Buying a home is a legal process, which means that after signing contracts and exchanging them, you are legally bound to buy the property, – and will forfeit a substantial part of your deposit if you don’t go through with it.
So, to avoid common pitfalls and mistakes, it is essential that every purchaser talks to their conveyancer or solicitor about the conveyancing process before exchanging contracts.
Confidence born of knowledge also helps the buyer when negotiating price and can assist in securing the property quickly to reduce stress.
You should aim early on to develop a
good business relationship with your conveyancer or solicitor so that they are familiar with your personal requirements. They need information about your mortgagee or mortgage broker as soon as possible to help them arrange a speedy request for valuation and loan approval.
Speed is of the essence especially when there are a few purchasers – or more – competing for the same property. If the contract reveals a fundamental problem such as zoning, the sooner you are aware of it, the better.
Analysing the contract
Every state in Australia has different conveyancing legislation and it is wise to use a conveyancer or solicitor who is
licensed and insured to practice in the one in which you are buying your home.
The contract identifies;
• the property
• the names and addresses of parties
• the price
• the deposit
• the date the parties agree to buy and
sell (known as date of agreement or exchange date) and the completion date – ie when the balance of purchase monies is payable and legal title and possession are usually transferred
The contract also allows for the adjustment of rates and taxes, rents rights, and the duties and obligations of each party.
The contract protects both purchaser and vendor, although your conveyancer or solicitor advises you on the contract before exchange to ensure that the purchaser’s interests (your interests as the buyer) are protected.
Once contracts are exchanged unconditionally, both parties are bound to performance of it and – be warned – changes to the contract after exchange are usually not entertained.
Negotiating the contract
When acting for a purchaser, your conveyancer or solicitor should recommend the following when reviewing a contract:
- land tax adjustment to be deleted if the property is to be the purchaser’s principal place of residence
- completion date is suitable to the purchaser particularly if they are selling at the same time
- inclusions match the purchaser’s expectations
- confirm all structures on the land comply with council requirements
- deletion of release of deposit clause if included in special conditions
- home warranty insurance certificate is included in the contract if the vendor has carried out building works of over $12,000 in the last seven years
- copy of development application and any building certificate issued by
the relevant council, and approved council plans if there has been recent development of the land
- obtain a copy of the survey from the vendor
- confirmation of vacant possession if required
- approval of sewer authority if structures were approved to be built over a sewer main, if required
Organising the title deed
A title deed, otherwise known as a Certificate of Title, is a single document
Once contracts are exchanged unconditionally, both parties are bound to performance of it and – be warned – changes to the contract after exchange are usually not entertained
issued by the NSW Department of Lands. These certificates are maintained by the NSW Department of Lands and detail the registered proprietor and registered interests such as mortgages, leases and easements.
Its purpose is to provide proof of title with accurate definition of boundaries and dimensions guaranteed by the State Government of NSW. The accuracy of the registry is called the ‘principle of indefeasibility of title’.
The purchaser’s identity
The purchaser’s full name must be consistent with details on their birth certificate and any other identification documents, such as a driver’s licence and passport provided in support of loan documents and any application for the First Home Owner Grant.
This is also important in order to avoid identity fraud – one of Australia’s fastest- growing crimes.
Purchasers should think very carefully as to who is to be noted as the ‘Purchaser’ before entering into a contract.
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