Buying real estate in New South Wales

When you are considering a property for purchase, the real estate agent will have a draft contract available for you to inspect.

It is important that you obtain advice about that document before you proceed any further. I regularly provide such advice and assist buyers negotiate modifications to contracts where needed. Contracts can be centimetres thick and quite difficult to follow.

The draft contract must have attached certain mandatory documents. These documents include at least: a title search; the registered plan of the land including the text of any easements, rights of way, restrictions, etc.; a planning certificate; a sewer connection diagram; and a drainage infrastructure diagram. There can be many others. There is important information about the property hidden in these documents. Typically, buyers need assistance interpreting the information.

There will be Goods and Services Tax issues to be addressed in the contract if the property is not an existing dwelling. Non dwellings and new residential dwellings are generally taxable. There can be exemptions for some commercial and some rural sales. I regularly liaise with a client’s accountant to make sure GST implications are correctly addressed.

There are various investigations you may wish to carry out before you are committed.

Sometimes the boundaries to the property need to be investigated to check there are no building encroachments on or by the property. One cannot assume that the fences are necessarily on the boundary.

At a minimum, most buyers wish to see a pest report and a building report (and sometimes an asbestos report) before they commit. The alternative is to ask if the vendor will agree to clauses in the contract allowing you time to obtain reports and giving the right to pull out if they are not satisfactory.

If the property is to be auctioned the agent may have already obtained pest and building reports. Otherwise you need to consider obtaining reports before auction even though you may not be the successful bidder.

If the property is not to be auctioned, the buyer of residential property generally has a “cooling-off” period of 5 business days. Or 10 business days if the sale is “off the plan”, i.e. yet to be built or yet to be finished. This can be waived but only if the buyer’s qualified representative signs a prescribed waiver document.

You can pull out of the contract during the cooling off period without giving a reason.

If you are waiting on finance approval, it is imperative that you not exchange contracts unless the contract has a clause allowing you time to obtain approval and allowing you to pull out if approval is not obtained.

If the property is to be auctioned you should not bid unless you have the lender’s pre-approval for the finance you need.

Upon exchange of contracts you need to pay a deposit. Usually 10% of the price unless the vendor agrees to a different amount.

Typically you must pay transfer duty to RevenueNSW unless you are entitled to a concession or exemption. 

A guide to the amount you pay can be calculated at:

https://www.apps09.revenue.nsw.gov.au/erevenue/calculators/landsalesimple.php 

I organise the forms you need to sign for transfer duty assessment after which I organise the assessment via the Revenue NSW online service and this assessment is then fed into the electronic conveyancing system ready for when settlement of the sale occurs. As the settlement occurs, the system accesses your money to pay the duty either via my trust account or via your bank.

You do not need to pay the transfer duty until settlement occurs provided settlement occurs within three months following exchange of contracts. Other delayed arrangements can apply to off-the-plan contracts. 

When the contract is unconditional, a “Workspace” is opened in the electronic conveyancing system and all party representatives and banks operate in that electronic Workspace to progress the matter towards settlement. I am an accredited system user and I represent and sign for clients in the system.

There are formal requirements before the electronic conveyancing system can be used for your transaction. You must sign a prescribed Client Authorisation for me to operate in the system on your behalf. Additionally, your identity must be formally verified. This means you must, in person, with your identification documents (typically both your driver licence and passport), attend either myself or an independent certifier like the Post Office.

One other participant in the electronic conveyancing system will be your mortgagee, if you are using finance.

I make enquiries for you to Council, water authority, body corporate, etc so that, near to the time for settlement, calculations can be made for adjustment of council and water rates and strata levies, etc. You either pay your share of outgoings for the remainder of the rating period following the settlement date or you reimburse the vendor if the vendor has already paid.

When settlement occurs, I sign off for you in the electronic conveyancing system and settlement (transfer of title) occurs and the system automatically attends to the transfer of funds. You will have deposited your funds to my trust account beforehand and the system accesses my trust account to pick up the funds. Alternatively, the system may pick up the funds needed from your bank.

The real estate agent is notified as settlement occurs and will then make the keys, garage controller, etc available to you.

You need to have the property insured before settlement occurs . Ideally with a “replacement” policy. If you are allowed to move in prior to settlement your insurance needs to be in place before you move in. It will be up to you to arrange electricity, gas and NBN connections into your name.

Please note: The foregoing text is a generalised guide only and may not cover all the requirements for your particular situation.