What You Should do up to Exchange of Contracts.

Finance for Purchase

When you are out looking to purchase a home,  before you actually start inspecting properties and putting offers in, it is most important that you work out your finances and what you can afford. You should seek a pre-approval of a loan from the Bank if you need to borrow.

Subsequently, prior to exchange of contracts or before bidding at an auction, you should get unconditional approval of your loan.

 

Exchanging Contracts with a Cooling off Period

When discussing the purchase of the property with the real estate agent you may be anxious about the property being sold to another buyer and if this is so, you do have an opportunity to arrange for the agent to exchange contracts with a cooling off period which means you pay .25% of the purchase price as a deposit and you then have 5 business days to undertake any necessary enquiries or reports.

If you do exchange with a cooling off period it is most important that you get to see your solicitor or conveyancer as soon as possible so that appropriate reports and enquiries can be made before the cooling off period expires.

If you do exchange with a cooling off period and the 5 business days is not sufficient for you to undertake your enquiries including obtaining unconditional finance approval then it is sometimes possible for your solicitor/conveyancer to extend the cooling off period to enable those enquiries to be undertaken.

 

Stamp Duty

When purchasing a property you must remember that apart from the actual purchase price and legal costs, there is also stamp duty payable. For example, stamp duty on $350,000 will be $11,260.00 and stamp duty $500,000 will be $18,010.00.

As and from the 1st July 2017, first home buyers will not have to pay duty for both new and existing homes for properties up to $650,000. The duty will be reduced for amounts between $650,000 and $800,000. Need to clarify the cap for vacant land which hasn’t changed.

 

First Home Owner Grants (New Homes) from 1st July 2017

In addition to the provisions relating to stamp duty for first home buyers, first home buyers will be eligible for a $10,000 grant for the purchase of a new home as follows –

  • When building a new home under a home building contract where the contract price, when added with the land value does not exceed $750,000
  • A new home built by an owner/builder where the value of the land and building does not exceed $750,000
  • Purchasing a new home worth up to $600,000

 

Sales Advice

As soon as you reach agreement with the real estate agent regarding the purchase, you should make sure the Sales Advise gets to your solicitor/conveyancer and you contact your solicitor as soon as possible. This is particularly important if you have exchanged contracts with the help of the real estate agent with a cooling off period.

 

Reports and Enquiries Prior to Exchange of Contracts

As soon as possible after reaching agreement on the price for the property and prior to exchange of contracts you need to see your solicitor/conveyancer to ascertain the following –

  • Whether you should obtain a building report – highly recommended
  • Whether you should obtain a pest report – highly recommended
  • Whether you should obtain a report regarding strata records – highly recommended.

Sometimes it is necessary to obtain other reports such as engineers reports if there is any real issue about the structure on the property or in the case of a swimming pool, it is recommended that a separate swimming pool report is obtained.

Obviously any of these pre-contract enquiries should be made during the cooling off period if contracts are exchanged with a cooling off period.

 

Other Enquiries/Discussions with your Solicitor

Obviously it is very important that you actually read the contract and the special conditions and ask any questions of your solicitor relating to the actual contract particularly as far as –

  • Any covenants that might apply
  • Easements or other affectations which might affect or benefit the property

 

Title When More than One Purchaser

When purchasing a property other than in your own personal name or with another person being your spouse or otherwise, it is very important that you discuss how the title is to be held as it may have some effects in the future in terms of your financial position and/or estate planning. For instance, it is important that if you are purchasing a property with another person, you should ascertain whether you wish to hold the property as tenants in common in either equal or unequal shares which means you actually own a portion of the property and you are able to gift your portion under a Will. On the other hand you could chose to purchase the property as joint tenants with another or other persons which would mean that the surviving joint tenant/s automatically receive the interest of a deceased joint tenant.

 

Verification of Identity (VOI)

It is now necessary as and from August 2016 for a solicitor or conveyancer to go through a verification of identity process involving all dealings with a Title Deed and you will need to provide various documents to prove your identity and in particular, photographic identification such as Passport, Australian Driver License or a combination of one of these with a Birth Certificate and other means of identity will be needed. You should discuss this with your solicitor when you make first contact to ensure you have the documentation to prove your identity.

 

Actual Exchange of Contracts

Once all the above processes have taken place, your solicitor will be in a position to exchange contracts and this will then mean you are bound to purchase the property and upon settlement you will be able to take possession of the property.

Contracts are exchanged when your solicitor swaps the contract signed by you for the contract signed by the vendor and you attend to payment of the deposit.

 

 

This article is intended to be for information and educational purposes only and cannot be relied upon as legal advice. The information may not apply to your circumstances or to your particular situation. If you need specific advice or you have any questions, we welcome you to contact us directly.