The buy and sell property processes in NSW:
Buying or selling a home is often the biggest financial decision we’ll ever make. This article provides an overview of how lawyers can guide you through each steps.
- Before you commit to buy and sale.
Selling
Before your decide to advertise a home for sale, a contract of sale has been prepared. In addition, a seller is also required to provide a number of documents, for example,:
(1) a zoning certificate;
(2) drainage diagram showing any sewer lines,
(3) a copy of property certificate;
(4) a copy of the plan for the land;
(5) copies of any documents showing easement, right of way, restriction, covenant etc.
Seller of strata properties (generally units, townhouses) should also have attached a copy of property certificate and strata plan; and a copy of by-law concerning the use of common property.
Buying:
If you’re buying a property your rights depend in large part on what’s in the contract of sale. Many of the terms in any contract for sale will be ‘standard’ ones, which means that they’ve been in use for a long time and are fair for both seller and buyer. However, a seller doesn’t have to include these terms and instead may choose to include something in the contract which favors themselves at a buyer’s expense. That’s why the first thing your solicitor will do is make sure that the contract for sale isn’t just legal, but that is also isn’t unfair to you. Where a clause isn’t in your interest, your solicitor will negotiate with the seller’s solicitor to get it changed. This includes working out a time to ‘settle’ the sale, which is when you’ll pay the balance owing and take ownership of the property.
- Conditional offer
For private treaty, buyers would make an offer on the property, once the offer is accepted, the buyer will receive the sale of contract and pay 0.25% deposit which would start the cooling off period. Since 0.25% is a lot of money, before the buyer pays the deposit, it will be good idea to get legal advice so that the terms of the contract isn’t unfair to the buyer.
- Cooling off
At private treaty:
- The buyer has a five day cooling-off period to negotiate things, and do the diligence, during which they can withdraw from the sale.
- If the buyer use the cooling-off right and withdraw from the contract during the 5 business days period, the buyer will have to pay the vendor 0.25% of the purchase price.
- The cooling off period can be waived, reduced or extended by negotiation.
At auction:
- There is no cooling off period for auction. The successful bidder is bound to go through with the purchase and pay the buyer a deposit on the spot (usually 10%). As long as you have your solicitor look over the contract for sale before you bid at the action there is no reason an action needs to be any riskers than buying by private treaty. Before the auction, your solicitor will identify any terms that might not be in your favor and negotiate with the vendor solicitor to change them. That way if your bid is the winning one, you can be sure the contract you sign will be in your interest.
- Pay for inspection:
- Because you’re expected to take the property “as you find it” that means that you’ll also sign up for any structural problems, pest infestations or other defects that might not be obvious to the naked eye. That’s why it’s always best to have someone who knows what they are doing look over the property first. After all, you may be paying a few hundred dollars up front to save yourself thousands, or even tens of thousands of dollars of bother down the track.
- Your solicitor should also check the contract includes: a survey; a building certificate, a home owner’s warranty insurance certificate for any renovation done at the property.
- If you’re buying at auction, it is important that you have any pest or building inspections carried out before the auction. Once the hammer comes down, it’s unlikely you’ll be able to get out of the contract.
- Contract exchange
- A contract to sell property becomes binding when the buyer and sell each sign a copy of the contract for sale and exchange them. At exchange the buyer also usually hands over deposit (usually 10%). This process is usually arranged by your solicitor or the real estate agent for their clients.
- At an auction, exchange happens immediately after the winning bid is accepted. For private treaty sales, exchange usually means that you will deliver your signed contract to the agent
- Settlement
- Settlement is the conclusion of the sale transaction and usually takes place six weeks after contracts are exchanged.
Buying a town house or apartment:
- Most apartments and town houses are strata title which means you’re buying into the rights and obligation of being a member of the owner’s corporation. Being a member of the owner’s corporation means you will have a say on issues affecting the building but it also means you will need to pay strata levies and the way you can use your property will be restricted by by-laws. While a seller must attached some information about the body corporate to the contract for sale, your solicitor will make sure you have everything you need to reach an informed decision before you buy.