So you’ve made the decision to buy a home, now what? Entering the property market can seem overwhelming when you have no idea where to start. With such a major investment, it’s a good idea to know exactly what’s involved in the process and how you go about taking that first step to owning your own property. Appointing an experienced solicitor who specializes in conveyancing is essential.
1st Stage: Obtaining Finance
If you’re obtaining finance the first step is to secure a loan pre-approval so that when the right property comes along, you’ll be in a position to make an offer. A lender will typically require 14-21 days to approve your application and then a further 14 days for all documents to be signed.
It is important to be aware that a pre-approval for the purchase of a home is not an approval. It generally means that the lender has approved you but not necessarily the property and finance may be subject to a property valuation. Consequently, you should make your offer to purchase “subject to finance” as that will allow you to terminate the contract of sale if your bank doesn’t approve finance.
2nd Stage: Viewing the Property
You’ve finally found the perfect home that exceeds all of your expectations; great location, good size and the price is within your budget. What could go wrong?
When a property comes along that feels like ‘the one’, it’s easy to overlook small details that could potentially end up being quite costly. To an untrained eye, minor enhancements such as new carpet or a fresh coat of paint can make a property more appealing. To a qualified building inspector, superficial renovations might indicate a range of issues from water stains, structural defects to infestation of pests. If you have any concerns about the integrity of the property then you should insist on making the contract conditional upon building and pest inspections. This is achieved by inserting ‘special conditions’ into the contract of sale. It is essential that inspections and, if applicable, termination of the contract of sale are carried out in accordance with the ‘special conditions’, otherwise the right to inspect and terminate will be lost. The wording of the ‘special conditions’ is set out below:
Purchase conditional on a building report
The vendor must make the property available for inspection by a recognised building practitioner for 7 days from the date hereof. If the recognised building practitioner provides a written report identifying any major structural defect in the property, the purchaser may end the contract by providing a copy of the that report to the vendor within 10 days of the date hereof, whereupon the deposit must be refunded to the purchaser.
Purchase conditional on a pest report
The vendor must make the property available for inspection by a recognised pest control practitioner for 7 days from the date hereof. If the recognised pest control practitioner provides a written report identifying any major infestation of pests in or around the property, the purchaser may end the contract by providing a copy of the that report to the vendor within 10 days of the date hereof, whereupon the deposit must be refunded to the purchaser.
Taking the time to properly measure the boundaries of the property will confirm whether the dimensions match the plan of subdivision. You should do this before signing the contract and notify the vendor immediately if the measurements don’t correspond. The vendor will not be liable if you discover any discrepancies after signing the contract, which may result in you having to resolve the issue with your neighbours.
3rd Stage: Contract of Sale
The contract of sale is the most important document in the conveyancing process as it outlines the terms and conditions as agreed on by the vendor and you. It must be in writing and signed by all of the parties involved, either personally or pursuant to an instrument, for example a power of attorney.
The contract is normally prepared by the vendor’s solicitor. However, details such as the sale price and settlement date are generally completed when the parties are signing the contract of sale.
Provided that the vendor agrees, the contract may be conditional such as ‘subject to finance’ or ‘subject to a building inspection’. The sale will only proceed provided that the conditions are met. For example, if your finance has not been unconditionally approved, a ‘subject to finance’ condition will allow you to end the contract without penalty if the loan application is refused. Importantly, special conditions such as these carry an expiration date so you must do everything necessary to obtain finance before this time. Occasionally, the vendor may agree to an extension but you would need to lodge a written request prior to the expiry to avoid heavy penalties.
An unconditional contract simply means that the sale is not dependant on any terms and must proceed. If you decide to withdraw once the contract has become unconditional, the vendor would be entitled take legal action to recover any losses. This usually results is costly and time consuming proceedings in the County Court. In most cases the vendor’s losses will exceed the deposit and leave the purchaser seriously out of pocket.
4th Stage: Making an Offer
There are two ways in which you can purchase property; by private sale or at auction.
Private Sale
This means that the vendor has advertised the property and invited potential buyers to make an offer. When negotiating the sale price with the vendor or agent, it is also important to come to an agreement on specific terms such as the settlement period, item inclusions and any conditions that the sale may be subject to.
Auction
Before bidding on a property at auction, you will need to ensure that your loan has been approved and is not subject to any conditions. Unlike a private sale, there is no opportunity to specify any further conditions after the auction if you are the successful bidder, as you will be asked to sign the contract immediately. For this reason, it is a good idea to obtain any documentation, such as the contract of sale, from the agent and have it reviewed by your solicitor prior to the auction. If you decide to amend the contract, ensure that you provide the agent with a copy before the auction and advise them that you will be bidding based on the terms of your contract.
A property sale by auction also has no cooling-off period meaning that once you sign the contract, it becomes a legally enforceable document and you will not be able to cancel the purchase.
Notwithstanding the above you can make an offer to purchase at any time before the auction any include any special conditions etc. that you require.
5th Stage: Conveyancing
Vendors Statement
Also known as a section 32 statement, this document will provide you with all relevant information regarding the property’s title, including any defects in title. The Vendor’s Statement should be prepared by a legal practitioner, signed by the seller and given to you prior to the contract being signed. The Vendor’s Statement can be confusing to the uninitiated. Consequently, we’ll review the Vendor’s Statement for free.
Certificate of Title
We will conduct a title search to ensure that the vendors name corresponds to that which is registered on the title and also to determine whether any restrictions currently apply to the land. After transferring the title to you at settlement, the original certificate is held at Land Registry whilst you keep a duplicate copy. If your property is mortgaged, your bank will hold the copy until your loan is paid in full.
Transfer of Land
This document is normally prepared by the purchaser’s solicitor. Its purpose is to notify the relevant authorities of a change in land ownership.
Property Certificates
We will request a number of reports from various authorities that will inform you of certain information pertaining to your property such as zoning and planning, VicRoads proposals, land and water charges or previously issued building permits.
Caveat
A caveat serves as a warning to the world that a person claims an unregistered interest in the land and the title may not be transferred without the consent of the caveator. It is basically a note on the title to prevent any other person from taking possession of the property. Whilst they are now relatively rare, we are able to lodge a caveat at your request.
Bank
If you require us to liaise with your bank, you would need notify them that we are acting on your behalf so that we are able to arrange settlement.
6th Stage: Settlement
The time for celebrating is near, there’s just one last hurdle to jump until you are the proud owner of your new home. The date of settlement is stated in the contract and generally, it is only the financial and legal representatives of both parties who attend. Before transferring the property over to you, there are just a few matters to be finalised.
Final Inspection
You have a right to carry out a final inspection of the property within the seven days preceding settlement however it is advised that you try and do this as close to settlement as possible. That way, you can be reasonably certain that the property will be in the same condition after the transfer. If you believe that the property has been damaged or inclusions are missing, you will need to inform the vendor as soon as possible to avoid delaying settlement.
Adjustments
This refers to any rates, taxes, current leases or outgoings that will need to be adjusted to ensure you are only liable for charges from settlement date. Adjustments are then deducted or added to the total amount due.
Funds
Prior to settlement, your solicitor will advise you on the details regarding bank cheques that you will need to arrange. If you are using any of your own funds, you will also need to provide these by way of bank cheque.
Keys
Generally, the keys to the property will be available to collect from the real estate agent once settlement has been finalised, which your solicitor will inform of as soon as they receive confirmation.