• A building inspection report is a pre-purchase report obtained by the purchaser which outlines the condition of a property. It is the purchaser's responsibility. It is strongly recommended that you obtain a building inspection report prior to the exchange of contracts. This document will ensure that the quality of the property you are intending to purchase is up to your standards as well as the standards of the building inspector who undertakes the report.
• A building report contains sufficient information for you to evaluate the property’s condition and identify any structural defects evident from visual inspection. A building inspection report usually costs between $250-$450 but can vary depending on the type of building. The building inspection report may be obtained directly by the purchaser or be organised by us.

• A pest inspection report helps identify any pest related issues that are presently evident at the property or any possible future insect infestations. Obtaining a pest inspection report helps the purchaser develop a clear understanding of the quality of the property and whether it is suitable for purchase. It is strongly recommended to obtain a pest inspection report prior to the exchange of contracts. 
• Pest inspection reports generally costs between $250 - $350 but this will depend on any complicating factors. The pest inspection report should be obtained from reputable firms that have adequate professional indemnity insurance cover.

• In New South Wales a planning certificate is a certificate issued by a local council under section 10.7 of the Environmental Planning and Assessment Act 1979 (NSW). It provides details about the type of land it is, zoning and any known developments that will impact it directly.
• A building certificate warrants that a council will not require a building to be demolished, upgraded or altered except in the case of fair wear and tear over a period of seven years. Building certificates are provided by your local council.  
• If you are a vendor you or your solicitor should attach a building certificate to the contract of sale. If a building certificate is not attached to the contract then a purchaser may obtain one from the council. If the council does not issue a building certificate then the purchaser may have the right to rescind (revoke or cancel) the contract.
• If you are a purchaser you might obtain a building certificate for your own financial protection and the protection of your mortgagee.
• If the property has additions such as a pool or a granny flat and the contract of the sale does not have a building certificate attached you can request the contract for sale to be made subject to the issuance of a building certificate. Under this condition the purchaser will apply to the appropriate council for a certificate.
• The purchaser must pay for the certificate which is usually around $250 for a dwelling.
• If the council does not issue a certificate then the purchaser is usually entitled to withdraw from the contract without penalty. 

• The exchange of contracts occurs when the contract signed by the purchaser and the contract signed by the vendor are dated at the office of the vendor’s solicitor or conveyancer. Both contracts must be identical. The purchaser is usually required to pay a deposit at the time of exchange of contracts. The normal deposit is 10% of the purchase price. The deposit amount is usually kept by the vendor’s real estate agent in a trust account until completion of the contract. 
• Once the contracts are exchanged the contract signed by the vendor is sent to the purchaser’s lawyer or conveyancer. In the event of an auction sale the agent exchanges the contracts immediately after the completion of the auction. Exchange can occur either face to face or through the post. A scanned signed contract cannot be lawfully exchanged.

• Rescission (cancellation) takes place when a buyer or a vendor cannot complete a contract.
• A buyer or a vendor can only rescind a contract under very limited circumstances.
• If the contract does not contain a prescribed document the purchaser may rescind the contract within 14 days from the date of exchange. 
• If the vendor breaches any of the vendor warranties implied under the law the purchaser has the right to rescind the contract unless the vendor has contracted out of those warranties in the special conditions. 
• If the time for completion is ‘of the essence’ then failure to complete the contract on time provides the aggrieved party with the right to rescind the contract. 
• A vendor who cannot or does not want to answer a requisition can rescind the contract. 

• A cooling off period is the timeframe after a contract has been exchanged within which a purchaser may rescind the contract. In New South Wales the cooling off period starts at the time of exchange of contract and finishes at 5.00pm on the 5th business day. Weekends and public holidays are not counted as business days.
• A purchaser who rescinds the contract during the cooling off period may be required to forfeit 0.25% of the purchase price. This is usually deducted from the deposit paid to the vendor when the contracts were exchanged. Any remaining balance must be repaid to the purchaser. If no deposit has been paid the vendor may sue the purchaser to recover the penalty of 0.25% of the purchase price.
• Properties purchased at an auction or on the same day as an auction are not subject to a cooling off period. If you are successful at auction you must proceed with the purchase immediately.

• In New South Wales all purchasers have the right to a cooling off period. A section 66W certificate enables the purchaser to waive their right to a cooling off period effectively ‘locking’ them into the contract at the time of exchange. 

• Gazumping occurs when the property is sold to someone who makes a higher offer despite the agent or the vendor having a verbal agreement with another person to sell the property to them. 
• A verbal agreement does not bind the vendor to sell the property to one person. This is true even if that person has put down a holding deposit on the property. 
• In NSW an agreement to purchase a property is only valid if a signed and written contract has been exchanged between the parties. 

• The purchaser must pay the transfer duty (formerly known as stamp duty) on the transaction. This amount is calculated based on the purchase price of the property. There are online calculators on the NSW OSR (Office of State Revenue) that provide an estimated amount of duty that must be paid.
• An additional $20.00 is required on top of the transfer duty payable for a stamp on the duplicate copy of the contract and on the title transfer document. 

• In New South Wales transfer duty (stamp duty) must be paid within 3 months of a contract being exchanged or else interest is payable to the OSR.
• For contracts that have a 6 week completion date from the date of exchange the purchaser should pay the transfer duty at least 2 weeks prior to completion. If the purchaser is not borrowing any money for the purchase the transfer duty can be paid at settlement. The transaction and new ownership will not be registered until transfer duty has been paid. 
• If the completion date is longer than 6 weeks you have 3 months from the date of contract to pay the transfer duty in order to avoid the accrual of penalty interest. 
• For off-the-plan purchases the purchaser must pay the transfer duty within a year of the date of contract exchange or at completion of the contract, whichever occurs first. 
• For commercial off-the-plan purchases or for a purchase of vacant land you must pay the transfer duty within 3 months of exchanging the contracts.

• Settlement is the date on which the purchaser pays the balance of the purchase price for the property and gains title to the property. On the settlement day you also get keys to your new property. 

• A covenant is a condition tied to the use of land such as the type of construction material that can be used when building a house. 
• An easement is a registered right that gives another person the right to use land for a specific purpose such as a shared path or shared driveway.
• A profit a prendre is a registered right to take from the land owned by another person part of natural produce grown on that land. 

• Prior to the completion date the purchaser’s lawyer or conveyancer drafts settlement figures that are adjusted from the balance of the purchase price paid at settlement. Drafting settlement figures is a technical task and requires a basic mathematical knowledge. 
• The vendor is entitled to all rents and profits and bears responsibility for all rates and outgoings up to and including those existing on the adjustment date.
• Settlement figures generally include the following items payable by the purchaser:

1. council rates;
2. land tax;
3. purchase price;
4. water rates;
5. if strata or community title, administrative and sinking fund; and
6. certificates. 

• Settlement figures generally include the following items payable by the vendor:

1. rent; 
2. bond or security deposit;
3. bank cheques if more than the allowance requested; and
4. registration fee on discharge of a lease if requested.

• The calculation procedure followed is the sum of all amounts payable by purchaser and vendor with the total amounts allowed by the vendor subtracted. 
• If you are looking for an experienced conveyancer Newcastle Legal and Conveyancing’s fixed fee conveyancing service provides a competitive fee.

You should do your final inspection of the property immediately prior to settlement. If you cannot inspect the property on the settlement date and prior to the settlement time you should try to organise it for the day prior to the settlement. 

Question

I'm buying my second property and I'd like to save some money this time around. It was so expensive paying for the lawyer's fees. I've done it once before so I think I should be familiar enough to do it myself. Can anything go wrong?

Answer 

• Yes it is possible for things to go wrong when undertaking the conveyancing yourself or with the assistance of an online kit. In particular self-conveyancing can be confusing for most people who:

1. aren’t familiar with legal terminology; 
2. don’t have a lot of time; 
3. have a complicated matter; 
4. would not necessarily understand or be familiar with all the standard contract terms or special conditions that are in a contract or should be in a contract for sale and purchase; or
5. aren’t comfortable liaising with different stakeholders.

• If anything goes wrong a vendor or a purchaser engaging in self-conveyancing will not have the protection of a professional indemnity or fidelity insurance cover. It is always recommended to engage either a lawyer or a conveyancer to handle your matter.

Question

I'm just reviewing a contract of sale for a property that I'm interested in. I can see a special condition relating to ‘release of deposit’. What does this mean and what implications does it have for me as a purchaser? 

Answer 

• A release of deposit clause means that the deposit paid by you (the purchaser) at exchange of contract can be used by the vendor prior to settlement for the purpose of making a deposit on another property or for payment of stamp duty on a property being purchased by the vendor. 
• You would be strongly encouraged to request removal of this clause from the contract of sale as protects only the interests of the vendor and has the potential to put you in a difficult financial situation if something goes wrong between exchange of contracts and settlement. 
• If at a later stage the contract is rescinded recovering the deposit can be a lengthy and expensive process.

Question

I agreed to purchase a property a couple of days ago but now my bank is asking for documentation that I don't have. It's going to take a while to get that documentation to them and I don't know if the finance will be approved. I just need more time. Can I ask for an extension to the cooling off period?

Answer 

• A cooling off period is usually for a period of 5 business days from the date of the exchange of contract but it can be extended at any time before its expiration.
• If requested by you (the purchaser) your lawyer can provide the vendor’s lawyer with a written request for extension of cooling off period. It is up to the vendor to accept or reject the request for an extension. 
• It is always good practice to finalise your finances prior to entering into a contract of sale. 
• Even if you rescind the contract as is your right during the cooling off period you will have to pay 0.25% of the purchase price as a penalty.

Question

I am thinking about purchasing a property. It's my first home and I'm nervous about making such a big decision. What are the major things that I should be concerned about? 

Answer 

• Purchasing your first home is a big decision and there are a lot of things you should consider to ensure that it is the right time and right property for you to buy.
• You must consider your source and availability of finance. You should at least have conditional loan approval before you begin property hunting. You should never sign a contract unless you have unconditional loan approval. 
• You should seek legal advice regarding vendor disclosure and vendor warranties and what that means in relation to the contract that you have been offered. 
• It is also a good idea to ask your lawyer about anti-gazumping legislation.  
• Check whether you need a survey report or a building certificate.
• Check what inspections and investigations should be made and when.
• If you want to carry out renovations or rebuild you should check what approvals will be necessary and what costs are involved. 
• Always factor in the cost of a thorough conveyancing process.
• Additional costs such as transfer (stamp) duty and adjustments will be added on top of the purchase price and you must be prepared for them in advance.
• Always understand your rights and the vendor's rights to rescind (revoke or cancel) a contract.
• Ensure that you leave enough time for completion of the conveyancing process to avoid any costly delays.

Question

My settlement took place today and I went to the real estate agent to get the keys to my new property so I can start moving as my old house has also sold. The agent refused to give me the keys saying that he hadn’t received instructions to release the keys. What can I do?

Answer 

• After settlement takes place the purchaser’s lawyer gives an ‘order on the agent’ to pay the deposit to the vendor and the vendor’s lawyer gives the real estate agent an order to release the keys to the purchaser.
• The real estate agent cannot give you the keys until he or she has received written instructions from the vendor’s lawyer. It may be simply a technical issue and the lawyer has not been able to fax the order to release the keys to the agent yet. You may request the real estate agent to contact the lawyer to sort out the issue.

Question

I'm interested in purchasing a house in the suburb next to mine. The house has a lot of potential and I want to renovate and build additions like a driveway and a swimming pool. What should I be aware of?

Answer 

• Many renovations and building projects require planning or other approvals . It is the homeowner’s obligation to find out what approvals are required. In NSW there are two categories of developments:
• exempt development that meets building criteria and is on suitable land does not require approval from a council. Examples of exempt development include driveways, fences and gates, antennas and aerials, rainwater tanks, privacy screens, carports and sheds; and
• complying development that requires approval according to specific standards. Examples of complying development include a new single or double storey house, additions to a house such as a granny flat, internal alterations to a house such as a new bathroom, detached shed or studios, garages and swimming pools. 
• You should talk to your local council to discuss whether your proposed renovations require approval. After completion of renovation work you should obtain a building certificate from the council. This will ensure that the renovations are completed to council’s satisfaction. It will also make any future sale of the property easier.   

Question

I've heard the government advertising benefits for new home owners over the past few years but I'm not sure if it's still available or if I'm eligible for it. I've never owned a home before. Am I eligible?

Answer 

• The First Home Owner Grant was established by the NSW government for eligible first homeowners who are purchasing or building a new house. 
• To be eligible for the grant you must meet the following conditions:
• the property purchase must be a brand new home that is:
• a home that has not been previously occupied;
• a home that has not been previously sold as a residence; or 
• a home that has been substantially renovated and built to replace demolished premises;
• all purchasers must be over 18 years old and at least one purchaser must be a permanent resident or an Australian citizen;
• the purchaser and the purchaser’s spouse must not have had their name on the certificate of title for any other residential property in Australia prior to 1 July 2000. Spouse in this context includes de facto partners;
• the value of the property must not be more than: 
• $650,000 for the purchase price of a new home; or
• $750,000 in total for the land and home if you’re buying land to build a new home;
• you can only claim the first home owner’s grant once. You will not be eligible if you have previously benefited from a first home owners grant anywhere else in Australia;
• the property must be your main residence (the place where you live) for a continuous period of at least 6 months; and
• companies or trusts are not eligible applicants. 
• You can find instructions and an application form on the NSW Office of State Revenue website. You need to lodge your application within 1 year of settlement being completed.

Question

I am a first home buyer and am purchasing a property for $480,000. Can I get a transfer (stamp) duty exemption? 

Answer 

• The NSW government offers transfer (stamp) duty exemption under its First Home-New Home Scheme.
• Eligible purchasers are given a concession on stamp duty under the scheme if they purchase a new home valued less than $650,000 for a full exemption or a new home valued between $650,000 and $800,000 for a partial exemption.  
• You will only be eligible for stamp duty exemptions or concessions if you are:

1. an Australian citizen or permanent resident; 
2. a person and not a company or trust;
3. over 18 years of age;
4. purchasing a first home. This includes a first home purchase for your spouse as you will not be eligible if your spouse (including de facto partner) has previously owned residential property in any state or territory of Australia; and
5. able to move into the home within one year and then live there continuously for 6 months.

Question

I am in a hurry to purchase a property and I don’t want a cooling off period. Can I waive my right? How can I do this? 

Answer 

• Under section 66S of the Conveyancing Act 1919 (NSW) a purchaser can choose to waive their right to a cooling off period by authorising a section 66W certificate. 
• The section 66W certificate must:
• be in writing;
• be signed by the purchaser’s lawyer or barrister;
• indicate the reason why the certificate is being given; and 
• state that the lawyer or barrister has explained the effect of the contract to you as well as the nature of the certificate and what happens when you give the certificate to the vendor. 
• You should always discuss the implications of a section 66W certificate with your lawyer and clarify any doubts before authorising the certificate. 

Question

I had put down a holding deposit on a property I wanted to purchase. The agent agreed verbally to my offer but I have now been informed that the property has been sold to another person. I have spent money on getting legal advice and conducting searches on the property. What can I do?

Answer 

• This situation is often referred to as 'gazumping' in NSW and occurs when despite having a verbal agreement with a vendor to purchase the property at an agreed price the property is sold to another person. This is true even if that person has put down a holding deposit on the property.
• If you are gazumped you cannot claim compensation from the agent or from the vendor for any money that you may have spent for your intended purchase. You are entitled to get your holding deposit refunded in full. If you are serious about purchasing a property you should always:

1. try to have finance approval finalised in advance;
2. seek legal advice on the contract of sale as soon as possible;
3. exchange contracts with the vendor as soon as possible.

• Remember you have a 5 day cooling off period during which you may conduct your searches. If you want to rescind the contract within the 5 days you will lose 0.25% of the purchase price.

Question

I made an offer on a property last week and found out today that the property was sold for a lesser amount that what I had offered. I believe the agent didn’t inform the vendor about my offer. What can I do?  

Answer 

• Real estate agents are legally obliged to inform the vendor of all offers up until contracts have been exchanged. The vendor has the right to accept any offer he or she chooses and can change their mind up until contracts have been exchanged. It does not necessarily have to be the highest offer. 
• If you feel the agent did not inform the vendor about your offer you may not receive any compensation but the real estate agent may be subjected to disciplinary action. A vendor may sue the real estate agency if it has evidence that the agent wilfully or negligently withheld any offer.

Question

I want to purchase a property with my partner. How many different ways can we collectively hold title to a property?

Answer 

• Under property law principles a single property can be owned by more than one person either as joint tenants or as tenants in common. 
• Joint tenancy occurs when two or more persons own a property and each owner shares the ownership equally and collectively. If one owner dies the other owners automatically acquire in equal shares the deceased owner’s interest. An owner under a joint tenancy cannot dispose of their interest in the property to another person under a will. 
• A tenancy in common occurs where two or more persons own their shares in specific proportions and independently from each other. For example owner A may hold 75% and owner B may hold 25% of the property. When one owner dies their interest in the property is distributed to their beneficiaries under their will or under the laws of intestacy. The surviving owner does not automatically acquire the deceased owner’s interest. A purchaser should discuss with their lawyer what arrangement might best suit their individual circumstances.