Legal Advice For Buying Property From A Property Law Specialist
Looking for no-nonsense legal tips for buying property? I sat down with property law specialist Benjamin Marchesani from Hammersmith Lawyers and asked him to give some advice on property laws and what you need to know before buying a property.
For more than 10 years, Benjamin, a long-term associate of Mortgage Corp and expert in property law and conveyancing, has overseen conveyancing contracts and advised our clients on legal matters that involve property law. Whether it’s property transactions, transfers or settlements, Benjamin’s knowledge and experience is indispensable to our team of accountants, financial planners, property managers and solicitors. After years of dealing with him, Benjamin is one of the few lawyers that Mortgage Corp confidently recommends to our clients.
Should You Use a Solicitor or a Conveyancer?
If you are thinking of purchasing a home or investment property, you might be wondering why there’s any need for you to hire a solicitor or conveyancer. First home buyers sometimes are wondering if there’s any difference between the two professions. Luckily, Benjamin was able to cut through the jargon and succinctly explain the role of solicitors and conveyancers in a property transaction. Before we go any further, you should understand that ‘conveyancing’ is just the term used to describe the process of transferring ownership of a property.
Although technically you can supervise the conveyancing process yourself, but considering a house or even an apartment is one of the most expensive investments one might have, it’s obvious that many property buyers decide to hire a licensed conveyancer or solicitor to save you from any documentation mishaps and help you navigate the reams of legal paperwork.
Difference between Solicitors and Conveyancers
If you choose to hire a conveyancing expert, there’s a few things you should know about solicitors and conveyancers. The biggest difference between the two professions is the amount of training that is required. According to Benjamin, people in the conveyancing profession previously required no legal education or knowledge of property law. Nowadays, conveyancers must secure a license – a process that can only be completed when a conveyancer holds Professional Indemnity Insurance and has been supervised for 12 months – to conduct a property transaction or advise prospective property buyers.
In comparison, solicitors have graduated from a tertiary institution with a degree in law, (often specialising in property law). The higher level of training that solicitors undergo manifests in a broader understanding of the complex legal framework – made up of company laws, family laws, and consumer protection laws – that underpins conveyancing transactions. Furthermore, if your conveyancing transaction becomes litigious for any reasons, solicitors have the authority to represent you in Court, issue notices or hold money in trust. This means that you won’t need to hire an external legal practitioner if your conveyancing transaction turns sour. In many parts of Australia, the price difference between solicitors and licensed conveyancers can be as little as $100 or $200; a small price to pay when you’re buying a property. When you consider the difference in experience and expertise, Benjamin thinks choosing between a conveyancer and solicitor is a no brainer.
Section 32s and More – Things to Look Out for When Buying a House
If you’ve ever gone to a property inspection, you have probably seen real estate agents talking with prospective buyers, selling them on the land and giving them further information about the property they are representing. One of the most important pieces of property material that you can receive is a Section 32 (also known as a Vendor’s Statement). A Section 32 provides otherwise unavailable information about a property. A Section 32 will include information about the property’s Certificate of Title, zoning details, land use restrictions, previous building permits, the land’s current outgoing rates, and any pending government or council proposals that might affect the property.
If you’re getting rattled by a real estate agent or you’re not sure about the information in the Section 32, Benjamin has some legal recommendations for buying property to help you make the right decisions:
Check things yourself
Don’t let your property contracts be undermined by inaccurate information from real estate agents. Benjamin couldn’t stress this point enough, relaying two incidents where real estate agents lied to his clients: once when a real estate agent told a potential buyer that a property was within a nearby school zone and a separate incident where a real estate agent incorrectly told the home buyer that the building’s windows were double glazed.
Checking the fine print and personally verifying any dubious information or claims is a good practice to get into. Not only are you securing your peace of mind, you’ll also build your own knowledge of property and finance – something that will stand you in good stead as a property purchaser and owner. However, if you want expert verification of your property’s documentation, a solicitor can help you make sense of the legal information and highlight any ambiguous or incorrect claims in the advertising material.
Regardless of whether you’re a first home buyer or a seasoned property investor, you need to pay close attention to the property title. Found in the property’s Section 32, the title contains detailed information about the land being sold. Specifically, the title provides information about any structures on the land (e.g. age of construction, previous renovation, type of building) and outlines the legal restrictions on the property (e.g. boundaries, subdivision rules, how high can you build, number of units that can be built).
Does the property have the correct permits?
Benjamin strongly encourages all property purchasers to review the permits documentation of any property they are interested in. In many cases, vendors don’t bother purchasing expensive permit certificates from their council, and use ‘say so’ claims in their Section 32. Consequently, if you don’t critically review the Section 32, you can be caught unawares if your vendor has made false permit claims. All too often, years after purchasing a property, owners who skimmed over permit information find out that they don’t actually have a permit for the backyard pergola or second story decking that first attracted them to the property.
Legal Tips For Easements, Covenants or Caveats
You can find information about these potential property restrictions in your property’s title. For instance, if your property has an easement (a reservation on your land that often contains pipelines, internet cables or electricity lines), you should be aware of the accompanying restrictions it can place on your property. These restrictions often allow public or private workers to access, maintain or upgrade the utilities without remedying the site before leaving. Depending on your purchasing intentions, having this information available before signing a contract can save you time, money and stress.
Being aware of any covenants affecting your property can have similar advantages. Covenants are long-standing land and home restrictions that have been formulated and ratified by the property’s previous owners. Covenants can stipulate conditions on anything from your home’s roof type to the subdivision of the property – crucial information that any prospective property buyers need to know before signing a contract.
Watching Out For Property Overlays
Property overlays – a planning instrument and permit scheme designed by your local government – can also restrict the usage of your land and any structures on it. These overlays can impose blunt restrictions on your home and land, dictating the colour of your fence or limiting your choice of front-of-house renovations. If your property is situated in an area of local or state heritage, the conditions of a property overlay can be even more stringent.
Benjamin also warns property buyers to be aware of any compulsory acquisition overlays – a process that allows statutory authorities to acquire all or part of your land – that are scheduled to affect specific cities, towns or regions. The construction of regional pipelines or major highways is one of the most common drivers of compulsory acquisitions. If you are purchasing a property with the intention of selling it in future, you should be mindful of the fact that any impending compulsory acquisitions will greatly diminish the value of the land.
Could Your Property Be Affected By The Body Corporate?
If you’re thinking of purchasing townhouses or other community title schemes, you have to consider how the body corporate or owners corporation can affect your property. If an owners corporation is active, your property complex may be subject to restrictions on renovation, pet acceptance or driveway usage.
Fortunately, Benjamin has shed some light on how these restrictions may come into play, revealing that an owners corporation is only considered active when the complex carries insurance, holds at least one meeting every 15 months, and levies fees on residents. These fees – which are outlined in the Owners Corporation Certificate (distributed by the complex manager) – can be a further strain on your quarterly or annual budget. The Owners Corporation Certificate should also disclose any plans to renovate or repair the complex.
Why You Should Get Legal Advice on Any ‘Subject To’ Clauses
“Subject to” is one important legal advice for buying property from Benjamin. ‘subject to’ clauses are designed to benefit the property buyer. As a mechanism in the conveyancing process, ‘subject to finance’ clauses allow a potential property purchaser to agree upon a price that is subject to the buyer arranging certain financial conditions. This conditional approval process will give you added security if your financial situation quickly changes. Once you have specified your bank, approval date and borrowing amount, your conditional conveyancing contract will be approved.
The ‘subject to inspection’ clause is a broad term for conveyancing contracts that are conditional on the purchaser signing off on a verified building inspection report. However, Benjamin cautions against using an inspection report supplied by a real estate agent, stressing that you should structure your ‘subject to inspection’ clause with the assistance of a solicitor. This is because real estate agent reports will only withhold contract approval if there are major structural or living-standard defects in a property. If you sign off on these reports, you might be approving a contract for a property that requires thousands of dollars in minor restoration or pest control. To avoid any nasty surprises, Benjamin recommends that you work with your solicitor to formulate a more precise ‘subject to inspection’ clause. If your building inspection does indicate expensive repairs, your ‘subject to inspection’ clause will give you the upper hand in any pricing negotiations with the vendor and real estate agent.
If you’re still not sure about what that all means, Benjamin rattled off an example of what a safe ‘subject to’ clause might look like, telling Neil: “Look its [the contract] subject to the buyer getting a building inspection that he or she is satisfied with, within a given period of time.”
Meeting Face-to-Face For Legal Advice
While you’re not actually required to meet face-to-face with your solicitor or conveyancer, Benjamin understands that, for something like buying a property, many people want to meet the person advising and managing their conveyancing needs. However, Benjamin, who maintains officers in Hampton Park and South Yarra, appreciates that not everyone can or wants to set up a face-to-face meeting. If you would rather let your solicitor handle your conveyancing contract without meeting them, this can easily be arranged. In this case, Benjamin recommends that you make the time to track down an established and reputable solicitor.
Following on from this subject, Benjamin and Neil also discussed recent developments in conveyancing legislation. Now, prospective property buyers will need a verified 100 point identification check if they want to be eligible for a conveyancing contract. Your 100 point identification verification can be secured at a solicitor’s office or, if you’d rather stay at home, you can use Australia Post’s online identity verifier.
Working with a team of experts
Regardless of whether you’re purchasing a property for $500,000 or $1 million, you need to cover your bases and get the right legal advice for buying property. In addition you can rely on other experts in the property area, hiring a lawyer, consulting with an accountant, and talking with a financial planner will build your own knowledge of the house buying process and help smooth over any worries you might have. Not only does this give you an edge over purchasing competition, the expert assistance and advice you receive will help protect you in the event of any legal or financial issues before, during and after the transaction.
But more importantly, before you start your house hunting journey, it’s important to work with a mortgage strategist on your future goals, your current situation, your dreams and find out not only how much you can borrow, where to buy but how to plan properly from the start to achieve your long term goals.
Mortgage Corp specialise in helping property investors, both savvy and aspiring investors, on strategies to help them maximise their overall investment result.
Book a Free Loan Strategy Consultation with our loan strategist Neil Carstairs today and get not only a loan but a loan strategy for long term investment success.
About Mortgage Corp
Based in Wantirna South, right opposite the Westfield Knox Shopping Centre, Mortgage Corp is the most loved mortgage broking firm in Melbourne with consistent 5 star customer reviews. Mortgage Corp specialises in helping successful professionals and property investors maximise their return and strategically structure your loan for long term investment success.
While most banks and brokers focus on merely getting you a loan, Mortgage Corp is committed to getting you a comprehensive investment result. Request a Free Loan Strategy Session with our senior mortgage strategist Neil Carstairs today!
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About Neil Carstairs
Neil is the founder of Mortgage Corp, an active property investor and awarding winning MFAA accredited finance broker with more than 10 years’ mortgage broking experience. Currently, Neil is one of only few MFAA Certified Mentors in VIC/TAS region.
He is known for his strategic approach to investing and ability to reach fast, successful outcomes for clients where his industry peers could not. Connect with Neil on LinkedIn.