To minimise your risks and exposure, the following are essential tips to consider when purchasing a property.
1. Prior to signing the Contract, inspect the property and get your solicitor to review the Contract.
In accordance with the Conveyancing Act 1919 (NSW), a Contract of Sale must include a number of prescribed documents known as the Vendor Disclosure Documents. Prior to executing the Contract, you must arrange for your lawyer to undertake a thorough legal review of those disclosure documents. This will assist in determining the following:
(a) whether the local council will restrict the future development or your intended use of the property;
(b) if there are any rights of way across your driveway or restrictions on what can be developed on the land, building a second story or specific fencing; and
(c) in relation to strata properties, whether there are any major upcoming works, special levies or litigation proceedings involving the owner’s corporation.
However, the law only requires the Vendor to disclose matters affecting the title to the property, and there is no requirement for the Vendor to disclose any information regarding the quality of any building on the land.
As such, you should ensure that you undertake your own due diligence. There are a number of additional enquiries which are not carried out by Conveyancing practices and which the intending purchaser may personally attend to prior to committing to the purchase of the property.
These include, but are not limited to:
(a) inspecting Local Council records to ascertain, for example, whether Council has received, is considering or has consented to any development application in relation to properties adjacent to the property you intend to purchase;
(b) talking to neighbours to find out whether they have received any order, notice or other document from any authority or other bodies, whether they are otherwise aware of proposed developments in the area and whether there are any disputes in relation to boundary fences, encroachments, noise and other problems;
(c) obtaining financial planning and/or investment advice; and
(d) obtaining a valuation from a Registered Property Valuer.
2. Utilise your cooling-off period efficiently
Most contracts in NSW include a 5-business day cooling off period, which allows you to withdraw from the Contract after signing. That said, you will forfeit 0.25% of the purchase price to the Vendor. It is important you use this cooling off period to finalise your finance and complete all your due diligence.
However, it is important to note that if you are buying a property at auction, the cooling-off period is waived entirely. As such, it is important to arrange your finances prior to auction, undertake your due diligence of the property and obtain legal advice prior to executing a contract at auction.
3. Allow sufficient time for settlement to occur.
In NSW, settlement will typically take place within 42 days from the Contract Date (i.e. 6 weeks) unless an earlier settlement date has been agreed between the parties.
Prior to settlement, it is critical to ensure that you have your funds ready to go in order to have a smooth settlement.
In addition, other documentation must be prepared to finalise the settlement through PEXA, such as stamp duty assessment, the transfer form and settlement adjustment sheet (which will be completed by your legal representative).
4. The day before settlement inspect the property
Prior to instructing your solicitor to finalise your purchase, you must inspect the property to ensure that the property is in the same condition as it was when you exchanged the contract (not including fair wear and tear) and ensure that all inclusions (e.g. blinds, lights) are present and in working order.
If there are any defects found, your solicitor can negotiate for funds to be retained from the purchase price, until such defects are rectified.
5. Plan your utilities ahead
Once settlement occurs via PEXA, the change of ownership is lodged with NSW Land Registry Services instantaneously. Once the change of ownership is registered with NSW Land Registry Services, the relevant water and council authorities automatically update the new ownership details.
To ensure that you have a smooth transition into your new home, it is important to organise your accounts for utilities such as electricity, gas and internet, as these are not automatically transferred at settlement.
If you are considering purchasing or selling a property, Afaf Elgammal and the Commercial Team at Watson Webb are well equipped to assist at any stage of the process. For further information or advice tailored to your circumstances, please feel free to contact our team.
Disclaimer
This article is provided for general information purposes only and does not constitute legal advice. It is not intended to address the specific circumstances of any individual or business, and reliance should not be placed on it as a substitute for obtaining legal advice tailored to your particular situation.
You should obtain independent legal advice before entering into, varying, or relying on any property transaction or related agreement.
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