Buying real estate in Victoria

When you are considering a property for purchase, the real estate agent will usually have a “Vendor Statement” for you to inspect for that property. Also known as a “Section 32 Statement” .

It is important that you obtain legal advice about that document before you proceed any further. There are a wide variety of details and documents which may need to be included in a Section 32 Statement depending on the nature of the property. The legislation has 12 pages setting out what must be included and the consequences if incorrect. There is important information about the property hidden in these documents. Typically, buyers need assistance interpreting the information.

In addition to the Vendor Statement, there will be a Contract of Sale to consider. I regularly provide advice and assist buyers negotiate modifications to contracts where needed. The contract and vendor statement can be centimetres thick and quite difficult to follow.

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. A vendor is supposed to disclose many things to you. However, if they fail to, is it better to indulge in costly and uncertain litigation after you buy? Or make your own enquiries before you buy?

Sometimes the boundaries to the property need to be investigated to check that there are no building encroachments by or onto the land. 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 insert clauses in the contract allowing time to obtain reports and that you have the right to pull out if the reports 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 the auction even though you may not be the successful bidder.

If the property is not auctioned, and the property is residential then you have a “cooling-off” period of 3 business days and you can pull out in that 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 upon settlement of the purchase you must pay transfer duty to the State Revenue Office. 

A guide to the amount you pay can be calculated at: https://www.sro.vic.gov.au/calculators/land-transfer-calculator

I organise the forms you need to sign for transfer duty assessment and I electronically organise the assessment online via the portal operated by the State Revenue Office. This assessment is then fed into the electronic conveyancing system ready for when settlement of the sale is to occur. As the settlement occurs, the system accesses your money to pay the duty either via my trust account or via your bank.

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 you 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 borrowing to finance the purchase.

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.