James King, Principal Lawyer at Legitimate Solutions Legal, gives an insight into buying residential property in the ACT.
I received a call the other day from a person looking to put in an offer to purchase a property in Canberra. This is not unusual as we actually do a lot of conveyancing work. If it was unusual you would wonder how we could have been in business for so many years.
Historically this time of year has a slump over the summer break followed by increased activity in January as people look to purchase residential real estate.
Clearly the client was excited about the prospect of buying but needed assistance with the legal process. I talked them through the process and sent out some information about the various steps.
I have detailed some of the key steps below.
Steps Before Exchanging Contracts
We strongly advise clients to get legal advice before signing any Contract.
If your offer is accepted the Real Estate Agent sends us the Sales Instructions detailing the property, seller, buyer and Lawyers acting for the seller.
We get the Contract from the Lawyers for the seller, which includes various legal searches and in the ACT includes pre-sale building reports and the EER.
We arrange to meet with you to sign the Contract for Sale . You provide a cheque (personal cheque is acceptable) payable to the Stakeholder or details of a deposit bond (if acceptable to the buyer) to us prior to exchange.
We confirm with you that finance is in place and we can exchange.
We exchange the Contract for Sale with the Lawyers for the seller and provide the deposit cheque. The Lawyers for the seller give the deposit cheque to the stakeholder (often the Real Estate Agent) to hold until settlement.
Exchange & Cooling Off Period
Exchange of Contracts creates legally binding obligations. Under legislation Agents can exchange Contracts but we suggest having the Lawyers exchange the Contracts following your instructions. Some of my friends are Agents but just as they wouldn’t want me selling houses I think it is best if the Lawyers look after the Contract matters.
The Contracts have a five day cooling off period where the Buyer can rescind or change their mind. If you do you must pay 0.25% of the purchase price ($250 per $100,000). You can waive the cooling off period if we sign a section 17 certificate as your Lawyer confirming your instructions to waive the benefit.
Reports
The Building, Pest and Compliance Reports in the Contract are vitally important. You should read thought the Reports and have us check them closely.
Insurance
You have an insurable interest in the property at exchange and should arrange for a building insurance cover note or policy to take effect at exchange. For unit title such as townhouses the Body Corporate arranges the building insurance.
Auctions
Auctions are a little different with no cooling off period for registered bidders that bought at auction or after the auction but on the same day as the auction.
Buying at auction as a registered bidder or after but on the day of the auction results in a binding exchange on that day. Keep this in mind if you continue to negotiate with the Agent after the auction but on the same day.
Stamp Duty and the First Home Owners’ Grant
There are limited ACT stamp duty concessions available. Talk to us about eligibility. Your Bank or Mortgage Broker usually assists with the First Home Owners’ Grant.
After Exchange
We advise you of the stamp duty payable and you provide a bank cheque (cannot be a personal cheque) payable to the Revenue Office. We have the duty assessed and Transfer stamped.
We work in with the other Lawyers to adjust the general rates, land tax (for investment properties) and water and sewerage rates.
We advise the incoming mortgagee (your bank) of the purchase details.
Settlement
We attend to settlement and collect cheques from your bank. We provide the cheques to the Lawyers for the seller with an order on the agent to release the deposit. We receive the Certificate of Title, Transfer and Discharge of Mortgage (if relevant) and provide these to your bank and receive the keys to the property.
If the property is sold subject to a tenancy we receive a letter transferring the bond to you.
Usually your bank registers the Transfer and their Mortgage over the property at the Land Titles Office. The Agent provides the keys to you or we pass them over after settlement.
Conclusion
So you see there are a number of stages in the process but we can help you with purchases in the ACT and reduce the stress associated with buying a home.
Call the office on 02 6162 3003 or email [email protected] if you would like to make an appointment to discuss.
This is general information and should not be relied upon as legal advice. Contact us if you require specific legal advice.
