Buying a property is a stressful scenario. The rules and regulations, the financial requirements and even selecting the right property is a stressful process for most buyers.
Reading this short guide will assist you in avoiding some of the most common traps that land buyers in hot water.
FINANCE
The first step when buying a property is to make sure you have the money to buy it. We recommend working out how much you can spend before getting serious about buying. If you need a loan, speak to the bank or a mortgage broker and get your pre-approvals in place. The old days of getting a loan in a day are gone – you need to get the ball rolling with finance as early as possible.
If you need to sell your existing property before being able to afford to buy a new one, we highly recommended that you sell your property before buying a new one. This way, you avoid the potential trap of signing a contract and then having to rescind the contract before exchange because you are unable to obtain the sufficient funds to pay for the property. This is especially true in a declining property market – you might not sell your house for what you thought, and not be able to complete the contract. Bridging finance may also be useful, which is a short-term loan if you can’t sell your existing property before completing your new purchase.
All this confirms that it is important to speak with a bank or mortgage broker before you begin the process of buying a property.
TRANSFER DUTY
Another potential pitfall most buyers don’t realise is that they have to pay Transfer Duty (formally known as Stamp Duty) on any purchase of property, within 3 months of the contract being signed.
With property prices as high as they are in metropolitan Sydney, this means that there is a large payment that needs to be made fairly soon after buying a property.
Similar to obtaining finance the main issue stems from people who rely on the sale of their existing property to pay for Transfer Duty. Too often people are caught with their property not being sold, and the Transfer Duty still being payable on their new property.
DUE DILIGENCE
Too often potential buyers do not conduct the necessary due diligence before exchange of contracts. It is very easy to get swept up in the excitement of buying a property, especially at auction, and sign and exchange a contract before you have conducted the necessary inspections and reviews.
The old adage “buyer beware” is particularly important in the buying of property. It is important to conduct thorough inspections and pre-purchase reports (such as pest and building reports and strata reports) in order to ensure that the property you buy is not plagued by significant issues. The property could have a severe pest problem, asbestos and/or structural issues. It is important to know about these issues and to understand the costs of any such repairs or maintenance before you buy the property.
In addition to this, it is important that your solicitor thoroughly reviews the contract before you exchange. Imagine a scenario where a property looks amazing and you buy at auction, however, you are unaware that someone is renting the property, and that their lease means that you will not be able to move into the property as quickly as you previously thought.
Other issues could include that the property is on a flood plain, or has a significantly high risk of bushfire danger. Issues such as this can increase your insurance premiums, therefore making the property far less attractive. Having a solicitor review the contract will ensure that you are made aware of any such issues, to ensure that when you sign the contract, you understand exactly what you are buying.
WE CAN HELP!
Contact our friendly solicitors at Eleven Legal and we will be able to guide you through the entire conveyancing process. Our fixed fee services ensure that you will have peace of mind when selecting us as your law firm.
If you would like to discuss any aspect of conveyancing or this article with our friendly team, please contact us at enquiries@elevenlegal.com.au or (02) 9450 2985.
The Good, The Bad and The Ugly – Why You Should Finalise Your Separation
Benjamin Franklin famously once remarked, “Never leave that till tomorrow which you can do today. ” However, when it comes to finalising relationship separations, people put off the inevitable which can have some bad consequences.
The process of separation
Separation in Australia is often a drawn-out process, as people don’t always agree on the care arrangements for the children or how to divide their finances. It is essential that you begin the formal process as soon as practicable.
Once the relationship breaks down, there are a number of options available to you to formalise your agreements, without the harsh expenses of going to court.
- Financial Agreement:
- A financial agreement allows the separated couple to make binding arrangements outside of the courtroom related to financial matters. These are:
- the division of the property and assets of the parties; and
- the maintenance of either of the parties.
- A financial agreement allows the separated couple to make binding arrangements outside of the courtroom related to financial matters. These are:
- Child Support Agreement:
- If you have children, this agreement allows you to formalise the amount of money required to be paid for by one party to the other for the care of the children.
- Parenting Plan:
- This allows a separated couple to formalise how the children will be raised. Unlike the other two previously mentioned agreements, this agreement is not enforceable under the Family Court Act, however, is still a useful tool. This agreement can arrange (amongst other things) the following:
- time spent with each parent;
- arrangements for holidays and other special occasions;
- schooling; and
- how to deal with the introduction of new partners etc.
- This allows a separated couple to formalise how the children will be raised. Unlike the other two previously mentioned agreements, this agreement is not enforceable under the Family Court Act, however, is still a useful tool. This agreement can arrange (amongst other things) the following:
For more information visit the Family Court Website, as well as this website from Relationships Australia concerning the separation procedure in Australia.
If you would like to discuss this process with our friendly team, please contact us at enquiries@elevenlegal.com.au or (02) 9450 2985.
Implications for your estate planning
Leaving your separation unresolved can have disastrous effects on your estate if you were to pass away. If you are still deemed to have a spouse, they automatically have rights to your estate, even if you have not had a relationship with them for many years. The Succession Act 2006 (NSW), gives your spouse and other eligible people rights to make a family provision claim against your estate. A family provision claim is an attempt to gain a share or a larger share of an estate of a deceased person. This is true, even if you have made a will which effectively cuts them out of your estate. However, by finalising your divorce and creating a new will, your estate will be in a better position to fend off any claims.
If you have not left a will, that spouse immediately inherits your entire estate, even if you have not had contact with them for years. The provisions of the Act ensure that the Spouse has the primary ability to make a claim on your estate. While an effectively drafted will can minimise the damage, we recommend you go through the formal procedures to separate entirely.
We can help!
Contact our friendly solicitors at Eleven Legal and we will be able to help you with all your estate planning and family law needs.
