The Process of Purchasing Property
Prior to Exchange of Contracts
Obtaining Pre-Inspection reports
Prior to exchange of contracts (or within the cooling off period) a purchaser should arrange certain inspections of the property:
- For a house the purchaser should obtain both a pest report and building report;
- For a unit or townhouse the purchaser should obtain a strata report.
Exchange of Contracts
In NSW contracts are formed when counterparts are exchanged, meaning that we pass over (hence “exchange”) the counterpart signed by the purchaser for the counterpart signed by the Vendors. A “counterpart” of the Contract is an exact copy of the Contract signed by the both parties.
Unconditional exchange of Contracts
The Vendors can require the Purchaser to waive their cooling-off rights. This is usual and normal where the Purchaser has the benefit of legal advice before the Contract is exchanged. Accordingly, once the Contract is exchanged, the contract is binding between both parties and both parties must proceed to complete the Contract. A Purchaser is also usually required to pay a deposit of 10% upon exchange of contracts.
Prior to an unconditional exchange of contracts the purchaser should have unconditional loan approval from a financial institution.
Cooling-off period
When you buy a property in NSW there is usually a 5 business-day cooling-off period after you exchange contracts. Within this cooling-off period the Purchaser is entitled to withdraw from the contract. The purchaser will however forfeit the 0.25% deposit they are required to pay upon exchange of contracts. The cooling-off period enables the purchaser time to obtain pre-inspections reports and unconditional loan approval.
Auctions
There is no cooling off rights at auction. At auction the purchaser waives their cooling-off rights and the contract is binding between both parties and both parties must proceed to complete the Contract. A Purchaser is also usually required to pay a deposit of 10% upon exchange of contracts.
BK’s Conveyancing will advise you of your rights before signing the contract.
Following Exchange Of Contracts
If the purchaser is obtaining finance through a financial institution the loan documents need to be executed and sent back well before the settlement date.
Stamp duty is payable by the purchaser on property transactions. Stamp duty needs to be paid on settlement or within 3 months of exchange, whichever is the earliest. Penalties apply for late payments of stamp duty - http://www.osr.nsw.gov.au
Prior to settlement, BK’s Conveyancing will advise the Purchaser of exact amount that they owe the Purchaser. Purchasers should be aware that there will be adjustments done for Council, Water and Strata rates.
Settlement
BK’s Conveyanicng will attend the settlement on your behalf.
This final step is the process where the Purchaser becomes the legal owner of the property and receives the keys.
Immediately following settlement a transfer of land document will be registered at the Land and Property Information. This is usually completed by the Purchasers mortgagee. The Land and Property Information will notify Council and Water of the change of ownership.
BK’s Conveyanicng will notify the Strata agent of the change of ownership if applicable.
The purchaser needs to notify other authorities such as Gas and Energy.