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Many of our clients, particularly first-time home buyers, come to us in the early stages of their purchase bewildered with the long string of sales negotiations and the conveyancing process in general.
Understandably, they do not know at which stage of the process the property they have searched so long for, is actually ‘theirs’, nor comprehend why additional investigations are recommended despite the many documents already attached to the contract.
Purchasing a property can be exciting but is usually also stressful. Having an experienced property lawyer by your side and an understanding of the conveyancing process before jumping into the market can help alleviate some of the uncertainty.
Following are our top tips to help get you market ready for your property purchase.
Get a check on your finances
If you are borrowing, you should have your loan pre-approved before you start window shopping.
There are numerous lenders and brokers in the market but you need to be comfortable with just one who will get you a suitable loan package with a good rate, advise on current stamp duty grants and concessions, and assist you with the entire loan process, from lodging the application through to booking your matter in for settlement.
A common cause for people missing out on securing their purchase is the time it takes to obtain finance approval. If you have everything ready to go then it is generally just a matter of having the property valued before final approval is given.
Delays in signing loan documents and providing information to your lender can also delay settlement of your purchase resulting in inconvenience and the risk of penalty interest being charged under the contract.
Pre-approval of your loan is essential before your property search begins and will give the edge you need in a competitive market.
Understand the conveyancing process
The timeframe between stepping through the door of your potential new home and settling your purchase is short – a basic understanding of the conveyancing process is therefore important so you can make informed decisions at critical times.
You don’t need to have an exhaustive knowledge of contract and property law – that’s our job. But an understanding of the conveyancing process in general, and some of the key terms will help you feel at ease with your property transaction. Following are some of the essentials.
The Contract – all contracts for the sale of land must be in writing and available for inspection before a property is listed. If you are interested in purchasing a property, you should be able to request a copy of the contract from the agent or seller.
The contract must contain certain documents relating to the property such as a title search, plan, copies of recorded interests, drainage diagram and planning certificate. Your lawyer will ensure that the contract has all prescribed attachments and will assist in explaining these to you. He or she will recommend any additional enquiries and investigations you should make and can arrange pest and building, or other reports on your behalf, before committing to the purchase.
The exchange – exchange of contracts is the formal process of binding the seller and buyer to the transaction. Identical contracts are ‘swapped’, usually between the parties’ legal representatives. The contracts are dated, and this generally triggers the settlement date.
Upon exchange of contracts, the deposit (10% of the purchase price unless otherwise negotiated) is payable and the purchaser’s liability for stamp duty arises.
Apart from some exceptions (such as properties bought at auction), purchasers of residential property in New South Wales have statutory cooling-off rights entitling them to rescind (cancel) the contract within five (5) business days of exchange unless these rights are waived by agreement between the parties. With off the plan contracts the cooling-off period is ten (10) business days. Purchasers who exercise their cooling-off rights must do so in writing within the prescribed timeframe, and will forfeit 0.25% of the deposit.
Because an exchanged contract is legally binding it is important that you are completely satisfied with the property, finance has been formally approved and / or your lawyer has requested special provisions in the contract allowing you to rescind if certain conditions are not met.
Failing to complete your purchase after exchanging contracts has serious consequences including forfeiture of the deposit and the risk of being sued by the seller for losses sustained for failing to fulfil your obligations under the contract.
Mid transaction – your lawyer will liaise with your lender to ensure all pre-settlement requirements are met and work towards settlement of your purchase.
Additional searches and investigations are carried out to obtain rate assessments for settlement adjustments and to ensure that the land is not subject to any adverse affectations which, in limited situations, may entitle you to rescind the contract. The law in this area is particularly complex and each property is unique. Your lawyer will be able to advise you on the depth of investigations to be made.
Communication is key to a smooth transaction. The good thing about a conveyancing matter is that the parties’ objectives align – the seller wants to sell and the buyer wants to buy. It’s that simple. The role of the parties’ lawyers is to facilitate the transaction whilst ensuring their respective clients are well informed and their interests protected.
Lack of communication is an obstacle to a seamless transaction. Occasionally terms are negotiated between the buyer and seller without the knowledge of the agent or lawyer. Consequently, the agreement is not reflected in the contract, providing little scope to clarify misunderstandings or to ensure enforceability. The matter may then become unnecessarily protracted. If you have reached certain agreements with the seller, you should make sure you bring this to your lawyer’s attention so appropriate advice can be provided and the terms included in the contract.
A good property lawyer will keep lines of communication open to ensure any misunderstandings are sorted so the parties can anticipate settlement on the due date with minimal stress.
This summary is a general guide to a standard residential conveyance. Your purchase may be off-the-plan, a strata or community-title dwelling or you may need to bid at an auction to secure your dream property. These matters will require additional considerations and an experienced property lawyer is well-equipped to guide you through the course.
The conveyancing process moves quickly and it is important that all parties are on the same page. Complications can and do arise but can generally be sorted by a fair and reasonable approach between the representatives for the buyer and seller.
If you or someone you know wants more information or needs help or advice, please contact us on (02) 9818 2888 or email firstname.lastname@example.org.