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FINANCE There are many places you can apply for a loan, the banks, credit unions, mortgage lenders or a finance broker. It is wise to shop around and do your homework before you apply so that you have an idea of what is being explained to you. There are so many different types of loans it is difficult to be in a position to understand all the complexities of the different types of loans. EXCHANGING CONTRACTS Contracts are signed by all parties involved in the transaction and when the seller and buyer have both agreed on a price and the conditions of the sale the contracts are exchanged and dated and the deposit paid by the buyer. Contracts are drawn up in duplicate and one copy is signed by the seller and one copy is signed by the buyer. The exchange of contracts is the exchanging of copies so that each party ends up holding the copy signed by the other party. By the Conveyancer. In this case it would be normal for the buyer to have all reports done, financial approval and the contract explained by their conveyancer before the contracts are exchanged. It is usual practice for the buyer to waive their cooling off rights so that the contract is binding on both parties as and from the date of the exchange taking place. Until such time as the contracts are exchanged either party can withdraw from the transaction, it is only once contracts are exchanged that the parties are bound to proceed, and in the case of the buyer having a cooling off period the buyer is not bound until the cooling off period expires COOLING OFF PERIOD Every contract for the sale of residential property (less than 2.5 hectares) has a cooling off period of five working days the cooling off period ends at 5.00pm on the fifth working day). This means that after entering into the contract the purchaser has five working days in which to "cool off". The seller is locked into the contract and cannot withdraw from the sale. If the purchaser finds that for any reason he or she does not want to proceed with the purchase they can rescind the contract within the five day period. If they do rescind the contract they forfeit to the vendor 0.25% of the sale price. The contract is then at an end and neither party has any further claim against the other. The purchaser can waive the cooling off period by having the contract explained by a conveyancer or solicitor and a certificate signed by that conveyancer or solicitor and the certificate handed to the seller's conveyancer. The certificate is drawn under Section 66W of the Conveyancing Act and is commonly called a "Section 66W certificate" The cooling off period can be shortened by the use of the S66W certificate whereby it will be stated that the purchaser has agreed to shorten the period to whatever number of days has been agreed. It can also be shortened by a condition in the contract. There is no cooling off period if the property is sold at public auction or on the same day as the property was listed for auction sale. PAYMENT OF DEPOSIT It is an essential term of a contract that the deposit be paid on or before the date of the contract (exchange of contract). The deposit paid can vary but it is usually 10% of the sale price. It is normally paid to the estate agent who holds it in trust pending completion as stakeholder. INSURANCE The seller is liable to take care of the property up until completion and the property should be handed over at completion in the same condition, subject to fair wear and tear, as it was at the date of exchange. STAMP DUTY Stamp duty is payable on the contract. Stamp duty is not payable on mortgages securing a loan for owner occupied housing. Stamp duty on investment housing will be abolished from 1 July 2008 and on other mortgages from 1 July 2009. The duty payable on the contract is calculated on the sale price, the higher the price the higher the duty. It is the purchaser's responsibility to pay the stamp duty and this must be done before completion if you are borrowing money and in any event within three months of the date of the contract or a fine is payable for late payment. The scale of duty payable on the contract is:
Plus the following
COUNCIL RATES, WATER RATES, STRATA LEVIES The Contract provides that council rates be adjusted between the vendor and purchaser as at the settlement date. Water Rates Water rates are usually quarterly rates and the adjustment made will only be for the current quarter. The same principals apply to water rates as they do for council rates. Strata Levies - Unit, Townhouse, Villa. If you are purchasing a lot in a strata scheme the quarterly strata levy will need to be adjusted. This levy is adjusted in the same manner as council rates except that they are adjusted on the quarterly not annual rate. The quarter for strata levies may begin at any time, they are not necessarily the quarters of the calendar year. Because the levies commenced on a date determined at the first annual general meeting held by the Owners Corporation the quarterly levies can commence at any date but for convenience it is usually but not necessarily from the beginning of a month. PRE-SETTLEMENT INSPECTION As a purchaser you are entitled to, and should take advantage of, a pre-settlement or final inspection of the property before you make the final payment and take occupation of the property. The ideal time to do the pre-settlement inspection is immediately before the settlement,. It is usually done the day before the settlement. This way if there is a problem there is some time to sort out the problem before settlement. WHAT YOU NEED TO DO BEFORE SETTLEMENT. Prior to the settlement date you should make a list of all those places you need to advise your change of address and see that this is done immediately settlement takes place. Do not do it before settlement just in case there is a delay in the settlement. SETTLEMENT The day of settlement is determined firstly by the date of exchange of contracts and is normally 42 days after that date. It is possible for settlement to take place on an earlier or a later date if both parties agree. If when signing the contract, you consider the settlement date is not convenient to you it should be discussed with your conveyancer at that time. It is too late to realise the settlement date is not convenient after the contract is exchanged, unless by chance the vendor agrees. The settlement time is determined by the availability of all parties to the transaction. Your conveyancer or your conveyancer's agent will attend the settlement on your behalf. MOVING IN It is normal practice that occupation of the property is not granted until after the settlement has been completed, unless some other arrangement is made. You should not assume that the seller will allow you to move in before settlement even if the property is vacant. BUYING WITH AN EXISTING TENANT If a tenant occupies the property and they have a current lease than you take over the vendors role as landlord immediately settlement has been effected. There is no need to enter into a new lease as the current lease remains in force and as the new landlord you are bound by the terms of that lease. If you want to have the tenant vacate the property then you will need to serve on the tenant a notice of termination which must allow the required period of time depending on when it is issued. a. When the fixed term period is due to run out either party can give 14 days notice to end the tenancy and it can be served at any time up to the last day of the fixed term. b. When the fixed term has expired, if the tenant wants to give notice to terminate then at least 21 days notice must be given. The landlord on the other hand must give at least 60 days notice. c. If the property is sold and the fixed term has expired then the landlord must give at least 30 days notice of termination, after the date of the contract. AFTER SETTLEMENT Immediately following settlement the estate agent will be advised so that he has authority to release any keys being held so that the buyer can have access to the premises. It is normal practice for the buyers conveyancer to give to the sellers conveyancer at settlement, a written direction to the agent authorising release of deposit and keys. This direction or "order on agent" is usually faxed to the agent so they have written authority to release the keys to the buyer. When confirmation of the settlement is given to you by your conveyancer you can then collect the keys from the agent and move in. |
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