Buying a home?
What happens when you want to buy a house, a unit, a block of land, or other form of real estate? How do you make sure that your rights are protected? How can your solicitor advise you, and what will he or she do on your behalf to make sure everything is in order?
This information has been prepared as a general guide to help you understand your solicitor’s role in conveyancing. Your solicitor will be pleased to answer any specific questions you may have.
As well as established houses and units, there are other kinds of property transactions which require distinct procedures. These include sales by auction or tender; buying into a retirement village or nursing home; buying a commercial property, business or rural property; buying vacant land (or land with a building under construction or to be built on it); and ‘off the plan’ sales. These are all special categories and your solicitor is experienced in handling all these types of transactions.
Please note that this information focuses on established residential house purchases. For information on unit purchases please refer to ‘Buying a Unit’.
The steps your solicitor will take
Your solicitor will ask you such questions as:
- Where is the property located?
- What is the desired date of settlement?
- Do you want ownership registered in your name only or with another person(s), and if there are to be two or more owners then do you want to buy as joint tenants or tenants in common (and if the latter then in what shares)?
- Have you made any arrangements for finance or do you need any advice or assistance?
- If you are a first home buyer, whether you may be eligible to apply for the First Home Owners Grant and/or stamp duty concession.
Your solicitor will also discuss with you such matters as the deposit, the goods included in the sale, whether you are to obtain vacant possession or whether the sale is subject to a tenancy, and insurance. Your solicitor will also advise you that it is your responsibility and not the solicitor’s to carefully examine and be satisfied as to the matters contained in the following documents attached to the contract: the Asbestos Information Sheet, the building and pest inspection reports and the structural compliance report (including the survey report), the energy efficiency rating report, and the Lease Conveyancing Enquiry. You should note that you will have to reimburse the seller for the cost of the building and pest inspection reports and the structural compliance report as an extra at the time of settlement.
Your solicitor will make sure that you receive from the seller a transfer of the legal title of the property into your name. Your solicitor’s responsibilities include:
- Ensuring that you enter into a contract which contains terms acceptable to you.
- Checking that the property you want to buy is at the location shown on the Deposited Plan attached to the contract.
- Checking that you are satisfied that your finance has been approved before contracts are exchanged (it usually takes at least 2–3 weeks after you advise your lender you have agreed to buy a specific property for it to issue you with a letter of loan offer confirming your finance has been approved).
- Obtaining the deposit from you and arranging for contracts to be exchanged.
- Advising you to insure the house as soon as exchange takes place (as the property is then at your risk).
- Providing your lender with the details it needs to prepare mortgage documentation.
- Arranging for you to pay stamp duty on the contract before the settlement date or within 90 days of exchange (or other period allowed in ‘off the plan sales’), whichever of those dates is the earliest. Any application for concessional stamp duty must be lodged and duty paid within 90 days. Stamp duty is imposed by the ACT Government and there are interest penalties for late payment.
- Checking that rates, including water consumption and land tax (if applicable) are up to date.
- Preparing or checking all documents to transfer legal title of the property into your name;,checking and witnessing the mortgage documents required by your lender, and attending to your lender’s requirements.
- Checking that the details and final amount payable by you that are shown on the settlement statement supplied by the seller are correct, and ensuring that cheques are drawn out of moneys due to the seller for any unpaid rates (including water consumption).
- Arranging for your lender to attend settlement with cheques drawn from its loan moneys to you, and arranging with you to provide bank cheques for any settlement moneys you are providing, as well as a cheque for your solicitor’s costs and disbursements (and GST).
- Advising you to do a final inspection of the property before settlement occurs.
- Making arrangements about keys being available to you after settlement occurs.
- Attending settlement and doing a final online Land Titles Office search of the seller’s title, checking that the documents transfer the legal title to the property into your name, giving the title documents to your lender so it can effect registration of the property into your name, passing all settlement cheques required by the seller to the seller’s solicitor together with a signed authority (known as the ‘order on the agent’) releasing any deposit paid (which is usually held by the real estate agent) to the seller.
- Advising you that settlement has taken place so you can collect keys.
- Generally advising you as to your rights and duties, and assisting you with any problems that arise in the course of the transaction.
It usually takes around four weeks for lenders to be ready to settle your matter after contracts have been exchanged, and during this time your solicitor will be ordering rates enquiries, paying stamp duty, and attending to your lenders requirements.
There are many non-legal matters for which you must exercise caution and take responsibility for.
For instance, it is your responsibility to be satisfied with the building, pest and compliance reports (and other documents attached to the contract). Note that these reports do not cover the current condition of and/or approval of plumbing, gas and electrical services or household equipment (eg stoves, dishwashers, fireplaces, heating or cooling systems) or the current condition of pools; nor whether there is asbestos in the property.
In the case of properties being built in new suburbs you should obtain soil classification reports and any geotech reports (particularly fill plans) to see if the area has any geological problems.
In all purchases you should find out if there is any likelihood of a zoning change or other development in the vicinity. You should also contact ‘Dial Before You Dig’ to check if there are any underground services that may run through the property and which may not be shown in the attachments to the contract — these services may prevent you from building on your property or might even run under existing structures.
Once you have exchanged contracts to purchase the property (except in the case of a new property where the contract gives you a 90 day maintenance period), you have no rights against the seller for any faults that may be present in the property (eg from the presence of asbestos, leaking roofs or taps, white ant infestation, to blocked drains and cracked foundations and equipment that does not work). You do have a statutory right to sue the person(s) who issued the Building, Pest or Compliance Reports that are attached to the contract, but only in respect of matters that are within their stated scope of their inspection (you will find that their Reports carry wide disclaimers of responsibility); and that they are defects that should reasonably have been discovered. You must therefore make sure you discover what all the faults are before you exchange contracts to buy rather than believing you will be able to get compensation or sue someone later on for any defects.
What will it cost?
When you call to discuss instructing your solicitor to act for you, your solicitor will give you an estimate of his or her professional legal fees, anticipated disbursements (out of pocket expenses) and GST payable by you. These are usually collectively referred to as ‘costs’. Your solicitor may ask you to sign a costs agreement where these are detailed, and may also ask you to pay part of the total legal costs into his or her trust account at the outset. Your solicitor will usually require you to pay the legal fees, disbursements and GST (or the outstanding balance of the same) at the time of settlement.
There is no fixed scale for conveyancing costs in the ACT. You should therefore agree on the amount of the costs, or the basis on which you will be charged, at the time you instruct your solicitor to act for you.
You will also be liable to pay ACT Government stamp duty on the purchase, and you should ask your solicitor to advise you of the amount of stamp duty payable by you (or you may find this out from the ACT Revenue Office Website which has a stamp duty calculator).
Before the exchange of contracts your solicitor will ask you to bring in the deposit, or the balance of the deposit payable, which may generally be paid by personal cheque, Deposit Bond or Bank Guarantee.
After the exchange of contracts your solicitor will ask you to bring in the amount of stamp duty payable on the purchase by way of a bank cheque payable to the ‘ACT Revenue Office’.
Before settlement your solicitor will need to obtain bank cheques from you (at your cost) for any settlement moneys you are providing.
When the transaction is finalised you will receive your Solicitor’s Tax Invoice for their fees, disbursements and GST, and a settlement statement in respect of the property.
Your solicitor will be protecting your interests only.
This publication is intended as a simple guide, and is not intended as legal advice. While every care has been taken to ensure the accuracy of the information contained in this publication, the ACT Law Society does not make any representations or warranty as to the accuracy of the material in the publication. The publication has been written according to the applicable laws in Australia relevant to a resident of the Australian Capital Territory as at September 2011.