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Buying Property: A Legal Checklist

- Wednesday, December 17, 2014
Buying Property: A Legal Checklist

We’ve compiled a handy checklist to help you conquer the legal fine print of purchasing property.

Appoint a conveyancer

Conveyancing is an important step in the legal journey to property ownership, and appointing a conveyancer to take care of the legalities for you can make your life a whole lot easier.

But what exactly is conveyancing? This definition from Slater + Gordon sums it up quite nicely:

"Conveyancing is the process involved in the transfer of title of property between two parties. In most cases, your conveyance will start from the time you enter into your contract. It continues through the duration of the contract as various conditions such as finance approval and building inspections are satisfied, leading to settlement where important legal documents are exchanged along, of course with the payment of the purchase price… Shortly following settlement, the registration of the property transfer takes place at the Land Titles Office – whereby the conveyancing process concludes."

While there are DIY conveyancing kits available, these can lead to unwelcome headache when even the most simple-looking property transactions are complicated by legislation and regulation.

It’s important to ask your conveyancer to look into local and national planning controls, permitted uses, heritage overlays and body corporate constraints.

Understand the sales process

Just like conveyancing differs slightly from state to state, so does the sales process.

The Real Estate Institute of Queensland (REIQ) outlines 8 steps to buying property, which include:

1. Determine your borrowing power
2. Research the market
3. Inspect properties
4. Clarify inclusions
5. Decide on a price to offer
6. Make an offer
7. Organise conveyancing
8. Settlement

Before you start, do your research to ensure you fully understand the sales process in your state.

Check the property’s title

Normally freestanding houses in Australia have a freehold Torrens Title, however other property types can carry different titles, which have their own legalities.

Strata Title comes into play when handling legal ownership of parts of a building or structure, such as units, townhouses, villas, retail shops, warehouses, factories and commercial offices (among others).

If you’re purchasing an apartment, villa or townhouse, be aware that you’ll need to adhere to bylaws, take into account the fact you will be paying regular levies for maintenance and other expenses and be responsible for voting at annual general meetings.

There also exists Leasehold and Community titles, while some older buildings remain under Company Title. Again, each of these have their own legalities.

Do the inspections

Conducting building inspections is an important part of the property purchasing process. A thorough building and pest inspection can identify faults that you may have otherwise overlooked.

Do the required paperwork

The legal paperwork associated with purchasing property varies from state to state, although it will usually include these documents:

  1. Contract paperwork – prepared by the seller’s solicitor. This paperwork outlines what is for sale; the settlement date; zoning certificate; plan of the land; drainage diagram; and a Certificate of Title confirming current ownership and detailing any encumbrances on the property.
  2. Exchange – the contract is made binding when it is signed at the ‘exchange’, which is either at the auction or following agreement upon a private sale price. A deposit is usually paid at this time.
  3. Settlement – the date of settlement is specified in the contract and is usually six weeks after the contracts are signed.
  4. Land transfer – this document is finalised by your conveyancer at settlement.
  5. Mortgage - If you are financing your purchase via a loan, your conveyancer will need to supply your lender with certain documentation.

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