Private Real Estate


Buying Residential Property in Victoria
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Information contained in the following checklist has been compiled from pieces of legislation that covers dealing with real property in Victoria.
It is written to advise the purchaser (buyer of the property) on what procedures need to be complied with in order to ensure that the purchase of a property goes as smoothly as possible.
Therefore in purchasing a property a purchaser should do the following:
1.	Purchasing property is a huge decision may be one of the most significant purchases a person makes in their life. You should therefore do a considerable amount of research and preparation before purchasing a property. At a most basic level, you should firstly decide what exactly it is you want and what will best suit your lifestyle.
2.	After attending an open inspection and reading relevant advertisements, it is advisable that you contact the vendor's (seller's) to express your interest and to obtain a copy of the Vendor's Statement.
3.	On receiving the Vendor's Statement it is important that you do some of your own research to verify that it is reliable and accurate. In particular it is important to check:
	(a)	The physical condition of the property such as:
		(i)	dimensions of the land and whether it is the same as what appear on Certificate of Title;
		(ii)	the structure of the building, for example the foundations, plumbing, wiring, dampness, cracks in the walls;
		(iii)	whether there is any part of a building that overhangs an adjoining property;
		(iv)	the condition of the fences;
		(v)	the gutters, eaves roof, exposed pipes;
		(vi)	for pest infestations (eg termites);
		(vii)	the tendency of the land to flood, ask neighbours if the property is in a low lying area, especially if it is located at or near the bottom of an incline.
			There are professional services that can help you with property and pest checks. Your solicitor can often assist you in choosing the best people.
	(b)	If there is a vacant block of land next to or near the property, check with the council. For instance, you would probably want to know if a block of flats or apartments is to be built next door. It may also be useful to check the zoning requirements of the area, which may affect what you are entitled to do on the land once it is purchased. The council will also tell you if there has been any unauthorised renovations and what to do about them.
	(c)	At various times it may also be useful to contact relevant government authorities such as VicRoads, State Revenue Office, Melbourne Water and the Department of Conservation and Environment before you decide to buy. They could provide information on new roads being built in the area, sewerage pipes and on your rights to remove trees or other structures within your property.
	(d)	The condition and details of the Certificate of Title. Although copies of a Certificate of Title should be attached to a vendor's statement and are relatively easy to obtain from the Land Titles Office, it is advisable that you engage a solicitor to check the title. In particular it is important to know whether there are any leases, easements, covenants, caveats or mortgages registered on the title. Easements and covenants refer to proprietary rights of other people (eg neighbours) may hold over your land and are typified by right of ways and restrictions on building over certain heights. Caveats are notices that can be lodge on your certificate of title, indicating that another person has an equitable interest in your property.
		It is vital to know about these details because if you purchase with knowledge of a lease, mortgage, easement, covenant or caveats, those other interests will take priority over your purchase.
		It is also important to know what type of title you are purchasing specifically whether the purchase is of a strata title, company share, old system title or Torrens title. Your solicitor should be able to advise you on the implications of each of these titles.
	(e)	For any costs that will be associated with completing the conveyance.
4.	It is equally important to decide on what type of ownership you are seeking. For example whether you seek to have the property registered solely in your name, or whether you want it to be owned by a multiple number of people. Your solicitor should be able to advise you on the advantages and process for creating a sole ownership, joint tenancy, tenant in common or company ownership arrangement.
5.	After making the appropriate decision, you should then approach the seller and make an offer to buy the property. In most cases the seller will ask for a deposit. This is done to ensure you are serious about the offer, and if your offer is rejected, the deposit should be returned.
	Of course, if you make a successful bid at an auction, the deposit will be paid immediately after the auction.
6.	If a vendor chooses to accept your offer, both sides enter into negotiations to draft a contract conveying the land. It is advisable that you engage a solicitor to draft this contract to ensure that it includes all the details you seek.
	Two main types of contracts are used in relation to land, a Contract of Sale and a Contract Note. In either case, the agreement should always include:
	(a)	the name and address of the parties;
	(b)	the vendor's statement must be attached;
	(c)	a space that allows the chattels to be listed and whether they are or are not included in the sale. Chattels are things not attached to the house like curtains;
	(d)	a period of 21 days in which the purchaser can make a series on requisitions on title;
	(e)	the purchase price, which is divided into the deposit and the balance. The deposit is usually 10% of the purchase price;
	(f)	if applicable the contract should contain a clause whether the sale is subject to any pre-existing leases between yourself and any tenants (see section below on dealing with tenants once the lessor sells their interests in a property);
	(g)	additional clauses can also be inserted in relation to the payment method, what will happen if payment is late or if the property is damaged prior to settlement;
	(h)	almost any matter the parties feel is important can be negotiated and included;
		Once happy both parties need to sign the contract and have it witnessed by their solicitors or other interested person. Each party retains a copy of the contract they sign.
7.	If you have not already then you must pay the deposit. Deposits are usually paid to the vendor's solicitors who will hold it on trust until settlement. It is possible for you to authorise the vendor's solicitors to release the deposit before settlement. However, to do this the vendor must provide you with information about any mortgages or caveats that affect the land and the contract must not prohibit the early payment of the deposit.
8.	After the Contract of Sale or Contract Note has been signed you have the option, under limited circumstances to withdraw from the contract over a 3 day cooling off period. Although, this only applies when:
	(a)	you notify the vendor in writing within 3 clear business days after the contract is signed that you intend to renege on the purchase. The 3 days begin at midnight of the day you signed the Contract of Sale or Contract Note and includes the next three days, but does not include a Saturday, Sunday or public holiday;
	(b)	there is a private sale, not an auction;
	(c)	it is domestic property, not being used for commercial or agricultural purposes;
	(d)	the house/land costs $250,000 or less;
	(e)	it does not apply if you consulted a solicitor before signing the contract.
	To cancel you can write a letter to the vendor saying that you intend to exercise your rights under the Sale of Land Act to end the contract.
9.	For 21 days after the Contract was signed, you will have an opportunity to make some requisitions on title. These are questions you can ask about the property. However, if you take more than 21 days to send your requisitions the vendor is under no obligation to respond and are entitled to assume that everything with the property is satisfactory.
	In Victoria there is no limit on how long a vendor can take to answer your requisitions on title. However most vendors will respond in a reasonable time before settlement, giving you an opportunity to respond.
	The vendor must as far as possible try to answer your questions as truthfully as possible. Any answer that is fraudulent or misleading may allow you to obtain compensation or if extreme to rescind the contract.
10.	At this time, if not before, it is necessary that you arrange the necessary finance from a bank or other financial institution. A mortgage is a type of loan. Basically the lender (called the mortgagee) lend you the money needed to purchase the property. The loan is guaranteed by the property you are buying, so they can sell your house if you don't pay the loan. A mortgage is then usually registered on the title at settlement telling the world that they have an equitable interest in your property.
	A potential mortgagee will provide you with the necessary information regarding the different types of mortgages. It is important to only accept one that has a repayment plan that suits your lifestyle.
11.	If satisfied you or your solicitor should then prepare the Transfer of Land document. This document tells the Land Title Office to change the registered ownership of the property into your name.
	It is your responsibility to prepare the Transfer and get it to the seller about a month before the settlement. Be careful not to date the Transfer. The date is usually written in as the date of settlement.
12.	The statement of adjustment. The purchase price of the property then needs to be adjusted to allow for expenses associated with the property that have been paid in advance or are owing at settlement.
	Adjustments are necessary because rates are charged over a 12 month period, and the sale of property will take place at some time during that 12 months. It would thus be unfair if you have to pay for rates and charges that apply to the period before the property is sold.
	It is your responsibility to calculate and provide the vendor with a Statement of Adjustments. You can calculate the adjustments by dividing the total amount of the annual rates by 365 (for the days in the year) to get a daily rate. You are then able to adjust the balance.
	Until the adjustments are worked out, you will not be able to write the cheques that you need to hand over at settlement.
13.	Settlement. This is the climax of the conveyance. All of the parties and banks meet together and exchange the documents and cheques that complete the sale of the property.
	You must receive the Transfer of Land document and a Stamp Duty Declaration. In return you must provide the vendor with a cheque or cash amounting to the full purchase price, unless otherwise agreed.
	The Stamp Duty Declaration needs to be lodged with the State Revenue Office and includes the Contract of Sale to ensure that all relevant stamp duty is paid. This declaration needs to be witnessed by an appropriate person.
14.	Post Settlement. After settlement both parties are required to notify the Land Tax Office, the local council and any rating authorities. Once the transfer is registered, the sale is complete and the purchaser for all effective purposes is the new owner of the property and is responsible for all actions forthwith.
	You will also be required to pay any stamp duty arising from the transaction to the State Revenue Office.



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