Buying or selling property is one of the most important transactions you can undertake in life. Besides the many hundreds of thousands of dollars involved, there is also the significance of the real estate asset as a family home, or an important income-producing investment. That’s why it’s important to get it right.
Below is a brief overview of buying or selling a property in Queensland. There are important legal requirements and repercussions all along the way during the purchase or sale of a property asset. The wisest course of action is to avail yourself of the services of a legal firm with experience in all aspects of such transactions, particularly the conveyancing of the property.
Buying a property
There are important legal considerations in three of the most common ways to buy property: at auction, off the plan, or through private treaty.
Auction: If you buy a property at auction it’s important to understand that if you’re the successful bidder, there is no cooling-off period. This means that you must settle the contract whether or not you have organised finance to pay for the purchase, conducted an inspection of the property, or then decide to change your mind.
The take-out is that you need to be prepared ahead of time. Make sure that before the day of the auction you:
- Inspect the property;
- get an independent property valuation (to ensure you don’t pay too much);
- get your finance organised (based on the valuation);
- get a copy of the sale contract;
- get legal advice about the terms and conditions, in case you’re the successful bidder.
You should also try and find out from the agent for the property what deposit they will require if your bid is successful.
It should be noted that the cooling-off period also does not apply if, two days after bidding on the property at an auction in which you were a registered bidder, you enter a private treaty contract with the owner.
Buying privately: If you bypass real estate agents and agree to buy a property directly from a seller, ensure you have an experienced solicitor check any sale contract before you sign it. The contract should include a warning statement that provides for a five-day cooling-off period as well as a clause that indicates there will be a termination penalty of 0.25% of the purchase price if you, as the buyer, terminate the contract during the five-day period. You should also obtain an independent property valuation of the property and do your own research into the values of similar properties in the area. It is also up to you to arrange necessary inspections – building, swimming pool and pest – before signing the contract.
Off the plan: Buying a unit before it is finished has become a common occurrence in our big cities where there is intense competition for properties based on location. For a buyer, this means you are entering into a contract before the building is out of the construction phase and the title to the lot has been created.
As a result, a buyer needs to be wary of the risks involved. The seller needs to provide a buyer with a disclosure statement that provides essential details about them and you, as the buyer. It also needs to clearly identify the land or unit you are buying, including the proposed number, area and orientation of the lot. The statement should explain the proposed state of the lot at the time you will take ownership. As the buyer, you must sign and date the disclosure statement.
Legal advice should be sought before signing a contract, There are circumstances where you can back out of an off-the-plan contract, including ‘material prejudice’, where a change to the initial disclosure about the state of the land will cause you a significant disadvantage. Also check the contract for the terms of any sunset clauses, which place conditions and limits on the contract such as its cancellation by either buyer or seller.
Contracts of sale
When buying a property the contract should set out the price you are offering for the property; the details of how much and when you need to pay the deposit; and the time and date of settlement.
The contract is only binding once both the buyer and the seller have signed it. Be sure to have your legal representative see the contract before you sign it. The cooling-off period of five days applies to all residential property sales.
Once the contract is binding, you’ll need to pay the deposit within 2–3 days. If the sale is conditional, the contract might be subject to certain conditions such as the buyer organising finance, conducting a building and pest inspection, or finalising sale of their current property.
Selling a property
There is quite a lot to do when you decide to sell your property, from appointing a real estate agent (if that’s your choice) to sprucing up or renovating the property in readiness for sale. One of the most important tasks is engaging a legal professional with expertise in property transactions. They will make life a lot easier by drafting a contract of sale and help you complete any other disclosure documents. They can also help fix any difficulties with pre-settlement inspections, deal with settlement, and transfer the property title from you to the buyer.
Once a buyer makes you an offer for your property, the contract is only binding once you have both signed it. Before doing so you should be sure you can meet all your requirements under the contract, including passing on covenants and agreements to the buyer. Alternatively, you can reject the buyer’s offer by not signing the contract, or make a counter-offer.
A counter-offer is made by altering the contract to suit your terms and signing the updated document. The buyer can accept by initialling your changes, reject it or make their own counter-offer. Be sure to initial changes at every stage otherwise the contract may become invalid.
Any contract for sale should include the warning about the five-day statutory cooling-off period and the termination penalty of 0.25% of the purchase price if the buyer terminates the contract during the cooling-off period.
At Felicio Law Firm we have extensive experience and expertise in advising people whether they’re buying or selling property. Call us today on (02) 4365 4249 if you have any questions or to arrange an initial consultation.