11 Feb Top Tips When Buying a Property in NSW
Most property purchases in New South Wales are by private treaty.
The contract for sale becomes activated once the seller and the prospective buyer have exchanged contracts. At this point, you will be required to pay a deposit.
The figure is usually 10% minus any holding deposits you have paid at this time. However, an activated sale contract does not mean that you are locked into making the purchase.
Most contracts for sale include what is known as a ‘cooling-off period’ where it is possible to change your mind if you wish. Your solicitor can have the cooling-off period waived by signing a certificate and explaining the entire contract of sale to you.
The cooling off period lasts 5 days and you can cancel the contract in writing during this time. It starts on the day of the contract being signed and ends at 5pm on the 5th business day after the exchange.
If you do use the cooling off period, you will have to pay the vendor 0.25% of the purchase price.
Buying Property at an Auction
Because there is no cooling-off period, purchasing property at an auction can be nerve-wracking.
If you are the highest bidder when the hammer comes down, you are usually required by law to go through with the purchase even if the contract of sale is unfair.
If you let your solicitor look over the contract of sale before you make your bid, you will be able avoid the trap of being forced to settle with a poor contract.
Before the auction begins, your solicitor will point out any terms in the contract that may be less than favourable to you and discuss them with the vendor’s solicitor to get them changed. Your solicitor will also make sure that your purchase is what you expected and that it is in the proper condition.
Purchasing Apartments, Units, Townhouses and Flats
In New South Wales, most apartments and townhouses are strata titled. This means that when you make a purchase, you are also buying into the rights and obligations of being a member of the body corporate of the complex.
If you are part of a body corporate, you will have a say in decisions that will affect the complex and you will also be required to pay strata levies.
Your ability to choose how to use your property may also be affected by area by-laws. Other downsides of strata title include making a monetary contribution toward communal problems such as plumbing, roof repair and property maintenance of the building.
Because a strata title can affect the value of your purchase, you will need to gain a complete picture of the activities of the body corporate before your make your purchase.\
In general the more amenities your complex has e.g. lifts, tennis court etc, the more body corporate costs you will pay.
The Contract of Sale
Your property rights in New South Wales are largely dependent on what is in the contract of sale. Because no two properties are alike, no two contracts are exactly alike either. A contract for sale must include several key points:
- A zoning certificate
- A copy of the plan for the land
- A drainage diagram for sewer lines
- A copy of the property certificate
The contract for sale should also include any documents showing easements, rights of way, restrictions, covenants and any other similar documents. In most cases, strata property sellers will also include copies of:
- Property certificates and strata plans
- By-laws concerning the use of common property
Most contracts for sale are ‘standard’ meaning that they have been in use for an extended period of time and are fair to the buyer and the seller.
However, sellers are not required to include some terms and may choose to include something that benefits them but puts the buyer at a disadvantage.
That’s why your solicitor will go over the contract with a fine tooth comb to ensure that it is both legal and fair to both of you. If there is a clause that is not in your best interests, your solicitor will negotiate with the seller’s solicitor to get it changed.
You Should get Inspections during the settlement period
Because you are taking the property on an ‘as-is’ basis, you will be signing up to take on any structural problems or other issues that may be present when you make the purchase. For this reason, it is always best to have a qualified inspection of the property before you make the purchase.
You can spend a few hundred dollars now to have the property looked at or tens of thousands of dollars down the track trying to patch up the property.
What is Included in the Sale?
All ‘fixtures’ on the property are included in the sale. A fixture is anything that cannot be taken off the property without causing damage.
Fixtures include stoves, toilets, built-in pools, electrical lights and ceiling fans. At times, a seller will attempt to exclude a fixture from a contract for sale.
Your solicitor will help you make sure that everything is clear-cut to ensure that you understand it.
The Exchange of Contracts
The contract to sell a property is binding when the buyer and the seller sign copies of the contract and exchange them.
At auction, the exchange takes place immediately after the acceptance of the winning bid. Sellers may also be willing to exchange contracts by mail.
If this is the case, the seller’s signed contract will be delivered to you by your solicitor. You may be able to get out of the contract and get your deposit back if the contract was incomplete on the seller’s end.
Government Help and First-time Buyers
If you are buying your first home, you may be able to receive the first home buyer’s grant from the government. The Office of State Revenue can give you more information. The obligation to pay stamp duty at settlement may be waived it you are purchasing a home for the first time. Your solicitor will also make sure that the contract for sale does not include any unfair taxes.
Certificate of Title
Owning a property technically means that you hold a title to it. Because most land in New South Wales operates under Torrens Title, your solicitor will need to register the Certificate of Title at the Lands Title Office once your name is on it.
The purchase of a house in NSW generally gives you either freehold, leasehold, company title, strata title or community title rights to the property.
On settlement day, you will pay the owner everything you owe to “settle” the purchase of the home. If you cannot make it to settlement, you must let your solicitor know as soon as possible to prevent complications of the settlement from arising.
You are not usually required to be present at settlement. If you are paying with a mortgage, bank representatives will also be present at settlement. Once the process is complete, your solicitor will contact you to let you know that the purchase was a success.