When buying property in Sydney or New South Wales, most buyers will typically follow the same process. This guide sets out an overview of the property buying procedure.
Step 1 – Funding the property purchase
The first step is to figure out how you are going to fund your property purchase and how much you can afford to spend. This Is usually either by way of your own funds, or by a combination of your own funds, together with a loan from a bank or other lender.
When understanding the funding requirements, its also important to understand the costs associated with conducting searches and due diligence enquiries, legal costs, and stamp duty, as these will all impact the amount of money you have available to pay for the property.
Step 2 – Finding a property to buy
Finding a property can be a very time consuming process. You’ll want to make sure that the property you buy meets your needs. For a home, this might be highly specific, but for an investment the individual features (such as the layout and appliances) probably won’t matter as much as the expected return on the investment.
Some people will get help with their property search by enlisting the services of a professional buyer’s agent.
Step 3 – Reviewing the property sale contract and conducting due diligence
Once you’ve told the vendor or their selling agent that you’re interested in the property, they will usually provide you with a contract for the sale of land. This contract contains all of the terms and conditions associated with the sale, such as the price, settlement period, how adjustments are made, any obligations of the parties, how settlement will actually take place, and much more. Contracts In NSW are typically 50-100 pages but can range into thousands of pages, and you’ll need a lawyer to review this and provide you with advice on its content.
Apart from the terms of the sale, the contract will also include documents such as title searches, diagrams of the land, planning and zoning information, and details of anything affecting the title to the land, such as positive covenants, restrictions on the use of land, a right of way, or other easements. It’s important that you understand and get advice on anything affecting the title, as encumbrances on title might prevent you from using the property in the way you had intended.
At this stage it’s also important to conduct due diligence on the property. This can include things like arranging for a building inspector to prepare a building and pest inspection report, or arranging for a strata inspector to search the records of the strata scheme and compile their findings in strata report. The sky is the limit when it comes to due diligence, although the circumstances of the sale will often limit the time available to conduct due diligence on the property.
Step 4 – Negotiating and signing contracts
After you have received advice on your contract, your property lawyer may need to negotiate amendments to that contract based on what is in the contract and what your individual requirements are. At this stage your lawyer will reach out to the vendor’s lawyer and will make these requests.
Once the contract is negotiated to a form you are happy with, you’ll then arrange signing (or in the case of an auction, you’ll then be in a position attend the auction and bid on the property.
In New South Wales, contracts are entered into by way of exchanged counterparts – meaning that the vendor will sign one copy and give it to the purchaser to keep, and the purchaser will sign one identical copy and give it to the vendor to keep. At this time a deposit will also be paid by the purchaser (usually 10% of the price) and the contracts will be dated. From this point the contract is binding on both parties, subject to any contract conditions such as a cooling off period.
Once contracts have been exchanged, your property solicitor will be ensuring that you meet all of your compliance obligations, and that the vendor meets all of their obligations. This includes things such as facilitating payment of your stamp duty, and arranging for the various tax declarations to be provided to the tax office by you and the vendor.
At this stage your legal representatives will also be checking to make sure there are no outstanding rates or taxes on the property which you might inherit, and will also be serving the vendor with requisitions on title, which is a bunch of questions that check that the vendor’s title to the land isn’t defective.
During this time your lawyers or conveyancers will also be assisting you in making final settlement calculations, scheduling settlement, and if you have a bank involved in the transaction, making sure that your bank is ready to settle on time.
Step 6 – Completing the purchase of your property
On the date of settlement, you will typically conduct a final inspection of the property to make sure that everything is in the same condition as what it was when you signed the contract.
The actual financial and legal settlement will usually take place in an electronic workspace which will have both parties’ lawyers, as well as any incoming our outgoing lenders.
At the time of settlement, ownership details of the land will be updated with NSW Land Registry Services, and simultaneously the funds that you owe to the vendor will be transferred to them, along with any outstanding payments being made to the council, water authority, the tax office, and any other relevant parties.
Once settlement is complete, you’ll be ready to pick up the keys and enjoy the ownership of your new property. If the property is tenanted, you may not
The property solicitors and conveyancers at Thornton + King have decades of specialised experience in buying property in Sydney and New South Wales. If you’re thinking of buying property, we’d love to work with you. Give us a call or submit an enquiry now.
