Buying a home is likely to be the single biggest financial decisions you are likely to make in your lifetime. It is important that you understand your legal rights and responsibilities so that you don’t put yourself at unnecessary risk. Listed below are some hints to ensure that your dream of owning your own home doesn’t turn into a nightmare!
This is an overview of the expenses you can generally expect in buying a property:
- fees and charges payable for obtaining any loan (mortgage)
- stamp duty (see stamp duty calculator)
- registration fees (paid to the Lands Titles Office)
- search costs
- rates and taxes for the period that you will own the property
- conveyancing fees and minor costs, and
- the costs involved in moving.
There may be other expenses in specific transactions; always ask your conveyancer for details of anything which may arise in your particular purchase.
See our Purchase Budget Guide for help in costing out your property purchase.
Check out the neighbourhood
Do your homework. Get online and check out the council’s website to see what services are like in the area. Where are the schools? Parks? Transport? Medical Facilities? Drive by the property at all times of the day to get a feel for the neighbourhood. Talk to neighbours. Do whatever you need to ensure that you are making a good choice not just in the house but also in the neighbourhood. Buying and selling a home can be expensive so you want to be sure of your decision on all fronts before jumping in!
The agent or seller are under no obligation to tell you about any hidden defects or negatives about the property or the neighbourhood unless you specifically ask or make it clear that something is particularly important to you. You take the property as is.
In the Northern Territory, the contract can be made conditional on building and pest inspections giving the buyer 10 days to complete the reports. This can be expensive, but it will give you peace of mind and ensure the property is built to code. If the building is not built to code, then any future buyer may insist that this is done which can take time and be an expensive process. Arafura Conveyancing will discuss the different reports available and the cost involved and organise them for you.
Check whether electricity, gas, telecommunications, water and sewerage are or can be connected. This is particularly important with rural property. If not connected, check the cost required to connect.
Flats, Apartments, Units and Body Corporates
All subdivisions with common property will be subject to a body corporate. You should consider:
- Any special body corporate rules
- Body corporate fees – these can be quite high. Will you be using the facilities you will be paying for – eg swimming pool, lifts
- Sinking fund – is there enough to cover the cost of capital expenditure required today
- Future maintenance costs
- Any litigation affecting the body corporate or its members
Real Estate Agents
As the buyer of the property you need to be mindful that the real estate agent is acting on behalf of the seller, no matter how nice or helpful they may be. It is an unfortunate fact that not all real estate agents are completely honest, so don’t be caught relying on what an agent tells you. You need to check all aspects of the property and the sale, legal and otherwise independent of what the agent may tell you.
Remember that most contracts reflect the entire agreement, so unless something the agent has promised or is important to you is mentioned in the contract, there is no cheap way to ensure this promise is made good. Arafura Conveyancing can check the contract for you and negotiate any amendments that are needed in order for you protect your interests and to ensure you can meet your financial or legal responsibilities by the dates set out in the contract.
Many real estate agents have local conveyancers to whom they refer work from properties they are selling. This is perfectly appropriate if based on the professionalism and expertise of the conveyancer and can be helpful if you don’t know of a conveyancer yourself. The agent may tell you that it will be cheaper for you to use the seller’s conveyancer. While it is legal for the buyer and seller to use the same conveyancer for the sale, the Australian Institute of Conveyancers does not recommend this practice. In the long run, using the seller’s conveyancer could be much more expensive for you than having your own.
Your conveyancer should be your advocate in the conveyancing process and their goal should be to protect your interests. To avoid any conflict of interest it is advisable that you seek independent legal advice to that of the seller and vice versa. A conflict of interest for a conveyancer can be as simple as a delay in finance approval. Arafura Conveyancing does not act for both parties and will protect your interests.
You should always have your finance pre approved before signing a contract. However pre-approval is not formal approval and does not guarantee you a loan. If you are relying on finance, then it is essential that you make finance a condition of the contract, setting out the lending institution you wish to use and the full amount you wish to borrow and the date your financial institution can give you loan approval. It is important that you meet this date or the seller can terminate the contract. You should therefore ensure you provide the financial institution with a copy of the contract along with any verifications they require as soon as possible. While Arafura Conveyancing will liaise with your lending institution, privacy laws are making this more and more difficult. You should continue to follow up the lending institution to ensure loan approval is obtained by the due date set out in the contract.
If you are providing some of your own funds at settlement, it is your responsibility to ensure that those funds are available for the settlement date. Funds must be in the form of bank cheques as required by your conveyancer.
Easements and covenants/encumbrances
If the title is subject to an easement or covenants or encumbrances, you will be subject to their conditions, so need to take this into account as they may affect the use you require of the property. Arafura Conveyancing can discuss any queries you have on this or any other issue.
Prior to the exchange of the contract, Arafura Conveyancing can liaise with you regarding the following issues and any others pertinent to the property:
- The names of the parties buying to ensure there are no stamp duty issues
- Stamp duty reductions available to you
- the price and GST
- deposit payable
- inclusions and exclusions
- finance or subject to prior sale clauses
- any other special clauses required
- encumbrances, covenants and easements