When it comes to real estate transactions, it is not uncommon for first home buyers to encounter several legal challenges along the way. Real estate in Australia requires expertise and experience because of the various legal transactions and processes involved.
Moreover, being a first home owner, you must exercise due diligence when transacting with the seller and your agent. If you're planning to buy your first home and you want to go through the process smoothly, here's an article that will talk about the legal challenges involved and how to hurdle them.
What Challenges Will First Home Buyers Experience?
Conditions in the Contract of Sale
A contract of sale is a legal document that transfers ownership from the seller to the buyer. Moreover, it contains the terms and conditions of the sale. It is the most vital document when it comes to purchasing your first home.
However, a contract might contain confusing and ambiguous terms and conditions. If you're unsure of what those conditions mean, it's important that you communicate with a lawyer to assist you in this transaction.
In New South Wales, a residential property cannot be offered until there's a contract of sale. An agent offers the property for sale when they
- indicate that the property is for sale
- offer to sell the property
- invite an offer to purchase the property
- indicate that a person may be willing to grant an option to purchase the property.
Other matters that first home buyers need to look out for are:
- Availability of the draft contract for inspection at the agents office. This includes the attachments, as enumerated under Section 52A of the Conveyancing Act 1919:
- property certificate (title search)
- drainage diagrams
- the planning certificate issued by the local council
- any dealings on the lot relating to an easement, profits à pendre, restrictions on the use of land or positive covenant
- a notice with respect to smoke alarms and loose-fill asbestos insulation (unless the notice is printed in the contract)
- Required documents under Schedule 1 of the Conveyancing (Sale of Land) Regulation 2022. Failure to attach the required documents will give the purchaser the right to rescind the sale contract within 14 days of exchange.
- The contract must also indicate property exclusions and the prescribed statement relating to the cooling off period.
The Conveyancing Process
- Review of the contract for sale
- Arranging building and pest inspections
- Analysing a strata inspection report
- Exchanging the contract of sale
- Payment of deposit
- Arranging payment of stamp duties
- Preparing and examining the mortgage agreement
- Tax-related obligations
- Compliance documentation
- Checking if government authorities have vested interest in the property
- Overseeing the change of title with NSW Land Registry Services
- Doing final checks prior to settlement
- Attending settlement.
For sure, as a first home buyer, this part might confuse you. The conveyancing process involves technical tasks and processes. That's why it's important to secure the assistance of a solicitor who will make things easy for you. To give you an overview, here's what happens during the process:
Clearly, some tasks in the list above require the expertise of a conveyancing lawyer. To be on the safe side, first home buyers must seek legal assistance on these matters.
Dealing With Disclosure Issues
First home buyers can overlook this aspect when it comes to buying residential properties in Australia. Disclosure issues may include the vendor's legal obligation to disclose certain information about the property and possible misrepresentation.
Basically, a seller should disclose material facts to the buyer so that they will be better informed when making their decision to buy the property. Under the Conveyancing Act, sellers are required to attach specific documents and to disclose matters regarding defects in title and in quality of title.
Other matters that the seller must disclose to first home buyers are:
- Structural issues
- Easements
- Zoning restrictions
- Other important details that might affect the property's value and usability
So what's the effect of the non-disclosure of this material information? There can be several consequences:
- Financial loss on the part of the buyer due to repair costs and decrease in property value;
- The buyer may sue the seller for breach of contract.
- The buyer may initiate the rescission of the contract.
- Delay in the settlement process.
Issues Relating to the First Home Owner Grant (FHOG) and Home Guarantee Scheme (HGS)
An Australian citizen or a permanent resident might be attracted to buying their first home in New South Wales. Why so? It's because of the first home owner grant. However, not everyone can satisfy the eligibility criteria. To check if you are eligible, you can use this online tool (Home Buyer Assistance Finder).
The first home owner grant is a AUD 10,000 benefit that the government entitles a permanent resident or an Australian citizen when they build or buy their new home. Revenue NSW provides for dwelling categories with their respective eligibility criteria. You can check the complete list here.
Furthermore, the government also has a home guarantee scheme that will help home buyers buy a home sooner and make it their principal place of residence. Whether it be an existing house, an apartment, a substantially renovated home, vacant land, a contract to build (comprehensive building contract), or a house and land package, the HGS will facilitate home loans to eligible home buyers.
With the HGS, buyers can apply for a home loan with participating lenders who are authorised by Housing Australia. This way, home buyers can pay the purchase price of the property they want and give them a home sooner.
Claiming for these grants can introduce you to several challenges, such as:
- strict eligibility criteria
- property type residence requirements
- changes in circumstances
- builder delays
But that's nothing to worry about if you have a conveyancing lawyer who can give you legal assistance on these matters.
How to Power Through These Challenges as First Home Buyers?
As a first home owner, getting funds to buy your first home is in itself a challenge. But the challenge does not end there because it will get more demanding when you start transacting with your agent. Hence, the help of a conveyancing lawyer is a must.
Here's what you can do to power through it all:
- Engage the services of a solicitor. A good conveyancer will help you go through the process and smooth things out for you.
- Read everything carefully. You must study the terms and conditions of your contract of sale. Don't just sign the document, even if you don't understand some of it.
- Ask important questions. You might have a few questions in mind, being a first home owner. If there's something you're unsure of, don't hesitate to ask your conveyancer or other professionals for clarification.
- Conduct your due diligence. Your lawyer will give you a list of what to do in order to satisfy due diligence requirements. Get building and pest inspections, and research the property and the area.
Seek Help From a Conveyancing Lawyer in NSW
First home buyers might perceive the conveyancing process as a big task that they need to accomplish to achieve their dream house. But there's nothing that conveyancing lawyers can't do when it comes to purchasing real estate.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
