4 Essential Steps to Purchasing a Property
The basic process of buying a property is fairly simple, but there’s a lot you need to know about the legal processes and possible pitfalls. It’s a good idea to get some professional help with your purchase.
Purchasing property requires a series of essential legal steps. Depending on the type of property you’re purchasing, the nature of the property, and title issues and requirements, it can be a complex process, and you need to be fully aware of all issues related to the purchase. This can cost you money, so be careful! Make sure you get professional legal advice from conveyancing solicitors right from the start of purchase.
Making an offer
Making an offer means making a commitment. There are several stages in this process:
- Get a copy of the contract of sale: The first step in this process is to obtain a copy of the contract of sale, and have it checked by a solicitor before making your offer. This vital preliminary step allows you to check any legal issues beforehand.
- Expression of interest: You may be required to make an initial payment known as an “expression of interest”. The seller must provide you with a receipt, and undertake to refund your payment if the sale doesn’t proceed. The seller must also inform you of later offers to buy the property.
- Offer accepted: This means you may now proceed with purchase, but the seller may negotiate with other buyers for a higher offer, until contracts are exchanged.
Conveyancing describes the legal processes of buying property, including the sales contract, mortgage, and any related legal documents.
Conveyancing may include:
- Arranging inspections.
- Strata title checks
- Examination and exchange of contracts
- Payment of deposit and stamp duty
- Checking land tax, rates, and other obligations related to the property
- Checking encumbrances or interests on title like easements, road reserves, etc.
- Checking for any issues related to illegal building, fencing, or undisclosed matters.
- Conducting change of title
- Pre-settlement checks
Please note: It is possible for people to undertake their own conveyancing, but it should be understood that this method may involve risk of loss in some cases. It’s advisable to obtain professional guidance regarding issues related to this form of conveyancing.
Contracts and issues
A property must have a contract of sale before being put on the market. You have the right to inspect the contract while the property is actually on the market. Any sale of property may have its own issues, and professional review of the contract, preferably by , is essential.
- Exchanging contracts: The exchange of contracts requires signature of both parties and payment of a sum of usually 10% of the purchase price.
- Cooling off period: The cooling off period is created by law, and permits a purchaser to get out of the contract within 5 business days after exchange of contracts.
Note: Conditions do apply to this exit from contract, including payment of 0.25% of the purchase price.
Settlement involves the final payment of the balance owing to the seller, at which time the purchaser becomes the legal owner of the property. This usually takes place six weeks after exchange of contracts.