Are you purchasing property?
We can help guide you through the process and protect your investment — contact property purchase expert, Fiona Taylor today to set up an appointment.
29 May, 2013 | Fiona Taylor
It is essential that you (or the real estate agent) give your lawyer a signed copy of the agreement for sale and purchase straight away. Your lawyer will not know you’ve purchased a property until you’ve done this (and won’t be able to start working on it until such time). So, the sooner you do this, the smoother the whole process will be.
The documents your lawyer sends you will have extra information for you in relation to the agreement and your purchase that isn’t necessarily in the agreement itself, such as important dates you will need to remember and comply with, important documents you will need to give your lawyer, and an overview of your agreement.
As soon as the agreement for sale and purchase is signed (and even before!), you should start trying to satisfy the conditions of the agreement. For instance, a LIM report can take up to ten working days for the Council to process, and in most cases you need to apply for one within five working days from the date of the agreement.
Once you have satisfied a condition, you should tell your lawyer straight away. Your lawyer must notify the vendor’s solicitor in writing that the condition is satisfied or the vendor could cancel the agreement.
If you need more time to satisfy a condition, you must tell your lawyer as soon as possible. Your lawyer will be able to request an extension of a condition rather than cancelling the agreement. But, be aware, the vendors do not have to grant an extension in time, so you shouldn’t rely on it.
You are under an obligation as a purchaser to do all things reasonably possible to try and satisfy the conditions of your agreement. If you can’t satisfy a condition, you will need to tell us so that we can then notify the vendors. This is particularly crucial when clauses state that you are deemed to have satisfied the condition if you don’t response before the due date.
The agreement will say when the deposit has to be paid, how much is to be paid, and who to pay it to. If you do not pay the deposit in accordance with the agreement, the vendor can serve you with written notice requiring payments, and if you do not comply with this, they can cancel the agreement.
If you require finance from the Bank to help purchase the property, you will need to arrange the terms and conditions of the lending with your bank. Even if you have pre-approved finance, you may need to get the bank to approve the specific house you are buying.
Once finance has been arranged, your bank will send your lawyer the loan documentation – this will normally include the loan contract, terms and conditions of the loan, mortgage instructions to secure the loan, and any guarantees involved. Once your lawyer receives the documentation, they should contact you to ensure that the terms are exactly what you asked for, for example, you may have agreed with your mobile manager that you wouldn’t be charged an establishment fee yet you have been charged for one in the loan contract. If this happens, your lawyer will contact your bank and arrange for new documents.
What will you need to do? You will need to arrange a time to see your lawyer and sign the loan documents. You should set aside at least 30 minutes to do this as the bank requires your lawyer to certify that they have explained to you all of your responsibilities to the bank, and the effects and implications of the loan documents. This will include things such as what the interest rate is, what property the bank is securing their loan with, and the consequences for you or your guarantors should you default on a mortgage payment.
What happens next? How do you get the money? Once you have signed the loan documents, your lawyer will forward them to the bank. On the settlement day, the bank will then send the money straight to your lawyer, who will then pay it to the vendor’s solicitor – you do not have to do anything on settlement day to get your money from the bank.
If you don’t need a mortgage, or if you are contributing some of the purchase price from your own money, you will need to make sure that you get it to your lawyer in time. Your lawyer will need to know how you transferred the money (by direct credit, cheque, etc) and will need evidence from your bank regarding this, as well as confirmation that the money is cleared funds and will not be reversed. Timing is critical and you may need to organise payment a few days before the settlement day to ensure your lawyer receives your money in time. You will know how much you need to pay before settlement because your lawyer should send you a statement of account clearly setting this out.
As of July 1, 2018 you may be asked to provide information regarding the source of these funds to meet the requirements of the Anti-Money Laundering and Countering Financing or Terrorism Act 2009.
You may hear your lawyer tell you that you need to sign an A&I. What is this? Now that the registration of titles, transfers, and mortgages occurs online, an A&I authorises your lawyer to act on your behalf to register the property in your name and to register the mortgage against the property. All of the purchasers must sign the A&I to enable this (whether it be the trustees of your Trust, you and your partner, company directors, etc).
With this electronic registration process, lawyers are now required to prove the identification of their clients. To do this a copy of your photo ID (drivers licence, passport, firearms licence) is attached to every A&I, so remember to take your photo ID along with you when you go to sign documents with your lawyer.
Also, make sure that your photo ID shows the name you want the title to be registered in.
You will need to arrange insurance for the property you are purchasing BEFORE the settlement day. Insurance must be for the full replacement value of the property. When you organise insurance, you need to ask the insurer for a ‘certificate of currency’ to give to your lawyer, which must note the bank you are getting your mortgage with as an ‘interested party’. Alternatively, you should tell your lawyer who you have arranged insurance with so they can organise to get a certificate on your behalf. A certificate of currency is essential, the bank will not give you your money until they receive this.
You are entitled to do a final inspection of the property before the settlement date. It is best that this be done as close to the settlement date as possible. In this inspection, you should look to see if there has been any damage to the property that wasn’t there when you first viewed it and check that the chattels in the agreement are in the same condition as when you entered the agreement. If you do find new damage to the property, you should tell your lawyer before the settlement date so they can contact the vendor and request for them to repair, replace it, or reduce the purchase price accordingly. A pre-settlement inspection is particularly important if the property is tenanted.
On settlement day (also known as the possession date), your lawyer will receive the money from your bank and send it off to the vendors (together with any money you may have personally transferred). Unfortunately, your lawyer cannot provide with any certainty the time at which this can all happen. It will depend on how busy the bank is, the efficiency of the vendor’s lawyer, whether you’re in a chain of sales, and whether you’re making any personal transactions that day to transfer the money to your lawyer.
Once the vendors’ lawyers have received the money from your lawyer, they will authorise the real estate agent to release the keys of the property to you together with any other electronic opening devices (the real estate agent will often contact you and arrange a time and place for this to happen).
Your lawyer will then register the transfer and mortgage online so that your name will appear on the title of the property. They will send you a reporting letter advising you of the completion of the matter and enclosing final documents for you to keep with your records.
Buying a house can be straightforward if you know what you need to do, if you do it as early as possible, and if you let your lawyer know what’s going on. If you have any questions, make sure you ask. It is not worth risking the possible consequences if you do not.
2 November, 2011 | Fiona Taylor