Property Law: NSW Guide to Buying a New Home | CM Law Blog
There's a lot to take into account when you buy a house in Sydney. You've got to be aware of so many things at once it can all seem like too much to bother moving. But here's a guide from a property lawyer for everybody to use. This should see you through the maze of legal terms and meanings that are an unfortunate part of property law and buying a home.
Before you even decide on a house, you need to know that there are three types of ways that you can buy a home:
- Private Treaty
- Auction
- Off-the-Plan
Each one these ways has their own disadvantages and advantages to them.
Private Treaty is the most common way to buy a property. This method involves the seller advertising how much they want for their property, and then they'll negotiate with potential buyers. Your contract for sale will become active once you exchange contracts with the seller (you both end up with the same identical contract). It's important to remember that when you exchange contracts you'll also be expected to put down the full deposit. Usually this is just 10% of the price, minus any other payments you've already made. One of the really good things about buying private treaty is that there's a cooling off period once you sign the contract so if you wake up in a cold sweat one night realising you've made a terrible mistake, you can get out of the sale.
Buying at auction comes up a lot in TV and movies, but it does still happen in the real world. When it comes to buying a property at auction, it can be a great deal more stressful, and sometimes more expensive, than the other two options. The most important thing you can do if you intend to buy at auction is to have your solicitor look through the contract for sale before the event. Your solicitor can then negotiate with the seller to change any terms that you don't like. There are two major disadvantages when it comes to buying through auction though. Firstly, there isn't a cooling off period, so if you bidded the highest amount, you're paying that amount. Secondly, it can be very easy to get caught up in the moment when you're bidding and you might find yourself bidding thousands, if not hundreds of thousands more than you budgeted for.
The final way that you can buy property is buying off-the-plan. Buying off-the-plan can be done either by auction or private treaty, but the major difference between those two options and buying off-the-plan is you're buying property before it exists, so you might not get what you were sold. Generally this happens with developments for apartments or townhouses and there are plenty advantages to buying off-the-plan but, unfortunately, there's an equal number of disadvantages. For a more detailed explanation of buying of the-plan check out our blog post What's the Deal With Off the Plan Conveyancing?
Another really important thing to remember before you even think about buying a property is that if you're intending to buy an apartment or townhouse is that the majority of townhouses and apartments in NSW are strata title.
When you buy into strata title you don't just buy the property but you also become a member of the body corporate, which can see you with a number of rights and obligations. It can be a really great thing to be involved in a body corporate because it means you get a say in issues affecting the building(s), but you will also need to pay strata levies, and you'll be restricted by by-laws when it comes to what you can do with your property. You may also be obliged to contribute to a communal pool for repairs and the like. If you know and understand all this before buying an apartment or townhouse you can appropriately budget.
Once you know what property you intend to buy, and how you intend to buy it, you can start thinking about other things like what's included in the sale. What you'll find with most contracts is that they'll say that you'll receive the property in the state you find it, therefore this means any fixtures are included. Fixtures in this instance refers to items that can't be taken away easily without damaging the property. So you'll probably get an oven with your house, but not a fridge, as the oven is wired in and the fridge isn't. Of course, if you have any concerns about what's included in the contract, then speak to your solicitor.
Most people will buy a property with someone else, so it's important that you understand the two main types of joint ownership:
- Joint Tenants
- Tenants in Common
If you choose to go into a Joint Tenant ownership, this means that you own the whole property as a couple, and if one person dies, the other person owns the whole place on their own, even if the deceased says something different in their Will. This is the most common way for couples to own a home. Tenants in Common ownership is more common for business partners or people who aren't closely related. What happens is that each person owns a share of the property which can then be sold to or passed onto someone else by a Will without the say of the other owner.
Married couples are some of the most common home buyers
When you've bought a property, you'll have ownership of it. But like in the case of joint ownership, there are different, more specific types of ownership:
- Freehold - ownership over the buildings and land
- Leasehold - ownership of buildings and land for a certain length of time (usually 99 years)
- Strata Title - (for apartments or townhouses) the rights to the airspace in your unit
- Company Title - you buy shares in a company, which entitles you to the use of an apartment
- Community Title - often used with Strata Title for rights (with other owners) to common land
There's certainly a lot to take in when it comes to buying a new home, but if you ever have any questions or concerns, don't hesitate to ask your solicitor or property lawyer.
