Buying a property involves many near-overwhelming considerations, including where to live, how much finance is needed and the type of property you seek. On top of this we have very complex conveyancing laws!
Appointing an experienced property lawyer at an early stage is important to ensure you understand the contractual obligations required for the purchase of your property.
Know your rights when buying residential property in Victoria
Before you pay a holding deposit (usually 10%) on a purchase, you should ensure you understand your legal rights and obligations.
Cooling off period
Generally, a cooling-off period of three business days applies to private sales of residential and small rural property sales in Victoria. The purpose of the cooling off period is to give you time to consider the purchase and change your mind if you no longer believe the purchase is suitable. It begins from the date you sign the contract of sale.
A consequence of cancelling the purchase during the cooling off period is that $100 or 0.2% of the purchase price (whichever is greater) will be deducted from your deposit.
There are a few situations in which the cooling off period does not apply, for example, if the property is sold at or within three business days of a public auction.
Understand the contract of sale
Do not rush into purchasing a property. Take time to ensure you have made an informed decision before signing on the dotted line!
While reading the contract of sale, you should look for things such as;
- details of the property,
- vendor’s name,
- details of the vendors lawyer/conveyancer;
- agreed purchase price;
- special conditions.
To ensure you understand the terms and conditions in the contract of sale and that it complies with legal requirements, we recommend you speak to one of our experienced property lawyers.
A contract of sale becomes legally binding once the vendor and purchaser have both signed it. The purchaser will need to pay a deposit to the vendor’s agent on signing the contract of sale. You should be aware that the amount of deposit (amongst other terms and conditions in a contract) is negotiable. Any terms or conditions verbally agreed to should be clearly and unambiguously written into the contract, so both parties know exactly to what they are committing.
Make sure you read and understand the Section 32 (vendor statement)
The vendor statement is an essential part of the conveyancing process and discloses all information that isn’t on hand during an inspection. It must include all relevant details which may affect the state of the property, such as, Certificate of title search, council planning and information certificates, contaminated land, amongst other things.
This information helps a purchaser make an informed decision as to whether they want to proceed with the purchase.
What happens if I incorrectly terminate the contract of sale?
If you decide to not go ahead with purchasing the property outside of the cooling off period, you may forfeit your deposit and be liable to pay:
- Compensation to the vendor for any reasonably foreseeable loss from termination of the contract of sale
- Legal costs
There are other remedies available to the vendor through courts, such as an award of damages where the property is re-sold for a lower purchase price.
Terminating a contract of sale can place a vendor in a difficult financial situation. If you have decided that you will not or cannot proceed with the contract of sale for whatever reason, we strongly recommend you speak with one of our experienced property lawyers before notifying the vendor (or their agent). Our lawyers can ensure you minimise any damages payable as a purchaser.
What happens after I have officially purchased a property in Victoria?
The period between exchange and settlement of a property is usually between thirty and ninety days, however, you can try to negotiate a longer or shorter period.
During settlement of the property, all rates and other recurrent outgoings will be adjusted between the vendor and yourself. You will need to pay the balance of the purchase price in exchange for the transfer documents and the certificate of title.
When the change of ownership occurs, your lawyer or conveyancer will notify all relevant authorities on your behalf.
It is clear from the above that buying a residential property in Victoria can be complicated.
If you fail to meet all your obligations as a purchaser, you risk exposing yourself to legal action. You should also ensure you understand all legal documentation involved in purchasing a property before committing to such a significant commitment. Again, before you sign anything, we strongly recommend you speak to one of our experienced property lawyers.
If you or someone you know wants more information or needs legal help or advice, please contact us on 03 9725 0377 (Kilsyth) or 9088 8664 (Rosebud) or email [email protected].