LEGAL ISSUES
When buying a property there are several legal issues that must be handled such as:
• The Contract of Sale
• Conveyancing (A list of conveyancing services is available in our Links)
THE COST OF BUYING REAL ESTATE
As the buyer of real estate you may incur costs including the sale price of the property itself, stamp duty payable to the State Government, conveyancing costs and other legal fees, building and pest inspection reports, a valuation report, and costs payable to a financial institution.
As a buyer who terminates a Contract under the 5-business day cooling off provision, you may have to pay a cost to the seller. Below are the main costs of buying real estate that need to be taken into consideration –
1) Price of the Property
2) Transfer (Stamp) Duty and Land Tax
3) Conveyance & Mortgage Duty
4) Land Tax
5) Legal Costs and Searches
6) Valuation Report
7) Pest and Building Inspection Reports
8) Termination of a Contractunder the 5-business day cooling-off provision
STEPS INVOLVED IN BUYING REAL ESTATE
1. Find out your borrowing capacity from banks or financial institutions.
2. Decide on a location where you would like to buy.
3. Research property sales history in your chosen area and get information about median prices for the suburb. The REIQ publishes median sale prices for houses and units / townhouses by suburb in Queensland Property and Lifestyle, a consumer research publication available at www.propertylifestyle.com.au.
4. Jump on the Internet - you’ll be amazed at the volume of publicly available information on finding and buying property. Some good sites to check out before you start the process include:
• The State Government has a page devoted to property transactions at www.qld.gov.au/services_for_queenslanders/health_and_communities/housing_and_property.html. This page has links to everything from title searches to the First Home Buyer’s Grant to Building Codes
• The Office of Fair Trading (www.fairtrading.qld.gov.au)
• The Queensland Government Department of Natural Resources, Mines and Energy (www.nrm.qld.gov.au/property)
• The Building Services Authority (www.bsa.qld.gov.au)
• The Master Builders Assocation has made a Pre-Sale Inspection Booklet available to assist when purchasing a home. (www.qmba.com.au)
• The Housing Industry Association (www.hia.asn.au)
• Archicentre (www.archicentre.com.au)
• Your local council’s website.
5. Examine property agent’s offices, listing magazines, newspapers and property websites.
6. Approach the selling real estate agent and inspect properties making notes on each property visited. Clarify inclusions with agent (e.g. fixtures such as dishwasher - make sure everything is included in the Contract).
7. Decide on the suitability of the property and the price to be offered. Consider conducting a property sales history search to find out what the property last sold for and when, how large the property is, the recent sale prices of surrounding properties Several providers sell this information, including the Department of Natural Resources, Mines and Energy (by phoning 07 3405 6900 or logging on to www.nrm.qld.gov.au/property), Australian Business Research www.abr.com.au, and CITEC at www.confirm.com.au. Each provider has their own rates and value-added services so shop around before buying.
8. Get an independent valuation by a professional. Call the Australian Property Institute on 07 3832 3139 for a list of licensed valuers.
9. Obtain from the selling agent a PAMD Form 27c Disclosure to Buyer.
10. Obtain from the selling agent the REIQ/Qld Law Society Contract of Sale with a PAMD Form 30c Warning Statement attached (which outlines your 5-business day cooling off period). Obtain legal advice on whether to consider waiving the cooling-off period.
The Warning Statement:
• informs the buyer whether a cooling-off period applies
• advises buyers of their rights under the contract, including when the cooling-off period starts and ends
• advises buyers to seek independent legal advice and a valuation before signing a contract and provides contact details on how to do that
• informs buyers that a percentage of deposit (0.25% of the purchase price) will not be refunded upon termination of the contract during the cooling-off period
• provides special warnings with regard to house and land packages; Contracts that are entered into which do not have a Warning Statement, or contain a Statement that is not in the approved form, will be of "no effect"
11. Put in an offer and sign a Contract of Sale noting Special Conditions making the Contract subject to building and pest inspections, as well as finance if required.
12. Pay a deposit to the selling agent and receive a trust account receipt. Some buyers may choose to use deposit bonds which act as a substitute for the cash deposit between signing a contract and settlement of the property. At settlement the buyer is required to pay the full purchase price including the deposit. Acceptance of the bond in lieu of a cash deposit is at the discretion of the seller.
13. Agent to submit the Contract of Sale to the seller.
14. If they did not waive this right through a PAMD Form 32a Lawyers Certification a buyer may terminate the Contract under the cooling off provision within 5-business days of signing the Contract. Penalties do apply.
15. You will need a solicitor to do your conyenyancing. Solicitors can also help you with other services such as title searches. Solicitor’s fees are negotiable - it is advisable to compare the fees being charged by a few different solicitors. Good referrals and past experience are valuable when choosing your legal representative. It is possible for a buyer to undertake these activities on their own. However, the REIQ strongly recommends using qualified solicitors for conveyancing. Contact the Queensland Law Society for further details about how to contact a qualified solicitor.
16. During the conveyancing process your solicitor will make the following checks on the property:
• Applications and permits
• Details of development approval permits previously approved
• Notices, orders, requisitions or certificates issued in previous years
• Land liable to flooding
• Ownership and real property details
• Sewerage mains, maintenance holes and property connection locations
• Sewerage and septic tank installation/plan details
• Water main locations
• Existence of easements on the property
17. If your Contract of Sale is subject to a Pest & Building Inspection, ensure you carry it out within the specified timeframe. The building inspection report should cover issues such as the soundness of structures; the legality of existing structures on the property; existence of termites, etc. Building and pest inspection reports must be from licensed professionals. The cost of these can vary. It is now required under Queensland law that the Inspector must be licensed by the Building Services Authority and you can verify this by logging on to www.bsa.qld.gov.au
18. If there are no problems with the property and finance is approved, prepare to own your new home. Once the Contract is unconditional, keep in touch with your solicitor with regard to any issues approaching the settlement date.