House Sale | Purchase

Conveyancing refers to the legal process of transferring ownership of a property from one person (or entity) to another. It involves a series of legal and administrative steps, ensuring that the transfer of the property complies with property laws.

Purchase

Buying property in Victoria, whether as a first home or an investment, involves several important considerations.

It is important that in below items, subject to conditions must be placed as precaution:

• Finance
• Pest & Building Inspection
• Caveat
• Vacant Possession

The some of the key factors are listed below:

• Set Your Budget
  You need to assess your financial situation to figure out how much you can afford including deposit, loan repayments, ongoing costs, stamp duty, legal fees, inspection costs and any renovation or repair costs.
• Get Pre-Approved for a Loan
  You need to approach banks or mortgage brokers to get pre-approval for a loan so that it will give you a clear idea of your borrowing capacity.
• Research the Market
  You need to investigate different areas in Victoria to understand property values, amenities and future developments including factors like public transport, schools, shopping and overall neighbourhood vibe.
• Find a Real Estate Agent
  You may engage a local licensed real estate agent who knows the area and can help you find suitable properties including assistance with negotiations and provide insights into market trends.
• Inspect Properties
  You attend open for inspections and private viewings and may consider hiring a professional inspector to check for structural issues or pest infestations.
• Make an Offer
  Once you find a property you like, you can make an offer in either through a formal process of an auction or a private sale.
• Conduct Due Diligence
  You need to verify property details including title and zoning and check for any restrictions or easements and review the Section 32 Vendor’s Statement which outlines property details and any risks.
• Arrange or Lawyer
  You may now engage a lawyer to handle the legal aspects of the purchase including the contract review, settlement and registration of the property.
• Finalize the Purchase
  Once your offer is accepted, you’ll sign the contract and pay the deposit to make the offer unconditional subject any other conditions.
• Final Loan Approval
  You need to confirm with your banks or mortgage brokers whether the loan has been approved unconditionally so that you can tell your lawyer to proceed further for settlement.
• Final Inspection
  You must conduct a final inspection of the property to ensure it is in the agreed condition prior to settlement.
• Settlement Day
  On settlement day, the remaining balance is paid, and you receive the keys to your new property. The settlement day is typically set for 30 to 90 days after signing the contract.
• Post-Purchase Considerations
  After settlement, your lawyer will ensure the title is registered in your name with the Land Titles Office and you need to set up utilities, internet and other services in your name and update your address for relevant subscriptions or accounts. You are highly recommended to obtain home and contents insurance to protect your new property.

Sale

When selling property in Victoria, vendors need to be well-informed about the legal and practical aspects of the selling process to ensure a smooth transaction.

The following are few of the key points that vendor should consider:

• Preparation of the Property is where you must make necessary repairs, improvements, clean and declutter your property to enhance value.
• Engaging Professionals is where you hire licensed real estate agent assist with marketing, negotiations and handling the sale process and engage lawyer to handle the legal aspects of the sale.
• Prepare Legal Documents is where your lawyer will prepare Contract of Sale and Section 32 Statement including whether the sale is private or auction.
• Marketing the Property is where your licensed real estate agent will work with you to make marketing plan to ale your property.
• Receiving Offers is where your licensed real estate agent will present all prospective offers.
• Exchange of Contracts is where you and purchaser will sign valid contract od sale.
• Pre-Settlement Period is where purchaser may inspect property for the last time
• Settlement is where on the agreed settlement date of usually 30 to 90 days after signing the contract happens.
• Post-Settlement is where you discuss outstanding payments and tax implications and other issues.

Property Concepts

Property law in Victoria involves a variety of legal concepts related to the ownership, use, transfer and regulation of land and real property. Property law governs how property is defined, how it is held and the rights and responsibilities of property buyers and owners.

Types of Property

In conveyancing, the following types of property are dealt, each requiring a slightly different approach due to their specific legal and regulatory requirements:

• Residential Property
• Vacant Land
• Commercial Property
• Rural Property
• Strata Title Property
• Leasehold Property
• Mixed-Use Property
• Off-the-Plan Property

Owner’s Corporation

An Owner’s Corporation is a legal entity that manages and maintains the common property in a shared development.

It is very important to check if there is an Owner’s Corporation (also known as a Body Corporate) when buying a property, especially if the property is part of a shared or multi-unit development such as apartments, townhouses or strata-titled subdivisions. As a buyer, if you fail to check Owner’s Corporation Certificate, it may result in unexpected costs or restrictions after the purchase.

The main reasons why checking for an Owner’s Corporation is essential are listed below:

• Financial Obligations (Levies and Fees)
• Rules and By-Laws
• Maintenance of Common Property
• Insurance
• Legal Disputes or Issues
• Future Maintenance or Renovations
• Compliance with Disclosure Requirements

When selling a property in a strata-titled development, the seller must provide the buyer with an Owner’s Corporation Certificate.

Section 32 Vendor’s Statement

In conveyancing, Section 32 Vendor’s Statement is a very important document under law. This document must be given to buyer before signing and must be also factually correct. The reason it is called a Section 32 statement is because

The Section 32 Vendor’s Statement contains information about the property’s title including:

• Mortgages
• Covenants
• Easements
• Zoning
• Outgoings like rates
• Declaration if located in a bushfire-prone area

As it is a legal document, it must be factually accurate and complete. If it contains incorrect or insufficient information, a buyer may be able to withdraw from the sale or take legal action against you.

Caveats

Caveat basically means a caution or warning. A caveat on title has following two purposes:

• It is a warning to all the world that a person claims an interest in the land and
• It acts as a statutory injunction restraining the Registrar from registering a dealing affecting the land without first notifying the caveator.

A caveat does not create anything, nor does it bring into existence a right not already in existence. Although it has no effect to create, it does protect an existing right in land.

Home insurance

Even though the seller’s insurance may cover the property up to the date of settlement, your lender will recommend that you take out building insurance effective from the date the seller signs the contract. This is to safeguard their interest in the property, as well as your own.

Do Not Rush into Buying Property

• Never rush or be pressured into making hasty decisions.
• Make sure you are committing to the right property for you.
• You will feel more confident about your investment if you make an informed decision.

Risks of Buying Off-the-plan

Buying off-the-plan without being able to see the finished product has its risks including:

• Being unable to inspect the actual property. You have to rely on an artist’s impression, floor plan and advertising material for information about what you are buying
• Differences in the expected and actual quality of the final finishes
• Unexpected changes to the plans or specifications
• An uncertain completion date
• Complex contracts
• Limited recourse with the builder if there is a dispute. This is because the developer enters into a major domestic building contract with the builder, and you buy the property from the developer
• Property market volatility causing the value of your off-the-plan home at settlement to be less than the contract price
• Potential issues with obtaining finance – for example, if the value of the property decreases or the completion date changes, you may have problems getting the loan approved.

Due Diligence Checklist

Before you buy a home or vacant residential land, you should be aware of a range of issues that may affect that property and impose restrictions or obligations on you. The due diligence checklist aims to help you identify whether any of these issues will affect you. The questions are a starting point only and you may need to seek professional advice to answer some of them.

All sellers or estate agents must make this due diligence checklist available to potential buyers of homes or residential property. You must request due diligence checklist from the sellers or estate agents.

Sellers or estate agents must:

• Ensure copies of the due diligence checklist are available to potential buyers at any open for inspection
• Include a link to this webpage (consumer.vic.gov.au/duediligencechecklist) or include a copy on any website maintained by the estate agent or the seller (if no estate agent is acting for the seller)

First Home Owner Grant (FHOG)

First home buyers in Victoria will receive specific programs, grants and concessions designed to make the process of purchasing a home more accessible and affordable.

The State Revenue Office has a complete list of all concessions and discounts for First Home Buyers in Victoria including:

• First Home Owner Grant (FHOG) for new builds
• Stamp Duty exemption or concession
• Principal Place of Residence (PPR) concession

If you are buying or building a new home valued up to $750,000, you may be eligible for a First Home Owner Grant (FHOG) of $10,000. The home must not have been previously sold or occupied.

Established homes are no longer eligible for FHOG. However, if you are buying an established home as your first home and you meet the FHOG eligibility criteria but for the fact that it is not a new home, you may be entitled to a first-home buyer duty exemption (for homes valued at $600,000 or less) or concession (for homes valued at $600,001 up to $750,000) where the contract is entered into on or after 1 July 2017.

You can receive a duty concession as a first-home owner buying an off-the-plan land and building package or a refurbished lot. If you sign your contract on or after 1 July 2017, you must live in the property as your home.

Principal Place of Residence (PPR) Concession

You may be entitled to a concession from duty when you buy a property that you intend to live in as your home for a continuous period of 12 months, within 12 months after settlement.

Building and Pest Inspection

A building and pest inspection may be highly recommended for every type of house when you’re considering a purchase. The inspections are important for the following reasons:

• A building inspection assesses the structural soundness of the property, checking for issues like cracks in the walls, roof problems and other significant structural concerns.
• Inspectors ensure that the property meets current building codes and regulations.
• It can reveal if previous renovations were done properly and whether any repairs are needed.
• Identifying any defects or maintenance issues early can help you avoid significant expenses down the line.
• A pest inspection checks for signs of termite activity, which can cause extensive damage if not addressed.
• Inspections can reveal other pest infestations, such as rodents, ants, or other insects that may compromise the property’s integrity or your health.
• Identifying pest issues before purchasing allows you to negotiate repairs or treatment with the seller.
• Knowing the property’s condition can give you confidence in your investment.
• It helps prevent unpleasant surprises after moving in, such as unexpected repair costs or pest problems.
• Inspections can uncover safety hazards that may not be visible during a casual walk-through. Issues like mould, faulty wiring, or structural instability can pose risks to health and safety.

Flood and Fire Risk

Properties are sometimes subject to the risk of fire and flooding due to their location. You should properly investigate these risks and consider their implications for land management, buildings and insurance premiums.

Soil and Groundwater Contamination

You should consider whether past activities, including the use of adjacent land, may have caused contamination at the site and whether this may prevent you from doing certain things to or on the land in the future.

Land Boundaries

You should compare the measurements shown on the title document with actual fences and buildings on the property, to make sure the boundaries match. If you have concerns about this, you can speak to your lawyer or commission a site survey to establish property boundaries.

Building Permits

There are laws and regulations about how buildings and retaining walls are constructed, which you may wish to investigate to ensure any completed or proposed building work is approved. The local council may be able to give you information about any building permits issued for recent building works done to the property, and what you must do to plan new work. You can also commission a private building surveyor’s assessment.

Safety

Building laws are in place to ensure building safety. Professional building inspections can help you assess the property for electrical safety, possible illegal building work, adequate pool or spa fencing and the presence of asbestos, termites or other potential hazards.

Estate Agents’ Responsibilities to Buyers

Although an agent’s responsibility is to the seller, they are also obliged to act responsibly and ethically when dealing with you, the buyer.

As a buyer, you can expect an estate agent to:

• Take your details and provide free information advice about relevant properties for sale
• Answer any questions you have
• Arrange inspections
• Give you a Statement of Information for a property for sale
• Provide a copy of the Section 32 Statement
• Communicate genuine offers to the seller
• Organise the signing of the contract of sale.

Building Problems After Property Settlement

If you find problems with the building work in your new home – whether it be a newly built house, or a home with recent extensions, renovations or repairs – you may be covered by the:

• Statutory building warranties that set the standard of workmanship for all domestic building work
• Builder’s domestic building insurance.

The statutory building warranties apply to building work for up to 10 years after the date the occupancy permit or certificate of final inspection was issued, even if the property sells several times.

If you believe the problem is covered by the warranties but the builder is going to charge for the repairs, you will need to consider legal action.

In some situations, you may be able to claim the cost of repairs on the builder’s domestic building insurance. This insurance covers work worth more than $16,000 for six years if the builder has died, disappeared or become bankrupt.

Cooling-off Rights

In an endeavour to enhance consumer protection, law gives a purchaser a statutory right, in certain circumstances, to bring the contract to an end within three clear business days of after signing the contract. A cooling-off period is a period of time following a purchase when the purchaser may choose to cancel a purchase,

A purchaser who exercises this right is entitled to a refund of the deposit less either $100 or 0.2 per cent of the purchase price, whichever is the greater.

Material Fact

A material fact is a fact that would be important to a potential purchaser in deciding whether or not to buy land, or which may influence a purchaser to buy land at a certain price.

The maximum penalty for knowingly concealing a material fact when selling land is:

• A fine of over $19,000 (120 penalty units)
• Up to 12 months imprisonment.

License Agreement

A License Agreement gives license to purchaser to move into the property to access possessions before settlement for the property has taken place. The “License” is granted by the seller of the property and a daily or weekly fee is often charged.

Covenants

A covenant on title is an agreement creating an obligation contained in a deed. It is usually enforceable by a number of people, and it is as though it were cemented into the land. When you become proprietor of the land you inherit the covenant.

Covenants affecting land must contain the following characteristics:

• Touch and concern the land – have something to do with how the land is used and/or possessed
• Run with the land
• Burdens and benefits run with the land to successors in title
• Can be enforced by anyone whose land has the benefit of the covenant

Easements

An easement is a right held by an owner of land over the land of another. It does not have to be adjoining land.

An easement must contain the following four characteristics:

• The existence of a dominant tenement. A dominant tenement is the land that enjoys the benefit of the easement
• The existence of a servient tenement. A servient tenement is the land that gives the benefit of the easement to the dominant tenement
• Ownership must be separated. The dominant and servient land cannot be owned by the same person – a person cannot have an easement over their own land
• The benefit arising must be capable of being a grant of land

The principles of equity and common law cause easements to run with the land. This means that whoever owns the land from time to time will be bound by the easement.

Mortgages

It is basically a contract to secure payment or performance of a monetary obligation.

There are two essential elements of a mortgage. They are:

• The promise – the personal contract for the payment of money or for the performance of the obligation
• The right of the mortgagee to take action in respect of the property over which the mortgage is secured

Methods of Sale

Although anyone can sell their own property, most vendors employ an estate agent to act on their behalf.

The properties are sold in following ways:

• A private sale with no agent where this situation is the exception rather than the norm
• A private sale through an agent which is the most common way properties are sold
• Sale by auction is real estate auctions which are popular in Victoria
• Tender is a marketing strategy used by agents mainly to sell industrial, commercial or special interest properties
• Option to purchase is an option to purchase is regarded as a document creating an interest in land
• Right of first refusal is a right of first refusal may be included in a lease, usually in favour of the lessee (the tenant).