Long weekends and holidays are prime times to get swept up in the property movement. Bright sunny skies and warm weather are optimum conditions to go house hunting (not to mention the recent drop in interest rates). Whether it’s an open house or an auction, let’s face it, snooping through other people’s houses is quite fun. But my big caveat for all of this is, don’t get caught up in the hype of an auction or the urge to spend that extra money!
When buying a property, we really only think about the visual things like the timber flooring, plantation shutters, or the 70’s colour scheme. Whilst these things are important for some, there can be hidden surprises in a contract that you don’t know about.
My message to you all today is:
DON’T KNOW? DON’T SIGN!
My first message is for those attending an auction. If you haven’t received legal advice about the contract, do not bid at auction. If you are a successful bidder at auction, you will be locked in, unconditionally, with no option to pull out. Haven’t got your finance in order or you need an extended settlement? This all needs to be negotiated before the auction. The number one tip for any auction is to be informed and be organised.
Secondly, you need to know: what’s in a contract?
There’s the first page which sets out what your buying and the price. It also lists the inclusions like your light fittings and fixed floor coverings. The following pages are the standard Law Society of NSW contract pages (‘the standard conditions’) – which basically set out the rights and obligations of the vendor and the purchaser and the conveyancing process generally.
The next part is the special conditions. They serve three purposes:
There are clever lawyers and conveyancers out there who can craft some cheeky special conditions, so watch out for those hidden traps.
Then we have the title documents. This includes a title search which shows who owns the property, what the legal description is, where its located, and what the property is affected by. There can be grants in favour of the Crown (most titles in NSW), easements (rights of way), or restrictions as to user (what you can and can’t do or build on your property). You need to know all this before you make any financial commitment to purchase. Following the title is a copy of the plan, kind of like a map, and then copies of any easement or restriction that may affect the property.
Next, the Section 10.7 Certificate is a certificate issued by the local council which tells the buyer things like if the property is in a flood zone, a bush fire area, and what kind of zoning the property is – note this can also affect what you can and can’t do with a property. (Important note: bushfire and flooding can also affect your insurance premiums). It may also disclose if there are additional rates payable, if the land is reserved for acquisition, or the Council intend to widen the roads.
Lastly, we have the sewer and drainage diagrams. The sewer diagram shows where a dwelling or property is connected to the sewer main (very important or you may be using a port-a-potty!). The internal drainage diagram will provide a map of the internal plumbing inside the dwelling. This is only a recent requirement, so some contracts may not have them as not all councils have the appropriate records.
Be informed! Be proactive! Get the right advice! Happy house hunting!
As always, this is general advice only and is not be relied upon as legal advice.
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