Part 2: Post Contract Signing/Prior to Settlement
In part 2 of our ‘Five Essential Steps to Buying Property in Victoria’ guide we explore the post contract/prior to settlement phase which includes dealing with deposits, cooling off periods, insurances, building inspections and of course our favourite Electronic PEXA.
Post Contract Signing/Prior to Settlement
Generally you must pay the deposit under the Contract to the agent immediately on singing the Contract. The agent will hold the deposit and the seller cannot access it until settlement.
Cooling Off Period
Once you sign a Contract to buy a property, generally you will have three business days to terminate the Contract by giving notice to the seller. This period is designed to give you time to “cool off” and carefully consider whether you wish to proceed with the purchase. If you terminate under the cooling off period, you will get a refund of your deposit
However, the cooling off period does not apply to all contracts for sale of property, including properties purchased by auction or commercial/industrial properties. If you are considering terminating under the cooling off period, please contact us and we can discuss the best option for your circumstances.
Building and Pest Inspection
Even if your Contract is conditional on a building and pest inspection report or not, we recommend that you have a qualified and fully insured building inspector examine the property and to provide you with a building and pest inspection report.
The report will show defects in the building and pest problems which may reduce the value of the property and could save you the hassle of experiencing problems in the future. Generally you can only terminate a Contract under the Building and Pest Inspection condition is conditional and the reports reveals significant issues.
We recommend using PropDocs to facilitate your purchase. PropDocs offers cost effective and high quality building and pest reports from $195, which you can obtain through their website: www.propdocs.com.au. You only pay the difference of the full price is you purchase the property. Importantly they have only the most compliant inspectors on their books. **(Disclosure: the writer is a director of PropDocs).
If your Contract is subject to finance, you need to obtain satisfactory finance approval from your bank prior to the due date of this condition. If you do not obtain satisfactory finance, you must notify the seller in writing on or before the due date that the Contract is terminated as otherwise you may be locked into the Contract.
If your Contract provides that the property is at your risk once you sign the Contract, we recommend you contact your broker and take out building insurance straight away.
Title insurance is another form of insurance that you can take out. Even when the most diligent searches are undertaken on the property for risks, there may be risks that are unable to be identified. Examples of these risks include buildings without building approval certificates and boundary disputes between neighbours. Title insurance will ensure that you are protected from these unknown risks associated with the property.
Your broker will be able to provide you with further advice in relation to insurance. We can also review the policy for you if you wish, to ensure you are completely covered.
Recently an online e-conveyancing portal called PEXA (Property Exchange of Australia) commenced operating in Australia, which allows solicitors, banks and the land registry to transact together online quickly and efficiently. We frequently undertake conveyancing through PEXA, and the advantages of PEXA include reducing the risks of errors, not needing to attend any physical settlement, as well as a decreased chance in your settlement being delayed and you incurring penalty interest.