Buying a home or rural property
For most people buying a home is the biggest financial decision and the most important legal transaction they will ever make. There is also the emotional value of a home – something that is impossible to price.
Buying a rural property is a business decision and often entails other issues such as water and crown licenses, no matter how big or small you need someone with experience in the rural sector to assist you.
– The Contract for Sale
A seller must give every agent he engages to sell his residential property a copy of the proposed Contract which must contain up to date documents including a zoning certificate, a sewerage diagram, a copy of the title deed and a plan of the land from the Land Titles Office or Local Council.
- Auction requirements
It is extremely important that you look closely at the Contract for Sale if you are intending to purchase a property at auction. If you do purchase a property at auction there is no cooling off period. The contract becomes a binding contract from the time the auction is completed and you are bound to complete that contract and have no opportunity to pull out unless the seller has not disclosed the information required of them in the contract.
Once a contract is exchanged, either on the day at auction or through your solicitor’s office, to make the contract a binding one, a deposit, normally 10% of the purchase price, must be paid by the purchaser.
- Costs of Purchasing
When calculating the costs of buying a property you should always remember that there are, added to your solicitor’s costs, expenses incurred on your behalf. They include:
- Government stamp duty based on the purchase price (this is a major cost)
- Charges for establishing a mortgage (these vary according to the bank or financial institution)
- Lender’s legal fees(if appropriate)
- Legal & search fees for the conveyance
- PEXA fees (electronic transaction fees)
- Registration of Title fees at Land Property & Management Department
- Adjustment on rates (including if applicable Land Tax and Strata Levies),
- electricity, gas and telephone etc connection fees
- Removalist fees
- House insurance
- Survey fees – E$600.00(if required)
- Strata building inspection fees ( for strata units)
- Builders Repair and Maintenance report E$600.00
- Pest Inspection – E$260.00
- Council Building Report (317AE Certificate) – E$70.00
These costs can add up to quite a sizeable amount of money. It would be in your best interests to ascertain these costs prior to making any commitment to buying a property.
- Stamp Duty Options
Stamp duty on the purchase of your property is one of the biggest expenses. This is a tax by the State Government on the value of the property sold in New South Wales.
You could be entitled to a scheme in existence at the time of your purchase. The schemes and criteria for qualifying changes regularly. Your solicitor is able to supply you with an application form and assist in completing this form.
Selling a House, Property or Apartment
For most people their home or in the country the Rural property is usually the most important asset. Making a mistake or misunderstanding your legal obligations could have a significant impact on your finances and lifestyle.
- The contract for sale of residential property
The first thing you need to do if you’re selling your house or apartment is to prepare a contract for sale. Placing your house on the market without having a proper contract is an offence under NSW law and could lead to you being fined.
- What do you need to include in the contract for sale?
The law says that all sellers must include certain information in the contract for sale and must also make certain promises (known legally as ‘warranties’) about the property they’re selling. These obligations are known as the Vendor Disclosure Requirements.
The most common documents you need to include with the contract are:
- a zoning certificate. Often known as a ‘10.7 certificate’ this is issued by local council and shows planning controls and other things which may affect the property, such as any proposed road widening
- a drainage diagram. This shows the location of any sewer lines
- a copy of the certificate of title confirming that you own the property
- copies of any plans creating , easements, rights of way, restrictions or covenants.
You should also talk to your solicitor about whether you should include:
- an identification survey
- an Occupation Certificate
- a building certificate, and
- a property owners warranty insurance certificate.
- If you’re selling a strata title property
Most apartments in NSW are strata title. If you’re selling a strata title property, you’ll also need to include:
- a copy of the property certificate for the lot and common property
- a copy of the strata plan showing the lot
- a copy of all by-laws affecting the use of common property
- What’s included in the sale?
Unless the contract specifically says otherwise the property is sold ‘in the state it’s found’. That also means any ‘fixtures’ are automatically included.
A fixture is anything that can’t easily be taken away without doing damage to the property. For instance, stoves are usually fixtures because they’re wired in, whereas fridges aren’t because they only need to be unplugged. Sometimes you may be able to exclude a fixture from the contract for sale. At other times, what constitutes a fixture isn’t so clear cut (eg removable floor coverings or an above-ground pool) and this can lead to a dispute between you and the buyer.
Where anything is in doubt, it should be expressly included or excluded in the contract for sale.
- Agent’s fees
Agents are required by law to give you a written guide to their fees, commissions and expenses before you sign an agreement with them.
If you are unsure you should have your solicitor review the agent’s agreement before you sign it.
-What is exchange?
A contract to sell a property becomes binding when the buyer and seller sign their copy of the contract for sale and then ‘exchange’ them. At exchange, the buyer also usually hands over a deposit (usually 10%).
At an auction, exchange happens immediately after the winning bid is accepted.
-Stamp Duty, GST and CGT
In NSW only buyers have to pay stamp duty on the sale of a property. However, there may be other taxes you’ll need to pay, particularly if you’re selling an investment property. GST doesn’t generally apply to the sale of residential property. But you will be liable for GST if the property you’re selling has a commercial use (and in some other limited circumstances).
That said, the law surrounding CGT is complex so you should see your solicitor if you’re in any doubt about whether or not you’ll need to pay CGT.
-What happens at settlement?
When you sign the contract you’ll usually agree to a settlement day. Most commonly this will be six weeks after the date of exchange. At settlement the buyer pays you everything they owe you to ‘settle’ the purchase.
If you owe money on the property you’re selling, your solicitor will talk to your bank or building society to work out exactly how much you need to pay to ‘discharge’ the mortgage.
-Do you need to be present at settlement?
You don’t usually need to attend settlement in person. Most residential settlements will be done on the new electronic platform called PEXA. If you have a mortgage over the property you’re selling, your bank or building society will also be included in the electronic platform PEXA to receive any money owing on your loan.
Get in touch with us
If you’re thinking about selling or buying a property, you should get in touch with Lorraine Boyce Solicitors as soon as possible. They have the experience and knowledge to help you through the process and will be able to give you great advice.