Purchasing a Property? A Comprehensive Home Buyers Guide

Avoid common home buying mistakes with this ultimate guide to property purchases!

Whether you are a first home buyer, experienced home buyer or seasoned investor, one thing remains the same…once you sign a contract of sale, you are legally bound to it.

The first thing you might hear when looking at purchasing a property, is the contract of sale and vendor statement, also known as a section 32. You have heard the terms, but what are they?

What is a Contract of Sale?

A contract of sale is a contract signed by the purchaser and the vendor that formalises the agreement and binds the parties to the sale and purchase. Many people assume a contract of sale is standard or that they are all the same. They are not.

The contract of sale sets out what you are purchasing, all the conditions of the sale and obligations of both the vendor and purchaser. The contract will include key details such as the property address, sale price, deposit paid and settlement date. However, it also includes pages of general conditions as well as special conditions. It is these conditions that are crucial to understand before you sign a contract of sale.

What are General Conditions?

General conditions are the main conditions of the contract and are standard across most contracts of sale for real property. They will include things such as what happens in the event of a default by either the vendor or purchaser, warranties, signing, how settlement is to take place and more. Whilst these conditions are generally standard, it is important that as a purchaser, you understand these conditions and are aware of your obligations under the contract.

What are Special Conditions?

Special conditions are conditions that are extra conditions added into a contract. These will not be the same as in another contract of sale. They are often added into the contract by a vendor for the vendor’s benefit, however a purchaser can request special conditions be added in also. Special conditions can also be added in to change a general condition. To find out more about special conditions and what these can include, click here.

What is a Vendor Statement or Section 32?

A vendor statement is a document that a vendor must provide a purchaser before they sign a contract in accordance with section 32 of the Sale of Land Act 1962. The vendor statement or section 32 contains material information about the property that the purchaser is to be aware of so that they can ensure they can make an informed decision before they purchase the property.

The vendor statement includes things like annual costs such as council rates, land tax and water rates, any owners corporation fees and obligations, any easements or covenants that are on the property that may affect what the purchaser can do on those parts of the property, zoning issues or applications in progress for changes to the zoning, owner builder works undertaken on the property, any building permits issued or whether any notices or orders from government departments such as compulsory acquisitions are on foot and more.

It is important that if you are purchasing a property, you have full disclosure of all of these aspects of the property before you sign a contract!

I understand what the Contract of Sale and Vendor Statement is, what do I do next when purchasing a property?

Obtain legal advice on the contract of sale and vendor statement before you sign! By legal advice, we do not mean a cheap online contract review website or a cheap conveyancer who will summarise the main terms of the contract that you already know. We mean a proper pre-purchase review by a property lawyer. We can hear your eyes rolling but hear us out!

Why should I obtain pre-contract advice before I purchase a property?

Obtaining legal advice before you sign a contract allows you to proceed with the purchase with confidence, minimising unnecessary risk to you. A proper contract review undertaken by a property lawyer goes far beyond the sale price, deposit and settlement date. It takes a deep dive into those hidden areas that you may not have been aware of and that have a tendency to rear their heads only after you have signed a contract or settlement has taken place. Unfortunately, by the time problems are discovered, your options can be limited and expensive.

A proper contract review will identify and advise you on things such as but not limited to:

Unfavourable Special Conditions. Contracts are often drafted to protect the Vendor or work in the Vendor’s favour. We identify clauses that may expose you to financial or legal risk or be at detriment to you. We also ensure that the contract represents exactly what you have agreed to purchase and the terms of that purchase.

Title Issues. Easements, covenants, zoning restrictions, or unapproved structures can affect how you use or develop the property. Not having a clear understanding of any easements or covenants on the title can also put you at risk down the track.

Finance & Termination Clauses. Whilst subject to finance clauses seem simple, there are legal obligations placed on the purchaser that determine the ability to end the contract if finance is not obtained. Not understanding your obligations under the finance clauses could put you at risk of losing your deposit.

Settlement Times. Fast settlement times can create stress and financial penalties, particularly if you require finance approval. Our pre-contract advice provides guidance to you on the steps you can take to ensure settlement proceeds smoothly with no delays or penalties.

Auction Contracts. If you purchase at auction, there is generally no cooling-off period. The contract becomes unconditional immediately. This means you do not have time to get the contract reviewed in the normal “cooling off” period.

Building Defects and Pest Reports. Understanding your obligations to obtain a satisfactory building and pest report are crucial to minimising the risk to you. Not undertaking these reports as required by the terms of the contract may mean the contract is still legally binding even in the event of any major structural defects.

Owners Corporation fees and obligations. It is important you are aware of your ongoing owners corporation fees as well as any issues in the owners corporation that could affect you later, or raise the annual fees down the track.

Off the Plan Conditions. It is crucial that you understand what these really mean and what the practical implications for you are. Matters that require consideration are things like your ability to obtain finance once the build is complete, the value of the property once it is built, the builder obligations to finish the build and obtain an occupancy permit. We have seen some contracts that have placed obligation on the purchaser to fix any defects!

In short, obtaining pre-contract advice will provide:

✔ Clear advice as to exactly what you are buying;

✔ A clear understanding of your obligations in accordance with the terms of the contract;

✔ A clear understanding of your risk by entering into the contract;

✔ Opportunity to negotiate the contract if there are terms that are not in your favour;

✔ Opportunity to make further enquiries if needed;

✔ Protection against common mistakes that people make that put them at risk of losing their deposit;

✔ Peace of mind.

Purchasing a property is one of the biggest financial decisions you can make. Obtaining proper legal advice before you sign is a small price to pay to keep expensive problems away!

I have signed the Contract of Sale to purchase a property, now what do I do?

Once you have signed the contract and vendor statement, ensure you:

Know your obligations to apply for finance. You could risk losing your deposit if you do not obtain finance and cannot show that you complied with your obligations under the contract to make application. Ensure you know what you need to do.

Know the conditions for building and pest inspections. Building and Pest inspections must be undertaken by the dates set out in the contract and must be undertaken by a registered Building Practitioner or in accordance with specific Australian Standards. If it is not and there are any major defects or pest issues, you may not be able to rely on these reports to end the contract or seek reimbursement from the vendor to have these attended to.

Know what is included in the sale, and the condition of the property at the day of sale. Understand what fixtures or fittings will be removed and the condition all appliances are in so there are no surprises on settlement day.

Respond to your conveyancer and attend to their requests for information or documents in a timely manner;

Attend the final inspection and check all appliances are working and that the property is in the same condition as it was at the date you signed the contract;

Ensure you arrange insurance for the property from the day of settlement;

Organise gas and electricity to be turned on at the premise.

Why choose Wollerman Shacklock Lawyers to assist with your purchase?

With Wollerman Shacklock Lawyers, you get experienced conveyancers handling your purchase, with oversight by one of Victoria’s few Accredited Property Law specialists, meaning you get the best of both worlds.

We go through the contract of sale and vendor statement with a fine-tooth comb, making sure you are advised on all areas that could pose a risk to you before you sign anything. We outline all factors that you need to consider such as:

any title and property restrictions like any easements, covenants, or owner’s corporation for the property;

the extra costs of purchasing your home that need to be factored in such as stamp duty, adjustments, legal fees, land registry lodgement fees and extra mortgage establishment fee and ongoing owner’s corporation fees;

any building work or owner building works that have recently taken place and whether the insurance on those is adequate;

special conditions that might be of detriment to you and suggestion of any special conditions that should be added for your protection;

whether the property is sold subject to lease;

building reports and your obligations to obtain a satisfactory building report;

finance clauses and your obligations to comply with finance clauses;

off the plan purchases and the risks involved to you;

planning issues such whether the property is in a bushfire or flood zone;

what to do at the final inspection; and more.

Once you have signed the contract, our experienced conveyancers ensure a smooth stress-free experience. We get things organised from the start so there is no mad rush the day before settlement to sign or hand over documents. We provide clear and comprehensive advice and guidance at each step of the process, leaving you well informed so you do not ever have to wonder if things are in order.

Our team are on always on hand to answer any questions you have, providing you assurance and confidence the whole way. There is no take a number approach nor refusal to return your calls or provide you with updates. We also have an Accredited Property Law Specialist overseeing the matter so if anything goes sideways, you can be sure there is an expert there to step in to resolve it before it is too late.

Do I have to use a conveyancing lawyer or can I use any conveyancer?

You can choose who to undertake your conveyancing for you. However, it is critical to undertake that a conveyancer only undertakes the procedural steps to process the transaction and cannot provide you with legal advice on issues that arise, which does happen. To find out more about the difference between a conveyancer and a lawyer including the ‘low cost’ conveyancer trap, have a read of our blog here.

Wollerman Shacklock Lawyers, here to help with your first-home or next home purchase

Buying a home for the first time or for the third time is one of the biggest decisions you will make in your life! Whatever stage you are at, with Wollerman Shacklock Lawyers, you get a complete service so that you can be confident knowing you are protected and are ensured of a smooth and efficient purchase and settlement experience.