contact Craddock Murray Neumann today.