Real Estate in the ACT
Tips for Buyers
The legal position with respect to buying and selling real estate in the ACT has undergone significant changes since
1 July 2004 when the ACT Government introduced new legislation requiring Contracts for Sale to contain various so-called ‘disclosure’ documents.
This new legislation has important practical implications for both Buyers and Sellers of real estate in the ACT.
Tips for Buyers
Before the Purchase
As a practical matter, a copy of the Contract for Sale must be made available to each prospective Buyer at the time a property is marketed for sale.
At the time of negotiating the purchase of the property or making an offer, the Buyer should ensure the following:
- That they have secured ‘in principle’ finance approval from their Bank or other lender. This will normally require providing to the Bank/lender such information as pay slips, tax returns or other proof of income and details of assets and liabilities.
- That they have funds sufficient to provide a Deposit on exchange of Contracts (or, alternatively, a ‘Deposit Bond’ or ‘Bank Guarantee’).
- That they have examined the Contract for Sale and are aware what the Contract provides in the way of, for example-
- the goods included in the sale;
- any Settlement date specified in the Contract;
- any unapproved structures disclosed in the ‘Compliance Report’ attached to the Contract;
- whether the Building or Pest Reports disclose any adverse matters with respect to the property; and
- any penalties for delayed Settlement.
The Buyer’s Solicitor will be able to provide advice on any matters arising from the Contract – the Solicitor may need to be consulted to provide advice even on a draft version of the Contract.
After Agreement is reached on the Sale
Generally speaking, the issues discussed under the heading ‘Tips for Sellers – After Agreement is Reached on the Sale’ apply equally to the Buyer.
At the appointment with the Buyer’s Solicitor to sign the Contract for Sale, the Buyer should ensure the following (It is advisable for the Buyer to contact their Solicitor before the meeting to confirm these matters):
- That they have the Deposit (in whatever form it is agreed to be provided).
- That they have received a formal and unconditional finance approval from their Bank or other lender (or, at least, that they are aware of the timeframe within which the approval will be given).
- That they are familiar with the matters contained in the Agent’s Sales Report/Advice with respect to such matters as the Settlement date, the goods included in the sale etc.).
The new ACT legislation provides for a ‘cooling off’ period of 5 business days in which a Buyer may decide not proceed with the purchase after exchange of Contracts. However, as a practical matter, the Seller’s Solicitor normally requires the Buyer’s Solicitor to provide a certificate at exchange the effect of which is to waive this cooling off period so that the Contract becomes ‘unconditional’ at exchange.
It is important to note that-
- Until Contracts have been formally and unconditionally exchanged, neither party is bound to proceed with the sale - either party may withdraw from the sale at any stage and for any reason; and
- It is extremely rare for Contracts to be exchanged ‘conditionally’, that is, subject to, for example, unconditional finance approval.
Between Exchange & Settlement
In summary, the most important issues for Buyers to address between exchange of Contracts and Settlement are as follows:
- That they sign all mortgage and other security documents with their Bank or other lender (as a general rule, lenders will not authorise the draw down of the funds required for Settlement without these documents being executed).
- That they take out building insurance on the property. (This should be organised on and from the date of exchange of Contracts).
- That they have sufficient funds to pay the balance of the Purchase Price at Settlement and that these funds are readily accessible.
- That they have organised a ‘pre-Settlement’ inspection of the property with the Agent no later than 24-48 hours before the Settlement date.
The Buyer’s Solicitor will discuss the requirements around stamp duty. Stamp duty is now payable ‘post settlement’ within 14 days of registration of the Transfer document. The Buyer should advise their Solicitor if they are first home buyers as there may be an entitlement to a concession or exemption from stamp duty. A self-assessment is available via the ACT Revenue website as an initial guide and they buyer’s Solicitor will provide further advice in this regards as required.
The key to a successful and trouble-free home sale or purchase is organisation and being aware of the conveyancing process and the steps involved in that process.
Your Agent and/or Solicitor is well able to discuss with you any issues arising from this Guide on which you may wish to seek additional advice.