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Legalise Your Property Purchase Contracts - Own Your First Home

"Buying Process" will guide you through the final stages exchanging contract, settlement and final inspection.

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Legalise it! The Exchange of Contracts

A property sale isn’t signed, sealed and delivered until the exchange of contracts. A contract is a legal document that sets out the terms and conditions of the sale, including the price and the

settlement date. It should contain a copy of the property title, any local planning certificates, a sewerage diagram, the general terms and conditions and a list of special conditions and inclusions (such as curtains, dishwasher or floor coverings).

You can do this legal work yourself (there are DIY kits available) but this is not recommended for most buyers, particularly first home buyers. It’s a far better idea to employ the services of a solicitor or conveyancer. They are required to hold professional indemnity insurance and fidelity cover, which protects you from any mistakes they might make.

Ask for a quote first, and compare prices of legal representatives. Solicitors charge a fee calculated on the price of the property, the type of title and the mortgage. They are usually the more expensive option but can provide you with a wide range of legal advice.

Conveyancers are licensed to provide the same conveyancing services as solicitors but can only give legal advice relating to property. They charge either a flat fee or a price based on the value of the property.

Whoever you choose will look at the contract, discuss the terms and conditions with you and ensure inspections are carried out. During this period you can implement any changes to the contract, as long as you and the vendor agree with them.

CHECK IT OUT!
Inspections are provided by the Housing Industry Association - HIA: www.buildingonline.com.au and Archicentre: www.archicentre.com.au.

Solicitor Checks

It is your legal representative’s job to ensure there are no hidden surprises before you take over ownership of the property. That involves checking that all rates and taxes are paid up and that the vendor is legally entitled to sell. Your solicitor will also check heritage orders.

The vendor will certainly not provide any guarantees as to the structural soundness of the property so it’s essential you get an independent body to do this for you. Building and pest inspections are strongly recommended and your solicitor may ask you to organise a building inspection.

A building inspector will give you the clear facts and provide you with an overall report on the state of the property. This report will itemise all minor and major defects: good inspectors find minor flaws in nearly any home so don’t be alarmed. It’s the major work that you should be most wary of.

These building inspections allow you to go ahead with the purchase with your eyes wide open and to verify that ‘what you see is what you’re getting’. If you are purchasing your home at auction, pest and building inspections and the searches should be carried out before bidding.

Beware of inheriting illegal renovations. If your potentially new house is the only one with two storeys, have your solicitor obtain a Building Certificate from the council.

Your solicitor should also check council planning regulations for the area. Some councils are nightmares when it comes to getting renovation or building approval, which means your plans to make additions or add an extra storey to your new home could be severely restricted or not allowed at all.

Exchanging Contracts

Once all these checks have been made you’ll be ready to exchange contracts. There will be two copies of the sale contract: one for you and one for the vendor. You each sign one copy (you usually do this at your solicitor’s office) before the paperwork is swapped or ‘exchanged’. This can be done by hand or post and is usually arranged by your solicitor and agent.

It is at this time that you are required to pay a deposit, which is at least 10 per cent of the purchase price. The contract will include a completion date, which is the date that the property becomes yours – settlement. If the property was bought at auction, the exchange of contracts will have occurred on the day, on site.

Cooling-Off Period

You’ve signed the contract – and now you have to wait. Most buyers of residential property receive a cooling-off period (but not in WA, or if you buy at auction). This period normally starts on the day of exchange and ends five business days later. Within this time, you can withdraw from the sale. However, if you do so, you may forfeit an amount of money equivalent to 0.25 per cent of the purchase price.

If you exercise your cooling-off rights the agent will normally refund your deposit minus the 0.25 per cent of the purchase price. Cooling-off rights do not apply in certain circumstances, such as at auction. Also, you will lose your cooling-off rights if you produce a 66W certificate from a solicitor that states you have received legal advice in relation to the transaction.

This is your last chance to organise a building inspection or a pest report. These must be carried out during the five-day cooling off period, although it is possible to waive, reduce or extend this period with the vendor’s consent. As a side note, you should organise written confirmation that you have loan approval before the end of your cooling off period. This is because your lender will have to process your loan so that you have the money ready to be paid at settlement.

To find out about

house settlement date

, visit the next page.

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Moving in.