Buying Property in NSW: What You Need to Know

Buying a new home is a very exciting experience and a huge milestone in anyone's life. However, buying a property might be the most expensive purchase you will ever make. Hence, you should understand the decisions you must consider before buying a property in NSW.

From choosing the perfect listing to settlement, the property buying process can be quite thrilling, especially for first-time buyers. However, there are legal obligations that you need to fulfill as a buyer. Moreover, before buying property in NSW, there are several requirements and factors that you must consider for a successful purchase.

Buying Property in NSW:

1. What to Buy

Before purchasing your new home, you must consider your personal circumstances. For example, if you are single or married, or live with older people with disabilities. Do you need a house with a garden where the kids can play or a small home unit for yourself?

Some people prefer buying land and building their own home instead of getting a lot with an existing house. Others choose a home unit or townhouse closer to their workplace or place of business. While some prefer buying “off the plan,” i.e., a property that is still under construction—be that a unit, townhouse or house.

However, when buying off the plan, you must carefully review the contract and understand the risks involved. For example, construction delays, poor quality or below standard workmanship, or building plans being changed. You must also have patience as off the plan properties could take two to three years to complete.

More importantly, whichever you choose, make sure that you have the financial capacity to purchase the property. In addition, ensure you service the loan if you intend obtaining a mortgage. Consider how much you can afford to spend based on your needs or lifestyle. Moreover, you must choose the right lender to help you finance your new home.

2. How to Buy

Once you have finally decided which property to buy, you may now start with the purchase process:

a. Contract for sale

When buying property in NSW through private treaty sales, the first step of the process is to review the contract for sale. A seller must have the contract ready before offering their property up for sale, for a real estate agent to market the property.

However, because no two properties are alike, no two contracts will be the same. Hence, when reviewing the contract for sale, make sure that you understand the seller’s terms. More importantly, you must ensure that your rights as the buyer are properly considered in the contract.

Having a solicitor or conveyancer review the contract can help you identify clauses that are not in your interest. A solicitor or conveyancer will also make sure there are no defects in the title. Moreover, your solicitor or conveyancer can negotiate the terms on your behalf and ensure the contract is fair to you.

b. Expressing an Interest

Once you and your solicitor or conveyancer are satisfied with the terms of the contract, then you may make an offer. If the seller agrees to your offer, you might be asked to pay an initial or part deposit, or an expression of interest payment.

However, if you haven’t signed and exchanged contracts yet, your payment doesn’t mean you already hold the property. Therefore, the seller can still accept offers and enter into a contract for sale with another buyer. Moreover, should you have a change of heart over buying the property, you can refund the deposit.

If you want to secure your interest over the property, then you must exchange contracts through your solicitor or conveyancer. Once you have signed and exchanged copies of the contract and paid your deposit, then the contract for sale becomes binding.

c. Arranging Inspections

If you are buying an already existing residential dwelling, you are expected to take the property ‘as you find it.’ This is known as the principle “caveat emptor,” which is Latin for “buyer beware.” Hence, you must conduct several inspections to ensure there are no issues that may cause you thousands of dollars in repairs. This includes:

Building Inspection – check the natural soundness of the property, including but not limited to foundations, plumbing and electrical wiring, and kitchen and bathrooms.
Pest Inspection – if you are borrowing money, your lender may require you to ensure the property is not home to other creatures.
Strata Inspection – if you’re buying a strata property, then you need to review the written records and ensure everything is in order.
Building Certificate of Compliance – from local council; to ensure there are no orders or illegal or non-compliant building work.
Survey Report – to ensure the dimensions of the land, that there are no encroachments, and covenants and easements are complied with.

Getting the help of experts and specialists to perform the inspections can help you ensure that your property is safe for occupancy. Moreover, a thorough inspection will guarantee that there are no problems or concerns that may arise after the sale.

3. Buying your Property

If the seller has agreed to your offer and you are satisfied with the contract and inspections, then you may proceed with the next steps:

a. Contract Exchange

Your solicitor or conveyancer will organise the exchange of contracts with the seller’s solicitor or conveyancer. They will make sure the necessary attachments are complete, like:

Zoning/Planning certificate
Drainage diagram (sewer lines)
Copy of the property certificate
A copy of the plan for the land and any dealings recorded on such plans or property certificates

The contract is always prepared in duplicate—the seller signs the original, while the buyer will sign the copy. When you have both affixed your signatures, your solicitor or conveyancer will exchange contracts with the seller. You will then sign the contract from the seller and vice versa.

On the date of the contract exchange, you must pay the deposit as stated in the contract. The deposit is usually 10% of the selling price, but it can vary depending on your agreement with the seller.

b. Cooling-off Period

After the contract exchange, you are given a five (5) day cooling-off period (10 days if you are buying off the plan). During this time, you are legally allowed to change your mind and cancel the contract.

The cooling-off period can be waived or shortened by the purchaser’s solicitor or licensed conveyancer providing a 66W certificate. However, if you decide not to proceed with the purchase, you will have to pay 0.25% of the purchase price.

If you are buying the property through an auction, then you don’t have a cooling-off period. Moreover, if you win the bid, then you will exchange contracts on the spot—you are legally bound to buy the property. Hence, it is important to check with your solicitor or conveyancer if you have a cooling-off period.

c. Settlement

The settlement usually takes place 42 days after the exchange of contracts. While waiting, your solicitor or conveyancer will prepare the other requirements and make necessary enquiries.

Property settlements in NSW are conducted online through an Electronic Lodgement Network. In fact, the entire conveyancing process in NSW is now performed electronically. Hence, your solicitor or conveyancer must be subscribed to an Electronic Lodgement Network Operator (ELNO) to complete the property transaction.

Once your solicitor or conveyancer has established their right to deal on your behalf, they will start the e-conveyancing process. This includes the preparation of your documents and financial information in an electronic workspace.

On the day of settlement, your solicitor or conveyancer will sign the relevant documents on your behalf—electronically. Then, your solicitor or conveyancer will schedule the financial settlement.

If all the documents and finances are ready, the settlement will occur automatically at the scheduled settlement time. Hence, your payment for the balance will be disbursed as authorised and the relevant documents lodged at the NSW Land Registry Services—electronically. Your solicitor or conveyancer will let you know once the title of the property has been transferred to your name.

Conclusion

Buying property in NSW may seem simple and optimised due to e-conveyancing, but it can still be quite complex depending on your circumstances. Although you can do your own conveyancing using do-it-yourself conveyancing kits, getting legal guidance is recommended to ensure a successful sale.

VC Lawyers is a pioneer of electronic conveyancing and has completed a large number of property settlements. We are a team of well-experienced solicitors and paralegals who can help you on your property transaction journey. More importantly, we can reduce the difficulty, stress and anxiety of settlement, especially for first-time home buyers.

Talk to us to find out how we can serve your interests better and provide you with the most beneficial legal outcome for your property transactions.

NB: This blog post is neither a legal advice nor intended to be such, and is only for general information. The same should not also be taken as a financial or commercial advice. The reader must personally consult their professional adviser/s on the contents of this blog post. VC Lawyers is not liable for any loss or damage, direct or consequential, as a result of the reader’s or a third person’s misconstruction of the wordings or use/misuse of the contents of this blog post.

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Buying Property in NSW: What You Need to Know

Buying a new home is a very exciting experience and a huge milestone in anyone's life. However, buying a property might be the most expensive purchase you will ever make. Hence, you should understand the decisions you must consider before buying a property in NSW.