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8 Things You Need To Know When Buying Residential Property

8 things you need to know when buying residential property

Buying a property is often one of the biggest investments you will make.  Here are a few things you should be aware of before purchasing a property and what to look out for when signing a contract.

  1. Buying at Auction vs Private Treaty

An auction contract is an unconditional contract, which means that if you win the auction, you cannot alter or add any terms and make the contract conditional upon terms such as finance approval, building and pest or special conditions.

On the other hand, a private treaty contract is where you to negotiate the purchase terms with the agent and can make the contract conditional upon provisions such as finance approval, building and pest or subject to the sale of another property.

  1. Purchasing Off the Plan property

Off the plan contracts are tailored specifically to a development and contain lengthy contract terms and documentation, plans and various disclosures.  It is recommended to have your off the plan contract reviewed by a solicitor before signing the contract so they may decipher the fine print and advise you on what you need to know.

You should also note that you generally cannot make your off the plan purchase subject to finance.  The risk with this is that the contract price and the value of the property may fluctuate by completion.

  1. Finance

If you need to obtain a bank loan to complete the purchase, ensure you negotiate your private treaty contract to be subject to obtaining finance approval.  This will give you the right to terminate the Contract without penalty if your loan application is not approved.

The standard finance term under a private treaty contract is 14 days from the Contract Date.  You should discuss finance due date timeframes with your banker and apply for pre-approval before signing a contract.

  1. Building & Pest Inspection

A building and pest inspection will identify any problems with the property such as structural issues, termite activity, faulty appliances and fittings requiring repairs.  If major issues are identified by the inspector, you may have grounds to terminate the contract or ask for a reduction in price.

The standard building and pest inspection term under a private treaty contract is 7 days from the Contract date.  If you are buying at auction, you must undertake any building and pest inspection before the auction.

  1. Don’t assume that an item will be included with the Property

Items which are not fixed to the property are called chattels.  Chattels include items such as pool equipment, wall mounted televisions, refrigerators, outdoor furniture, pot plants and microwaves.  Chattels are not included with a property unless they are specified in the Contract.

Talk to the agent to confirm what chattels are included with the purchase and make sure they are listed in the contract.

  1. Special Conditions

Special Conditions are inserted in a contract if you need tailored terms which are outside the standard contract conditions. This may include due diligence enquiries, review of body corporate records, pet approvals or the purchase being subject to the sale of another property.

If you have any concerns regarding your terms, you should contact a solicitor to ensure your Special Conditions are correctly drafted to ensure your interests are properly protected.  

  1. Is the Tenant included with the Property

If there is a tenant in the property, you should clarify whether the tenant will continue to rent the property until the end of their lease term which may extend beyond the settlement date or if property will be vacant at settlement.

This information is important as it will affect whether you can move straight in and the amount of stamp duty you need to pay.

  1. New Combustible Cladding requirements for apartment buildings

New laws have recently been introduced regarding combustible cladding in apartment buildings.  A body corporate must complete an online checklist via the QBCC by 29 March 2019, and further steps may then be required if the cladding is non-conforming.

If the building is found to have non-conforming cladding, then there may be significant special levies payable by lot owners in the future to replace the cladding and notice must be given to new tenants and prospective purchasers of the combustible cladding, which may affect your ability to rent out or sell the property.

About Katie Kennedy

Katie Kennedy is a Paralegal in the Property team at Plastiras Lawyers.  Katie helps private clients who are buying or selling residential property with their conveyancing.  Katie also assists property developers with their off the plan apartment, vacant land and commercial lot developments.

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