5 Things You Should Know When Buying A House

Buying a house is an exciting time full of emotions.  Before you buy a property, here are 5 tips to help with the process:

1. Ensure the Contract for Sale is reviewed, before signing
   • When considering a property ask the agent to provide you with the Contract for Sale of Land (Contract). The Contract is a legal document outlining the terms and conditions of the sale, including the purchase price, inclusions, settlement date and special conditions. It is crucial to thoroughly review the Contract prior to signing. Our expert team of lawyers can help you understand the legal implications of the contract, explain your rights and obligations and suggest any necessary changes or additions to protect your interests.
2. Ensure your finances are in order, prior to bidding at auction
   • When purchasing a property at auction, it’s important to note that there is No Cooling-Off Period. This means that if you are the winning bidder at an auction, you are legally obligated to proceed with the purchase immediately and pay the agreed deposit at the time of signing the Contract. It is imperative to have all your due diligence completed and finances in order before participating in an auction to avoid any legal consequences.
3. Obtain Building and Pest Inspection or Strata Report (for units)
   • A building and pest inspection is a critical step when buying a house, while a strata report is essential when purchasing a unit in a strata-titled building. These inspections assess the property’s structural integrity and identify any potential issues or pest infestations. A thorough inspection report can help you make an informed decision and negotiate repairs or price adjustments if necessary.
4. Obtain Pre-Approval and Unconditional Finance Approval
   • If you require finance to complete your purchase, it’s advisable to obtain pre-approval, prior to attending an auction or signing the Contract. This will help increase your confidence and strengthen your position as a purchaser.
     1. A pre-approval indicates the amount you are eligible to borrow. However, it’s crucial to understand that having pre-approval does not guarantee your loan will be approved.
     2. An unconditional finance approval means your lender has completed their assessment and is ready to fund your purchase. You should work towards obtaining unconditional finance approval before the cooling off period expires.
5. Check your eligibility for Stamp Duty exemption (First Home Buyers Assistance Scheme)
   • Revenue NSW offers stamp duty exemptions or concessions to first-time homebuyers as a form of financial assistance. It’s essential to check if you are eligible for such exemptions under the First Home Buyers Assistance Scheme in your area. To qualify, you typically need to meet specific criteria related to the property’s value, your residency status, and whether you plan to live in the property as your primary residence. We can help you navigate the application process and ensure you take advantage of any available benefits.

Our expert team of lawyers can help you understand the legal implications of the contract, explain your rights and obligations, and suggest any necessary changes or additions to protect your interests.  Let our team of experts take away the stress. Call us on 02 9119 2232 or we can contact you via Contact Us | One Law Group Parramatta.

What benefits are available to first homeowners in NSW?

First Home Loan Deposit Scheme

First-home buyers can apply for the First Home Loan Deposit Scheme which will allow eligible singles and couples to pay a deposit of as little as 5% on their first home.

Under the scheme, the government acts as guarantor so borrowers won’t need to pay lender’s mortgage insurance, which usually applies when buying with a deposit less than 20 per cent of the value of the property.

The objective of the Scheme is to assist in the purchase or construction of a modest home and the value of the residential property must not exceed the relevant price cap for the area in which it is located.

Who is eligible?

Singles with a taxable income under $125,000 per annum in the previous financial year, and couples with a taxable income of up to $200,000 per annum in the previous financial year.

Couples must be married or in a de factor relationship – siblings, friends or relatives buying together are not eligible. The scheme is only available to owner occupiers, and investment properties are not eligible.

Eligible residential properties include:

• An existing house, townhouse or apartment
• A house and land package
• Land together with a separate contract to build a home
• An off-the-plan apartment or townhouse

Applicant must be first home buyers who have not previously owned or had an interest in a property in Australia either separately or jointly with someone else

First-Home Owner Grant (New Homes)

• This is a $10,000 grant for purchasers of new properties costing less than $600,000 and owner-builder/building contracts worth less than $700,000.
• If you’re buying land to build a new home, the total price – including the land and home – must be no more than $750,000.
• You will also be eligible for this grant, if you’ve already completed the purchase process or construction has commenced.

First-Home Buyer Assistance Scheme (Existing Homes)

First-time purchasers of existing homes will pay no stamp duty on property worth less than $650,000, or vacant land worth less than $350,000, and reduced stamp duty on properties up to $800,000 or land up to $450,000.

First-Home Buyer Assistance Scheme (New Homes and Vacant Land)

• To be eligible for an exemption or reduction in the amount of duty payable you will need to be a first home buyer who purchases a new home or a vacant block of land on which you intend to build a new home.
• For the full exemption to apply, the value of the new home must be no more than $800,000 and the value of a vacant block of residential land must be no more than $400,000.
• A concessional rate of duty will apply to homes valued more than $800,000 but less than $1,000,000 and vacant block of land valued more than $400,000 and less than $500,000.

The new transfer (stamp) duty threshold will only apply to contracts executed from 1 August 2020 to 31 July 2021.

*Details current as of 1 October 2020

How can a Lawyer help with Buying and Selling Property?

Conveyancing is a necessary process in both buying or selling property. As solicitors, we can assist with the settlement and title transfer process by ensuring our clients are meeting all their legal obligations and their rights are protected during the entire transaction.

Preparing Contract of Sale

One of the primary roles of a solicitor is to help prepare all the legal documents that are part of any real estate transaction.

When you are selling your property, this includes preparing the Contract of Sale and ensuring that any special conditions you require are included in this final contract. This will protect you from any potential conflict later. A solicitor will also conduct all the title and planning searches that go into the Vendor’s Disclosure Statement, so that you have met all the disclosure obligations according to the relevant laws in your state or territory.

When you are purchasing a property, you will need a solicitor to prepare all the transfer documents that ensure a property is rightfully and legally transferred to them. These important documents will include all necessary details to meet legal regulations in your state or territory.

Legal Advice

A solicitor will also undertake a good portion of the legal work needed to help you make the right decisions and navigate this process successfully.

When you are selling your property, your solicitor will be able to advise you if there are any particularly conditions that must be included in the Contract of Sale. The special conditions will be dependent on your circumstances. A solicitor can also help advise you regarding the legal documents that you will need to give to the buyer to complete the settlement, so that there is no confusion.

When you are buying property, your solicitor will give you advice regarding the terms and conditions of the Contract of Sale. They will point out any specific terms that you should be aware of as well as any planning restrictions or other details out of the ordinary that you should consider. It’s always a good idea to let your solicitor read through your Contract of Sale before you sign it. Finally, the solicitor can help you determine what statutory fees need to be paid. These will depend on several factors, including the purchase price of the property and the state or territory in which you purchased the property.

Arranging Settlement

One of the major roles of any solicitor is to help arrange the final details of the settlement. The solicitor will coordinate a proper time for Settlement, depending on the parties’ banks and mutual convenience. The solicitor will also contact your bank to make sure that your funds are in place to pay the vendor and providing the bank with any necessary payment details. If you are holding the funds yourself, you need to transfer these to the solicitor’s trust account at least 24 hours before the settlement date to ensure that there is enough time. The solicitor will then contact the seller’s real estate agent and direct them to release the keys.

First Home Owners in NSW

Buying your first home is often one of the biggest and most exciting purchases you will ever make, and while this may be the case, many first home buyers are not fully aware of the government incentives and entitlements they are eligible for when making this purchase.

Did you know that in NSW, if you’re planning to buy your first house, you may be eligible for the First Home Loan Deposit Scheme? This means that you are able to pay a deposit of just 5% to secure the loan to your first home.

In this instance, the government will act as a guarantor, so you won’t need to pay lenders mortgage insurance, which is what usually applies when you have less than 20% deposit.

There are however some conditions you must meet to be considered eligible for the scheme. These include, but are not limited to:

• Singles who had a taxable income of less than $125, 000 in the last financial year.
• Couples with a combined taxable income of less than $200, 000 in the last financial year.
• Buyers must plan to live in the house, as investment properties are not eligible.
• Buyers must not have previously owned or had an interest in a property in Australia either separately or jointly with someone else

There are also grants available for new home builders and first home owners wishing to buy a new house, as well as the First-Home Buyer Assistance Scheme.

With so much opportunity, and so much at stake it’s important to talk to the dedicated team of specialists at One Law who will guide you through this milestone purchase and help your better understand your entitlements and eligibility.

Successful Purchase of Property with lower penalty negotiated and no default interest being charged

It is without a doubt that COVID has changed an immeasurable number of things. One such example of this is the story of our client Arnold.

Arnold was purchasing home for his family, and was excited about the purchase after realising his children had fallen in love with the house, and the fact that they had a big backyard to play in. The matter exchanged with a 5-day cooling off period.

Our team received the contract, advised the client and sought the required amendments. Although Arnold was ready to proceed, his loan approval was being held up due to the mortgagee’s back log as a result of COVID.

We were able to quickly negotiate a further 10 day cooling off period which allowed Arnolds incoming mortgagee time to organise finance. The day prior to the expiry of the cooling off period, Arnolds incoming mortgagee informed us that a deposit bond was required to effect unconditional exchange. We requested this from the other side and were able to provide a deposit bond in time.

Because we were granted multiple extensions to the cooling off period, Arnold had two and a half extra weeks to finalise his loan and settle the matter. However, one day prior to settlement, we were notified by the incoming mortgagee that they will not be in a position to settle the matter by the settlement date and to request another extension.

The Contract of Sale is very strict in terms of default interest and penalties which apply if settlement does not occur on time. One Law wrote to the other side and successfully negotiated a lower penalty and no default interest being charged, which meant that Arnold was able to save some money in an otherwise very expensive transaction.

Successful Sale of Property without incurring Extra cost in transfer duty.

Our client William had subdivided his land into three separate lots and decided to sell one of the lots to a third-party purchaser. The settlement was due to occur 6 weeks after exchange.
Upon attaining the council and water certificates, we were notified that the 3 lots were not independently rated, and after further investigations, it became apparent that when William subdivided the property, he had mistakenly registered his principal place of residence in their names as “owners in part formerly ownership” as opposed to “joint tenants or tenants in common”. This meant that William was unable to sell one of the lots without selling part of his principal place of residence.

One law arranged for a transfer to occur on their Principal Place of residence without incurring any transfer duty, a security substitution, and a successful settlement of the property to the third-party purchaser.

Successful on time Sale of Property despite Purchasers unreasonable rectification requests.

Our clients Scott and Holly decided to sell their first home. On the day settlement was due to occur, the purchaser completed their pre-settlement inspection and made unreasonable rectification requests which threatened to delay settlement.

One Law prepared the Contract of Sale which included Special Conditions that would protect Scott and Holly should this situation ever arise. When our firm expressed our intention to rely on those Special Conditions, the purchaser’s Solicitor argued that our clients were not providing vacant possession in accordance with contractual obligations.

Our team however respectfully drew the Purchaser’s Solicitors attention to the same case they cited and were able to prove that Scott and Holly had not breached their contractual obligation.

We reminded the Purchaser’s Solicitor that our client was ready, willing, and able to settle and their client would be in breach if settlement did not occur on that same day. Much to Scott and Hollys satisfaction, settlement was completed on time.

Successful Sale of Property with over $8,500 in adjustments which made up for loss of rent suffered.

Our clients Matthew and Elenor decided to sell their family home in Melbourne. The purchaser was a developer and required a 6-month settlement period, to which our clients agreed. An ordinary settlement period is usually 6 weeks, but Matthew and Elenor were happy to grant the extension given that our team was able to negotiate an unconditional early release of the deposit.

Unfortunately, there were many hiccups throughout the settlement process. Less than two months after the exchange, our clients’ tenant decided to vacate the premises which resulted in our client being out of rent for 4 months. Being pensioners, they were not working, and the rental income Matthew and Elenor received from the property was their only source of income at the time.

Closer to settlement, the purchaser nominated another purchaser to complete the sale, which resulted in a delay with settlement. The new purchaser had also requested an extension to the settlement period of another month.

When settlement finally came around, One Law (with our client’s approval) charged the purchaser penalty interest of 12% p.a. on the balance of the purchase price which resulted in an $8,500.00 adjustment being made in our client’s favour. Both Matthew and Elenor were very pleased with this result as it made up for the loss of rent they had suffered in the process.