Buying property client guide

Quick Links

When do I sign?

Buying property is a big decision. Take care before you make the commitment of signing a contract.  If you are buying at auction special precautions are needed. We have a booklet similar to this dealing with auctions.

Should the buyer beware?

Vendors in Tasmania should advise purchasers about title restrictions on use of the property. Otherwise, there is no current system of comprehensive disclosure required of vendors on the sale of real estate.  In Tasmania, vendors are not required to disclose to the purchaser a minimum set of specified information about the property as is the case in some other states.

  • The agent will provide many details as part of marketing the property.
  • The agent is working to win a sale and working for the vendor.
  • The purchaser is responsible to make his own enquiries.

A list of some possible questions for the vendor is attached at the back of this booklet.   Purchasers may like to have vendors answer these in writing. A purchaser may be able to claim damages that follow from the wrong answers by the vendor.   Vendors are not legally bound to answer these questions and a vendor may refuse to do so. It is not usual in Tasmania to put such a comprehensive set of questions to the vendor.  Whether the vendor answers is a matter for negotiation.

Should I search before or after I sign the contract?

Complete your searches as far as possible before the negotiations. The results may affect the price or other parts of the negotiation.  Some searches may need to be finalised after the contract is signed.  If critical searches are outstanding you may need to change the standard contract in place, so the Vendor guarantees the result you want or to give you the right to withdraw if you do not get the result you want

Do I need to check the title?

It is foolhardy to sign a contract to buy land without first checking the title documents.

How do I get a copy of the title?

The estate agent should be able to get you a copy of the title.  Copies of the title, government valuation and last sale price information are available for Tasmanian properties via the internet at www.thelist.tas.gov.au. You can also get maps, zoning details, land valuation information and a history of sales from this site.  Tierney Law can access this information for you or you can get access using your credit card. There is a government search fee of $28.80 to get a copy of the title.

What do I need to check on the title?

Usually the title is a Government certificate as to who owns the land and what restrictions are recorded against the title.  If the title is held under the old deeds system, take special advice.  If the title is held under the modern Government certificate system there will be a title plan of the land. Usually there will not be a plan of the building. The title plan will only show the boundaries of the land itself.  A strata title will show the buildings on the title plan. Strata titles are special types of title designed for but not limited to multi story flats. If your property has a strata title you will need more information on that aspect. Tierney Law has available a similar client guide booklet to this regarding strata titles.

Check the land carefully against the title plan including:

  • the property boundaries;
  • no buildings encroach on adjoining land or road;
  • no encroachment on the land by buildings, fences or otherwise from adjoining land;
  • is it the correct block?
  • the area of the block;
  • is there access off a useable public road; and
  • use of the property other than by the current owner, for example: as a right of way, for drainage or as part of their land. Any electricity or other service infrastructure (including power lines), either on or passing through or over the property;
  • that there are sewerage, power and water services available at the property.

You might be assisted by surveyor’s notes to the title plan, which may have some more detail on the boundaries. Aerial photos with title boundaries overlaid are available for many properties. If you need either, speak to the agent or talk to Tierney Law.

You need to be certain about these matters. A surveyors report would allow you to be certain and would give you rights against the surveyor making an error. A surveyors report is likely to cost between $300 and $1,000. A surveyor may discover difficulties that you would miss. Unless you are sure enough to take the risk of not instructing a surveyor, you should incur the additional expense of a check survey or get Defect in Title Insurance.

What is defect in title insurance?

Despite our best efforts, your inspections and my due diligence may not detect all problems with the property.  You can buy insurance against risk from undetected problems with your ownership and use of the property including:

  • boundary, access and survey discrepancies;
  • heritage restrictions;
  • easements not shown on the Title; for example, paths, tracks, drains, overhanging eaves or spouting on any adjoining building, shared walls;
  • covenants and zoning issues;
  • unapproved or incompletely or certified uses and works;
  • incorrect or misunderstood government certificates;
  • fraud or forgery, or delay or mistake involving the land registry; or
  • claims of an interest in the land against the owner.
  • Such a policy gives a lot of insurance protection for the life of your ownership of the property at a once off cost of less than $610.00 for properties of up to $1,000,000. Make a value judgement / risk assessment.

Let me know if you want more information about this type of insurance. Alternatively go to www.stewartau.com or www.firsttitle.com.au .

What happens if the property is damaged?

The purchaser bears the risk of damage to the property after the contract is signed and should get insurance straight away.  The property is at your risk as the purchaser from the date the contract is signed. You should protect yourself against property damage by insuring the property from the date the contract is signed. You should not wait until settlement.

What do I need to check with Council?

Check planning, servicing and such matters with the local Council. Take notes, and record the dates and names of the Council officers you deal with.  Check water, drainage and sewerage services. Do any of these services rely on a private arrangement with neighbours? The Water and Sewer Corporation can give you details.  Check with the Water and Sewer Corporation if alternative arrangements are needed.

The Council will be able to tell you the rates payable, what services are available, what zone the property is in and the effect of that zoning under the planning rules.

When inquiring about your property:

  • Ask if there is a new planning scheme on the way or planning applications in relation to the property.
  • Ask if Council maintains the adjoining road.
  • Ask Council about building records for the property. Ask Council if they can provide records of building and planning approvals. At many Councils, comprehensive records are only available for recent years.
  • Ask Council generally if there are any other issues that may restrict the enjoyment of your purchase in the manner that you intend.
  • Council may have other general information about the property and the area. Be aware Council often cannot give you a comprehensive answer to such a broad question.

Council may have records of the land being flood or landslip prone.

It is possible to obtain a detailed report from Council on its rights and powers in relation to the property. This search is usually undertaken after the contract to check the Vendor has no unsatisfied orders. Council typically takes about a fortnight to prepare such a report. The report costs just over $300.00.

You can make your purchase offer subject to being satisfied with such a report. However, every condition makes your offer less certain and less attractive to the vendor.

What is the basis of property sales?

Unless a contract says to the contrary, land is sold on an “as is where is” basis. The purchaser takes the property as found. Inspect the property carefully before signing the contract.

The vendor does not automatically warrant that:
• the property has all necessary planning approvals, or
• buildings are built to any particular standard or according to the building regulations.

Do I need an expert building surveyor to do an inspection?

  • Do you wish to rely on your own inspection of the buildings?
  • Is the expense of an expert report justified?
  • Do you need to check Council’s records?

Council will have records of recent building approvals and there should be certificates on council records for the proper completion of the approved building work. You may need consent from the vendor to inspect council building records for the property.

You can ask Council to inspect a building and certify Council does not intend to take any action. Council may as part of preparing this certificate pick up defects. The cost of such certificates is not significantly cheaper than a private building inspection. Council bring their own agenda to any inspection that may not be the same as yours. Unless your concern is some special issue of approval, a private building inspector, answerable to you, may be a better choice.  Council no longer gives a general certificate that a property complies with the planning rules and building regulations.

A private building inspector will be directly focussed on your needs as a future owner. If there is no real problem with the building, inadequacies of council records can be easily remedied. Real problems with the building may be unrelated or unrecorded in council records.

Do I need a building inspection clause?

Before paying for a building inspection report, you may want the security of knowing you can buy the property at an acceptable price.  Perhaps the vendor will agree to be bound subject to such a report.

The 2012 version of the Standard Form Contract for Sale of Real Estate in Tasmania contains a standard building inspection clause in the Particulars of Sale.  (do we need to link to this instead of copying it here?)

Often an adjustment to the original price may be preferable to requiring the vendor to remedy defects after the contract is signed. Vendors may not be motivated to do the work to a good standard. Price adjustments are simple, clear cut and not time sensitive. With a price adjustment, the purchaser is free to undertake the remedial works at a time, to a quality and in a way of the purchasers choosing.

Should I check the neighbourhood?

Look about the neighbourhood. Check the issues that may affect your property.  The enquiries by your lawyer will refer to your property and not the neighbours. The state of the neighbourhood will not be part of the standard issues dealt with in the contract. Are there significant neighbourhood issues that should be searched or dealt with in the contract? For example if you are buying the block for the lovely open parkland next door, do you need to check it is public land and is expected to remain so? Is the old quarry site about to be reopened or become the site for council’s new sewerage ponds?

Do I need a pest inspection?

Pest inspections are uncommon in Tasmania because pest infestation is not such a common problem as in some other states.  Discuss pest inspection with any person advising you on the physical condition of the property.

Who has mining rights?

Ownership of land is separate from mining rights to land. Unless there was some relevant warranty, mining rights are irrelevant to the contractual relationship between you and the vendor. You need to resolve such issues before the contract is signed.  Most of Tasmania is subject to mining licences. One company, for instance, has exploration licenses that cover the whole of the Huon, Channel and Hobart areas.   An exploration licence is a licence to explore and not to mine. Holders of exploration licences may enter land regardless of the owner’s consent. An exploration licence holder must convert to a lease before mining. Miners need the written agreement of the owner before mining private land within 100 metres of any dwelling or dam.

How do I know if there is hidden pollution?

There is no comprehensive register of polluted properties. Problem sites include oil and chemical storage sites and refuse disposal sites.  Council and the state government each hold some records. Not all government records of contamination are available for search. Not all contaminated properties are recorded.  If contamination may be an issue, you may need to search several registers but would be wise to consider an expert assessment.

What heritage restrictions apply?

Restrictions on Heritage properties can be on the title itself, as part of Council’s planning rules or as part of the more comprehensive system to regulate historic properties that is now in place under the Historic Cultural Heritage Act.  Properties registered under the Historic Cultural Heritage Act are subject to special planning controls to prevent changes to the property that affect historic cultural significance. There is a register of affected properties that you may need to check.

Do I need a soil test?

Be sure the land is not subject to soil movement or landslip. Soil movement is a particular danger if the land is steep or has deep loam.  Council and the state government keep a register of landslip-affected land. Not all landslip-affected land is on these registers. If landslip is an issue, a soil inspection would be wise.  Councils require an assessment of soil conditions as part of the building approval process. If you will need a building approval, discuss this with Council and obtain this inspection at the pre-contract stage. Difficulties with the soil conditions may or may not have contractual significance. Landslip issues are best resolved before the contract is signed.

Do I need to check for Fire Regulation Compliance?

Tasmania Fire Service can report on their records of outstanding fire safety orders, recommendations as to appropriate fire safety and their records on building compliance with fire regulations. They do not audit all buildings. They are not likely to have records for domestic or small buildings.

  • Bush fire safety protection standards and building compliance requirements are increasingly restrictive.
  • Rely on an expert assessment rather than government records.
  • Tasmania Fire Service or an expert surveyor can undertake an expert assessment.
  • Fire safety compliance might or might not have contractual significance.

Do commercial buildings need special certificates?

Commercial buildings should have an annual certificate on maintenance of essential health and safety features. If you are buying a commercial building, check the maintenance of essential health and safety features and whether there is an up to date annual certificate. Essential health and safety compliance is not typically required of the vendor by the standard contract.

Are there hidden pipes and cables?

A register of the location of cables and equipment is available through a service called “Dial before you Dig” by phone on 1100 or on the web at www.dialbeforeyoudig.com.au.  Check that register before planning or executing any project on the property that may affect cables and equipment.

Are there Aboriginal relics?

You must not damage, conceal, expose, excavate, or otherwise interfere with Aboriginal relics. The government has declared some properties subject to protection for Aboriginal relics and has records of some but not all sites. Talk to Tierney Law if you need to search the register of protected properties. If this is a significant issue, an expert assessment and a search of government records may be wise.

Can I buy a house over the Internet?

The internet is a powerful and effective marketing and research tool.  Do not assume you can buy a house by internet research with the same ease and reliability as a book or CD.  You need to assess the particular property and the particular area.  Don’t just review the value of what is being sold compared to your own existing local market. What is the market value where the house is for sale? It is hard to assess these things without physically visiting the property and the area.

If you are buying from the mainland, consider investing in a short visit to Tasmania. If you are not able to do so, an independent valuation report from a professional valuer may be a good investment. Select a valuer who is not associated with the selling agent.

Do I need Australian residency?

People without residency status in Australia may need special Government permission to buy land. Go to www.firb.gov.au or talk to Tierney Law if you do not have permanent Australian residency status.  Tierney Law also have available without charge a client guide booklet explaining the residency requirements in detail.

Can I buy subject to finance?

A purchaser relying on getting finance can contract subject to getting a loan approval using the Finance Clause in the standard Contract.  (link to PDF?)  Before you confirm make sure you have a final approval. Check any conditions to approval. Usually, for instance, you would not risk confirming finance if the approval was still subject to valuation.

Can I buy subject to sale?

A purchaser relying on the sale of their own property can contract subject to the standard Law Society Contract by the Subject to Sale Clause.  (link to PDF?)  The Subject to Sale Clause only gives protection to the Purchaser to the extent that the offer on the new property is subject to signing a contract for the sale of the existing one.

To complete the purchase of the new property, the Purchaser will usually not just need to sign a contract for the sale of the old property, but will require the actual receipt of funds from the sale of that property to complete the purchase. Prudent purchasers subject to a sale, also make the contract for their new property subject to the further precondition that the sale of the old property proceeds all the way to settlement.

Do water rights go with the property automatically?

Owners of land adjoining watercourses or lakes (“riparian” or “quasi-riparian” landowners), as well as casual users of land, may take water for human consumption, domestic purposes, stock watering and fire fighting (these are known as “riparian rights”).

In addition, you can take water for private electricity generation as long as taking the water does not adversely affect other users or the environment.  A landowner can take groundwater or dispersed surface water from their land for any purpose. Under the Water Management Act 1999, legal entitlements to take water from rivers and streams for commercial purposes are not attached to the relevant land title. Water licences and their associated water allocations are legal property held by the licensee separate from any land titles.

When property with irrigation enterprises is leased or sold, the lessor or purchaser does not automatically receive transfer of any water licences associated with those enterprises.  While the ownership of the dam will generally transfer with the land title, the legal right to take water into the dam does not automatically transfer. If the new owner or occupier of the land intends to take water into the dam, then that person may need to also transfer the water licence.

What do I check on the contract?

Read the contract carefully. Raise with the agent anything you do not understand. If that does not resolve your query, get legal advice, talk to Tierney Law.  The contract will provide a date for completion. This is the changeover date to complete the transfer of ownership. Completion is sometimes called settlement. Check that the date for completion will suit you. 30 days is the typical period from unconditional contract to completion . Consider your particular needs.

Property is usually sold using a standard form of contract drawn by the Law Society. A copy is included at the end of this booklet. The standard contract is fair to both parties. The Law Society approval is noted on the front page of both the Particulars of Sale and the Standard Conditions of Sale. Non-standard forms of contract are sometimes used. There may be additions or changes to the standard form. If the proposed contract is not a standard contract, you should take legal advice, talk to Tierney Law.

How is the contract made?

If there is a real estate agent, the real estate agent usually prepares the contract and has it signed by the purchaser. The agent then presents this offer to the vendor. At this point the vendor either accepts or rejects the offer. If the offer is rejected, there may be further negotiation. The vendor may sign an amended contract as a counter offer to put to the purchaser or ask for a new offer from the purchaser. When the vendor is content with the offer, the vendor signs the contract to accept the offer and makes it binding to both parties.

If there is an estate agent, the agent will send the contract to the purchaser’s nominated lawyer to do the conveyancing. The lawyer will then begin work on receipt of the contract.  If there is no estate agent, the parties negotiate direct or through their lawyers. When the basics of the deal are worked out, the vendor’s lawyer usually draws a contract and sends a copy to the purchaser or the purchaser’s lawyer for approval. The parties then sign copies and swap those copies to form the binding contract.

What is the effect of the contract?

Once a contract is made the parties are bound to act according to its terms.  The contract should include all substantial matters agreed, for example, any outstanding work the seller agrees to complete. The contract should specify any important assurances given in negotiations and any preconditions, such as approval of a home loan for instance.  The contract is the last opportunity for negotiation.  In Tasmania there are no standard cooling off periods and no automatic rights to withdraw unless there is some specific provision in the contract.

What do I check on the contract?

Read the contract carefully. Raise with the agent anything you do not understand. If that does not resolve your query, get legal advice, talk to Tierney Law.  The contract will provide a date for completion. This is the changeover date to complete the transfer of ownership. Completion is sometimes called settlement. Check that the date for completion will suit you. 30 days is the typical period from unconditional contract to completion . Consider your particular needs.

Property is usually sold using a standard form of contract drawn by the Law Society. A copy is included at the end of this booklet. The standard contract is fair to both parties. The Law Society approval is noted on the front page of both the Particulars of Sale and the Standard Conditions of Sale. Non-standard forms of contract are sometimes used. There may be additions or changes to the standard form. If the proposed contract is not a standard contract, you should take legal advice, talk to Tierney Law.

What deposit do I need?

The vendor’s interest in the land is a bond for the obligations of the vendor under the contract. If the vendor breaks the deal the purchaser can claim against the land.  The deposit is a bond of the purchaser’s obligation.  There is no legal requirement for any particular deposit amount or for any deposit at all.

  • How much does the vendor want or need to feel safe enough?
  • How much does the purchaser have available?

A deposit of 10 per cent of the purchase price is typical but the amount is subject to variation and negotiation.  Instead of paying a cash deposit, some purchasers provide a deposit bond which is like an insurance policy for the deposit. The purchaser pays an insurance company to guarantee payment of a deposit.

Does the purchaser lose the deposit?

If the purchaser wrongfully breaks the deal and if the breach is bad enough, the vendor may be able to call off the contract and then the purchaser automatically loses the deposit.  Minor breaches do not justify the vendor terminating the contract. Usually initial delays in settlement do not give an immediate right to the vendor to call off the contract and claim the deposit. If the contract fails because some agreed pre-condition to the contract does not happen, the purchaser will be able to get the deposit back.

Do first home owners get a special deal?

If you are building you first home, you may be entitled to a government grant.  The website http://www.firsthome.gov.au/ has all the details, or talk to Tierney Law. We have a booklet like this specifically for first home buyers.

What is conveyancing?

Conveyancing is the process of transferring ownership of property.

Do you need to do all of that for every property?

Not all searches are needed in all cases. In certain circumstances, some searches may be a danger rather than a safeguard.  The vendor’s lawyer and the purchaser’s lawyer have different roles. There is more work and more risk for the purchaser’s lawyer.

What do lawyers do with all the search reports?

Conveyancing lawyers interpret and advise on the information gathered from searches.

  • The result of searches may require further investigation and;
  • action in relation to the other party to the transaction;
  • action in relation to neighbours; or
  • action in relation to government authorities.

In each case the action may or may not have relevance to the rights of the parties under the contract.  If, by way of example, the Council report states that the zoning is “rural”, it may be impossible to build a house in one part of a municipality but permitted in another. The Council report itself will not specify this. A conveyancing lawyer needs to know when the prohibition applies, the rights of the purchaser against the vendor and what remedial action is possible.

Is conveyancing just checking documents?

A conveyancing lawyer helps manage the transaction.  Conveyancing transactions involve many parties, conveyancing transactions are time critical. Careful co-ordination is required.  The conveyancing lawyer needs to empower the client with sufficient knowledge to carry forward the transaction.  Property dealings usually involve a person’s largest financial transaction. Property transactions are usually part of more major changes in a person’s affairs. Failures in the process are likely to have dramatic consequences.

The conveyancing process is complex. It requires precision and prompt action.  The procedure can be difficult and time consuming. Transactions do not proceed as smoothly if one party is not familiar with the required procedures and has to learn as the transaction proceeds. There are more likely to be mistakes.  Solicitors are responsible for their work. Insurance supports the solicitor’s responsibility. Someone acting for themself or with informal assistance, takes on themself the risk of mistakes.  Acting without proper advice is a dangerous and fearful experience.

What is the difference between a conveyancer and a lawyer?

The state government requires a person to be licensed as a conveyancer or admitted as a legal practitioner before they can undertake conveyancing for a fee.  Regulation of the conduct of conveyancing is needed to protect consumers and maintain standards of safe conveyancing.  Lawyers are more highly trained and highly qualified than conveyancers. Lawyers have at least a four year University degree and a six month post admission diploma.

Licensed conveyancers can be licensed without any formal training or education course. A six months trade or diploma course for licensed conveyancers has been suggested but is not yet implemented in Tasmania.

Can the same firm act for the vendor and the purchaser?

The same firm can act for both sides of a conveyancing transaction because there is not necessarily a conflict of interest. This is common but may raise issues if there does turn out to be a conflict of interest.  Conveyancing transactions are not like divorces or car accidents where parties are inevitably in conflict. Most transactions proceed without any issue of conflict of interest.

If any conflict arises between one party’s best interest and those of the other, a firm acting for both could not take sides in that dispute. The firm would need to stop acting for all parties if they could not act for the one party or reveal information contrary to the interest of the other. Both parties would be referred to other firms.

Is it cheaper for one firm to act for both vendor and purchaser?

There is variation from firm to firm on cost where one firm acts for both Vendor and Purchaser.  At Tierney Law, the cost is not cheaper for the parties where we act for both the Vendor and the Purchaser. Substantially the same amount of work needs to be done where the same firm acts for the Vendor and the Purchaser. The responsibility is greater not less when the one firm acts for both parties.

Where we act for both the Vendor and the Purchaser, we run two separate files with a separate person responsible for each file.  This booklet is not a complete statement of the law. It does not deal comprehensively with your particular situation.  This booklet is to provide general information to supplement our specific advice to you.  Do not act in reliance on this booklet without our specific advice.  We are responsible only if you give us specific instructions and for the specific advice we give.  This booklet was originally prepared in 1995 and has been updated as at the 30th August 2012. It does not reflect changes to the law after that date.  You need to take specific advice on the possibility or effect of any such changes.

Your purchase.  What to do and when to do it

Find a Property

  1. Check property
  2. Check Title
  3. Check with Council
  4. Check costs
  5. Check Funds
  6. Check contract

Sign a contract

  1. Get agent to send contract to Tierney Law
  2. Read initial letter from Tierney Law
  3. Get final approval of finance
  4. Send instruction form to Tierney Law

Arrange finance

  1. Sort out any documents for the finance.
  2. Check boundaries/property
  3. Send boundaries confirmation to Tierney Law
  4. Arrange insurance
  5. Arrange settlement date
  6. Prepare to move
  7. Book removalist

Get ready to Settle

  1. Review search report and proposed figure from Tierney Law
  2. Arrange funds with Bank and Tierney Law
  3. Pre settlement inspection
  4. Arrange to collect keys after settlement

Settle

  1. Collect any keys
  2. Move in
  3. Review report confirming settlement from Tierney Law
  4. Check title after registered

Enjoy!