A Guide to Buying Property in Victoria

As a new lawyer it was often my own assumptions about what others understood that would catch me out. Overtime I began to take notice of these assumptions and more carefully articulate them and their importance to my clients in order for them to appreciate the importance of some of the advice I was putting forward. I found context and understanding were powerful tools to creating collaborative relationships with clients and to helping them achieve their desired outcome. The conveyancing process is framed in a number of these assumptions, the most importance of which is:

 

1. Debt travels with land

What this means is that as the incoming purchaser, if at the time of settlement there remains any outstanding liability attached to the property, then you inherit that debt. The seller’s debt becomes your debt. Our actions as your representative in the purchase process are framed entirely around managing this risk at settlement and ensuring that you are not exposed to any post settlement liability. It informs each of our actions and the steps we take on your behalf.  Call it a leading light – but it is one of the three key reasons why you should always retain a professional to represent you in the purchase process. What are the other 2 key reasons you ask? The other two key reasons you should always get professional representation is:

2. Contract advice prior to signing

I find it disturbing these days when I hear about ‘over the phone reviews’ and conveyancing that excludes contract advice. Honestly, contract reviews are time consuming when done well. They are not the preferred practice of most conveyancers because of this. They are however the CORE of your protection as a purchaser and an essential element in both understanding what you are entering into, knowing what is and isn’t included and what your rights are is essential. When it comes to off the plan contracts – the importance only escalates more. More to the point however, receiving your advice ‘in writing’ allows you to rely on the work performed by your professional advisor should there be a mistake. It also gives you recourse – some where to go – if what you have been advised is incorrect.

3. Professional indemnity insurance

This to protect you if everything goes wrong. As mentioned above written professional advice, gives rise to you. Sorry to sound so down about these things, but honestly this is the core of why you retain an adviser for your protection. If they are not able to offer you the above, they are in my opinion, compromising you in the transaction. Think Conveyancing takes this burden seriously. Our commitment to putting our clients interests first extends beyond the document processing, to doing the real work (the work that takes time) but offers our clients the necessary protection they should expect from an advisor on a transaction as significant in nature as an Australian property purchase. Oh and we’re insured! And no, we have never had to make a claim against it!

4. Home loan insurance

Buying a new home is one of the biggest investments a person will make in their lifetime, which is why you want to make sure you’re covered financially when the unexpected happens. RACV Home Insurance can provide cover for loss or damage to the structure of your home and what’s inside your home will also be protected. You don’t want to be caught off guard when an event like fire, theft or storm strikes. Even accidents like a tree falling on your roof or a ball breaking a glass window can be covered with the right policy. Below we answer some more questions you may have.

No. Pre-approval is not full approval. After you have signed a Contract for the purchase of a property, you will need to submit the signed Contract to your bank so they can conduct a valuation of the property and process the pre-approval and grant you formal full approval. The bank or broker will then typically provide you with a letter of formal approval from the bank confirming that the loan has been formally approved and the amount of the loan that they have granted you.

2. Can I make a contract subject to finance when I am going to auction?

When you are purchasing a property which is being sold at auction, usually you cannot make the contract subject to finance. Properties sold at auction usually have an unconditional contract. This means that the sale is not subject to any conditions. You will need to be satisfied that you have sufficient funds to complete the sale based on the advice your banker has provided you with or the pre-approval they have given you.

3. What is a Statement of Adjustments?

A Statement of Adjustments is a document that is prepared by us apportioning the rates for the property between the days that the Vendor owns the property and the days you take ownership of the property (starting from the settlement date). The rates that are apportioned include water, council, land tax (if applicable) and owners corporation fees (if applicable). Depending on the rates, they may be calculated on a quarterly or yearly basis. We will order certificates from those authorities to verify the amount that is payable for the period and will apportion the rates on that basis. Any outstanding fees payable to the authorities will also be collected at settlement to ensure that the rates are paid in full.

4. Do I need to notify the water and council authorities of my purchase?

As part of the conveyancing process, after settlement has gone through, we will send a document called a Notice of Acquisition to the water, council, State Revenue Office and Owners Corporation Manager (if applicable) to advise them that you are the new owner of this property from the settlement date. The authorities will update their systems with the information we have provided to them and will send you the rates.

5. Do I need to arrange connection of utilities to the property?

Yes. You need to contact your preferred supplier for gas, electricity and telephone and make the relevant arrangements for them to be connected to your property. You may wish to contact them a few days prior to settlement so that they are connected from the day you move into your new property.

6. What happens if I can’t settle on the settlement date?

We can ask for an extension to the settlement date. The Vendor may wish to charge you penalty interest calculated from the settlement date to the actual date you are able to settle because of your failure to settle on the agreed settlement date. They have the right to charge penalty interest under the Contract. Therefore it is important where you are obtaining funds from a bank that you do everything possible to complete loan documents and return them to the bank so they can start preparing for settlement to avoid any delays for settlement.

7. I have to move in on the settlement date because I don’t have anywhere to live, but now the settlement date has to be moved. What options do I have?

We can request for the Vendor to agree to you moving into the property under a Licence Agreement. This agreement allows you to early occupation of the property and the Vendor may wish to charge you a rental or occupation fee. You will need to take out an insurance policy for the building and contents from the day you move into the property under the Licence Agreement. We can prepare the Licence Agreement for you at a fee.