There are a number of things to think about when you decide to buy property for your business.
- Remember the Deposit
Every purchase of real property requires payment of a deposit of normally 10% of the purchase price. Often, this will be payable in two instalments — an initial deposit upon signing of the contract and a balance deposit shortly after. Thus the bank will not loan this money up front so make sure you set aside enough money to pay this fee.
- Allow Enough Time for Finance Approval
For most people, buying a property will necessitate obtaining finance. Most contracts contain a finance clause whereby if finance is not approved by a set date, a buyer can terminate the contract. As these deadlines are generally within two weeks of the contract date, it is important to become informed and liaise with your bank as soon as possible and regularly to avoid losing a contract.
- Building and Pest Inspections
Most contracts allow for termination should a building and pest inspection disclose a problem to the buyer, however the deadline for this inspection is usually within a week of the contract date and as such these inspections should be arranged as soon as possible. Defects in lots within apartment complexes or even the common property should be cause for concern to sellers as most contracts include provisions allowing buyers to terminate on this basis. If you find something after the expiry of the building and pest inspection date then you cannot terminate the contract on that basis.
- What name to put on the Contract?
As with any transaction, there are numerous potential taxation and superannuation implications when it comes to buying or selling a property. As such you will need to consider whether you buy it in your own name, a company name, a trust or other manner. Always speak to an accountant and lawyer before entering into the contract as it may be difficult to change later on.
- Don’t Forget the Other Fees
While saving enough to cover the purchase price or deposit often feels challenging enough, the purchase of real property also entails often substantial payments with respect to transfer duty and registration fees. It is important to be aware of these costs and the effect which concessions such as the home and first home buyer concessions could have. When saving, make sure you save or borrow enough funds to pay the legal fees, Stamp duty or other associated costs. If you are not sure on amounts then ask your conveyancing lawyer.
- Caveats & Mortgages
It is important for both buyers and sellers to be aware of any caveats, mortgages or debts which are secured over the property being sold. Just because you finally paid out your mortgage all those years ago does not mean that you have discharged your mortgage. As such you will need to make arrangements to discharge the mortgage prior to settlement. The same applies for Caveats; it is not uncommon for separating parties to lodge a caveat over properties during separation disputes. As such it is important to ensure that no caveat is lodged over the property before listing it for sale, otherwise you run the risk of the contract being terminated and even possible cost implications.
- Leases & Easements
It is not uncommon for a lease or easement (which grant specific rights over the property) to be registered on a property. Failure to disclose such encumbrances in the contract of sale may entitle the buyer to terminate. We are able to conduct searches allowing buyers to become informed as to such encumbrances.
- Dividing Fences
Both buyers and sellers should be aware that dividing fences do not always correspond with lot boundaries and that structures one property sometimes encroach upon the adjoining lot. Such encroachments may allow the buyer to claim compensation from the seller. Encroachment are particularly common in old, hilly residential areas and can be confirmed by conducting a survey. It is not sufficient for buyers to consider encroachments only after settlement has occurred as compensation is only claimable pre-settlement.
- Do Your SEARCHES
While it may cost you extra funds, searches are the only way for you to protect yourself when buying a property that is unknown to you. For example, given the 2011 Brisbane floods, many areas were submerged under water and as a result have been listed as flood prone areas. These areas may be listed with Insurance companies as uninsurable. Other properties may have pending zoning laws changes coming so what you intended to do with the property is no longer permitted, or the property may now be heritage listed which has drastic impacts on what you can or cannot do with the property. You don’t have to do every search possible but you should talk to you lawyer about the one’s that may be of concern to your property.
- Time to Vacate
In the rush to sell, it is vital that sellers do not lose sight of the fact that most contracts require vacant possession at settlement. More over vacant means exactly that, it is not sufficient to leave all your garbage behind for the new owner to clean up. If they are forced to remove your property they can seek costs against you for doing so. As such, it is important to consider realistically the amount of time required for the removal of furniture and all other items not included in the sale so as to not be in breach of the contract due to insufficient time being factored in.