Before you sign any contracts and legal paperwork, it is important to understand your rights and obligations. There are some important factors that you need to be aware of:
- Form 1 (Section 7 Disclosure Statement): This is a formal statement by the vendor (seller) about details relating to the property under the Land and Business (Sale and Conveyancing) Act (SA) 1994. The statement must be complete and accurate when served on the purchaser. Ensure that you are aware and understand all of the terms and conditions that are applicable, and ask your conveyance if you are unsure of anything contained in the statement.
- Cooling Off periods: Most purchasers have a statutory right to terminate the Contract of Sale, also known as ‘cooling off’. The ‘cooling off’ period is usual two clear business days after the later of either receiving the complete and accurate Form 1 or entering into the Contract.
It is important to note that the ‘cooling off’ right does not exist if:
You have a certificate from an independent legal practitioner stating that you have waived the right to cool off;
The purchase was made through an auction and your bid was successful or you purchase later in the same day (note that the Form 1 must be available for inspection at the agent’s office at least three business days prior to the auction and at the place of auction at least 30 minutes before the auction commences);
A company is the purchaser;
In certain circumstances where the sale involves a tender or option to purchase; or
The purchaser is buying a business plus the property.
- Capital Gains Withholding: New rules for foreign resident capital gains withholding (FRCGW) apply to vendors disposing of certain taxable property under contracts entered into from 1 July 2017. The changes will apply to real property disposals where the contract price is $750,000 and above (previously $2 million) and the FRCGW withholding tax rate will be 12.5% (previously 10%).
- Australian resident vendorscan avoid the 12.5% withholding by providing a clearance certificate obtained from the ATO, to the purchaser prior to settlement.
- Foreign resident vendorsmay apply for a variation of the withholding rate.
- Purchasersmust pay the amount withheld at settlement to the Commissioner of Taxation.
Your conveyancer will provide you with a reconciliation statement at the end of your settlement which will include a detailed summary of all amounts payable on the day of settlement.
- Special Conditions: Your conveyancer will offer independent advice on any special conditions that are included in your Contract, for example, ‘subject to’ clauses such as loan approval and sale of an existing property
- Property Insurance: Usually, it is the responsibility of the purchaser to organize insurance on the property from the moment the Contract is signed. Hence you should organise insurance as soon as possible and obtain a Certificate of Currency with your mortgagee listed as an interested party.
- Title Insurance: Title insurance is a one off premium for claims against unknown and undisclosed risks that threaten ownership and use of the property until settlement.
- Building and Pest Inspection: Any inspections of the building should be conducted as soon as possible and preferably within the cooling off period. If it is not possible to do so within the cooling off period, the Contract should include a ‘subject to’ clause to that effect.
- Costs involved: Talk to your conveyancer about any fees and charges that may be applicable to your transaction. Some fees and charges will include, but are not limited to:
- Stamp Duty
- Registration of Transfer
- Government search fees- SA Government Property Interest Report (PIR) and Local Council searches
- Strata and Community Title search costs
- Rate and taxes adjustments
- Conveyancing fees which will vary depending on complexity of the transaction
- Disbursements- Lands Title Office (LTO) lodgement fees, SA Water meter readings, bank cheque fees, and file fees.