Question 1

What is a strata report and why is it important?

Accepted Answer

If you are purchasing a property under a strata scheme, it is critical for you to engage an independent inspector to conduct a pre-purchase strata inspection report. The inspector will make arrangement with the strata manager to inspect the strata records and issue a comprehensive report which shall assist you in ascertaining the status quo of the strata management. The report usually comes with an executive summary for your ease of reference. The Strata Manager is required to keep records of its accounts, minutes of meetings, correspondence and other records as necessary in order to properly manage the property. These documents can be searched and perused by your strata inspector. The strata report will disclose financial matters such as general levies and special levies (if applicable) relating to the property. It may also identify whether there are any major concerns and maintenance issues affecting the building. Furthermore, if you have any queries or concerns in relation to the strata report of the strata management, you may make further enquiries with the strata inspector as well as the strata manager for specialised advice as they work on strata issues on a daily basis. This way, you may be able to make a well-informed decision after perusing the strata inspection report.
When purchasing an apartment, the purchaser automatically becomes a member of the Owners Corporation and as such he/she will inherent and be responsible for any issue relating to the common property. Therefore, it is imperative for any prospective purchaser to obtain a strata inspection report prior to proceeding with the purchase of a strata title property.

Question 2

What is the cooling off right and how does it work?

Accepted Answer

When you purchase a residential property in NSW, usually you have a five-business day cooling off period after the exchange of contracts. The cooling-off period commences upon the exchange of contracts and expires at 5pm on the fifth business day after the exchange takes place. Usually, purchasers will utilise this period to obtain their unconditional finance approval, to undertake the building and pest inspection and to make further enquiries with various authorities such as the local council, water board or the strata manager. However, we recommend that whenever possible, it would be preferably if these due diligence tasks are completed prior to entering into the contract. If you require an extended cooling off period, you may negotiate for a longer cooling off period, say 10 business days depending on your circumstances. In any event, if you are unable to finalise your due diligence within the cooling-off period under the contract, please ensure that you instruct us at the earliest so we may seek an extension on cooling off for you, prior to its expiration.
If you wish to exercise your cooling-off rights and withdraw from the contract, please ensure that you instruct your property lawyer / conveyancer to serve the notice onto the vendor’s representative prior to the due date. Otherwise, you will be deemed to proceed with the purchase of the property. If you exercise your right to cool off, you will be required to forfeit 0.25% of the price (usually the initial deposit) to the vendor.
Further, when you are purchasing a property off-the-plan (i.e. the plan is yet to be registered by the NSW LRS or the Occupation Certificate has not been issued), a ten-business day cooling-off period applies.

Question 3

What is a Section 66W waiver?

Accepted Answer

Sometimes, when you make a written offer for the purchase of a property, the vendor may require you to provide it with a section 66W certificate. The provision of a section 66W certificate waives your right of cooling off which means that upon exchange, the contract will be immediately binding and you will be expected to complete settlement regardless of your financial situation or whether you are satisfied with the condition of the property.
Under the Conveyancing Act 1919, a s 66W certificate must set out the following:
the name of the legal practitioner (or the name of a licensed conveyancer) and where they are admitted to practice;
a statement that the legal practitioner provides the certificate in line with section 66W of the Act;
reference to the name of the property, the vendors and the purchasers;
confirmation that there is no cooling off period for the contract;
a statement that the legal practitioner does not act for the vendors; and
a statement that the legal practitioner has explained to the purchasers:
the effect of the contract for the purchase of the property;
the nature of a s 66W certificate; and
the effect of no cooling off period.
Given the gravity of providing a s 66W, we do not typically recommend our purchaser clients to waive their cooling off right, unless they are absolutely certain that they are satisfied with their due diligence checks, that they understand the effect of signing a legally binding contract, as well as the consequences should they fail to do so as outlined above.

Question 4

What is a Building Certificate?

Accepted Answer

A Building Certificate is a document issued by the local Council relating to existing works to a building. A Building Certificate is usually requested by buyers or sellers of properties to make sure that what is being bought or sold is not going to be the subject of action by the council.
Often a Building Certificate is requested when work is undertaken without the appropriate approvals being issued by Council or a Private Certifier. A building certificate states that Council will not take any action for a period of 7 years to Order, or take proceedings for an Order, to have the building covered by the certificate to:
be demolished, altered, added to or rebuilt or;
resolve any encroachment by the building onto land under the control of Council.
In general, you may make enquiries with Council and apply for a Building Certificate at liberty. Some contracts provide that you need to obtain the vendor’s prior written
consent prior to apply for a Building Certificate. If you are unsure about the provisions in the contract, we may review the terms of the contract and advise you accordingly.
However, kindly be advised that in most circumstances, the contract would provide that you are purchasing the property “as is”, which means that if the authority refuses to issue the building certificate or requires works to be undertaken before its issue of such certificate, you may not raise any objection or requisition, seek compensation from the vendor or seek to rescind or terminate the contract due to this and the vendor is not required to attend to any works as required by the authorities.
In any event, if you have concerns as to whether any work conducted at the property is illegal, we highly recommend that you undertake this due diligence prior to proceeding with the purchase.

Question 5

What is a Purchaser’s Caveat?

Accepted Answer

It is within the purchaser’s right to lodge a purchaser’s caveat against the title after a contract is being entered into. A purchaser’s caveat on title will prevent certain future dealings with the title to the property without you first being notified by the NSW Land Registry Services. Any Caveat would lapse at the time of registration of the Transfer of Land in your favour at the time of settlement.
In some occasions, the vendor may have a special condition in the contract removing your right to register a purchaser’s caveat against the title to the property, if you are unsure about the provisions in the contract, we may review the terms of the contract and advise you accordingly.

Question 6

How are deposits paid in New South Wales?

Accepted Answer

Deposit under a contract is usually 10% of the price. However, this can be varied when the parties negotiate and agree on a reduced amount, which is usually 5% of the price.
If you are purchasing a property through a “private sale” process (as opposed to purchasing at the auction), you may expect a request for you to pay the initial deposit, being 0.25% of the price upon signing the contract and the remaining balance of the deposit is expected to be paid at the expiration of the cooling off period.
Commonly, if you have negotiated for a deposit that is less than 10% of the purchase price, there will be a special condition in the contract providing that the deposit under the contract remains at 10% of the price. However, it is deemed to be paid by instalments, namely 5% upon contract exchange and the payment of the remaining 5% deposit falls due contemporaneously at settlement.
Should you default under the contract entitling the seller to claim the deposit under the contract, such deposit will be deemed to be equal to 10% of the purchase price, regardless of what you have paid upfront as the deposit. The unpaid amount may be recoverable from you as a liquidated sum.

Question 7

What does early release of deposit mean to me?

Accepted Answer

The vendors may require the deposit to be released to them prior to settlement for the purpose of purchasing of another property, paying stamp duty on that property or to
facilitate the discharge of any liabilities on the property being sold. Whilst it is not unusual for the vendor to require the early release of deposit, it is generally not recommended that you allow the vendor to tap into your deposit until settlement, in case the seller fails to complete on time for any reason but have already spent the deposit. Unless the seller has a legitimate and immediate need for the deposit that has been communicated to you, to which you have considered and agreed to, then any special condition included in the contract allowing the vendor to procure a release of the deposit prior to settlement should be deleted prior to exchange. If you are unsure about the provisions in the contract, we may review the terms of the contract and advise you accordingly.

Sydney Real Estate Lawyer

Select the conveyancing you need

LOCAL SYDNEY LAW FIRM
PROFESSIONAL CONVEYANCING SERVICES

Contract
Review

CONTRACT
OF SALE DRAFTING

SELL
PROPERTY

TRANSFER
PROPERTY

BUY
PROPERTY

GET A FREE
CONVEYANCING QUOTE

FIXED FAIR QUOTES

Conveyancing Sydney

Want More Information?