Buying real estate is one of the most significant financial commitments that most of us will make in a lifetime. It is critical to your financial wellbeing that you make well-informed decisions when purchasing a property, whether it be a home to live in or an investment.
There are some key considerations that can potentially save you a lot of money and stress down the track. First, it is essential to remember that when it comes to buying property, a purchaser must make their own enquiries and investigate all aspects of the property before entering into a contract.
- Building Inspections: Consider engaging an independent qualified building inspector to provide a building inspection report. The fee for a professional inspection service is small compared with the cost of buying a property that needs unforeseen major repairs. The inspector will provide a written report listing faults in the property, whether they can be repaired and how much these repairs are likely to cost. The report will also highlight any unsafe renovations or extensions. You can use the report to negotiate the price and contract conditions with the seller or end the contract.
- Pest Inspections: It is also worth considering engaging a qualified pest inspector to conduct a visual inspection of the property to discover any termite or other pest activity that may impact the property’s structural integrity. More detailed inspection such as thermal imaging or photographs to highlight any damp areas that should not be present may also be conducted if required. If left undetected, termite damage can not only increase but can cost many thousands of dollars to repair. Sometimes the property may even have to be demolished and rebuilt.
- Plumbing and Electrical inspections: A licensed plumber may be required to inspect drainage issues or if a septic waste system is installed at the property, to ensure there are no major issues that are costly to rectify. If there is any indication that electrical wiring may be faulty or the house is very old, an electrician may need to evaluate the property.
- Check the property’s applications: It may also be worthwhile to make an application to the local Council for a copy of the property’s records, including any development applications, building site records, and floor plans. The historical records should be carefully matched to the existing structure to ensure that the plans approved by Council have been complied with. For example, suppose an owner builds structures (such as decks, pergolas etc) on a property that require council approval, and the owner builds them without a proper permit. In that case, you should request that the owner obtains a building certificate to ensure that Council will not look to you after the sale to demolish, rectify or obtain approvals.
- Check the boundaries: A purchaser’s responsibility is to ensure that the boundaries of the property being sold correspond with the actual property. Here a site survey will be of assistance. A survey shows the dimensions and boundaries of the property. It will also identify any encroachments by structures erected on the land.
- Strata Inspection: If you are purchasing a strata property then a full examination of the strata management records should be undertaken. The strata records will show the financial details of the administrative and sinking funds and also show plumbing, drainage, fencing, driveway, and other problems that may exist. Any proposal for additional works or levies should also be identified via a strata inspection.
- Common Land or Property: If the property is part of a subdivision with common property such as driveways or garden areas, it may be subject to an owners corporation. As a result, you may be required to pay fees and follow rules that restrict what you can do on your property, such as a ban on pet ownership.
- Fire and Flood Risks: Sometimes, properties can be subject to the risk of fire and flooding due to their location. You should properly investigate these risks and consider their implications for land management, buildings and insurance premiums.
- Council Planning Schemes and Overlays: All land is subject to the local Council’s planning scheme, which determines how the property is zoned and any overlays that may apply. This may restrict such things as whether you can build on vacant land or how you can alter or develop the land and its buildings over time. There may also be other restrictions that apply, such as design guidelines or bushfire safety design, or restrictions on title (known as encumbrances), which prevent you from developing the property.
The traps when buying a property are avoidable, and the risk far outweighs the cost of a proper investigation before you buy.
If you are looking to buy a new property and would like to have an experienced property lawyer review the contract of sale to minimise your risk, please get in touch with Morrows Legal.
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