What to check?
If you are thorough about checking out possible problems, you may save yourself a lot of hassle later on. The main areas that you should cover are listed below.
Check:
- The dimensions of the land. Is it the same as that which appears on the title?
- The structure of the building, for example the foundations, plumbing, wiring, dampness, cracks in the walls.
- Whether there is any part of a building that overhangs an adjoining property.
- The condition of the fences.
- The gutters, eaves, roof, exposed pipes.
- For pest infestations (eg termites). There are professional services that can help you with property and pest checks.
Types of title
There are a number of different types of title used throughout Australia. For example:
- Torrens title — this is the most common title, and gives the buyer a guarantee of "good title" because the title is registered.
- Strata title — this is used for many flats, units and multiple living areas such as retirement villages. You usually get a title for your individual unit as well as one for your parking space (if you get one). You also have responsibilities for the common area through a structure called a body corporate.
- Company share — under this structure you don't own a title, you are allocated shares in a company that owns the title. When you sell your unit, you transfer your shares in the company. This is also less common now.
- General law or old system title — this was the original type of title used — it was made up of a chain of deeds and you had to make sure all the links of the chain were in place to establish ownership. There are not many general titles left.
Checking the title
A title is the short name for Certificate of Title. These days, titles are on computers at land titles offices in each state and territory. The title gives details about the registered owner and details of any easements, mortgages, covenants etc.
Check:
- Whether there are any easements — an easement is something that restricts the ability to use the land, for instance, a right of way across the property.
- Details about any mortgages.
- Whether there is a caveat — this is a warning sign that alerts you that someone else claims an interest in the property.
If there is a mortgage or a caveat, it does not mean the property cannot be sold, but to give you a "good title" they must be removed by the seller before, or at, settlement. Remember, most properties have a mortgage that the seller will pay off with the money from the settlement.
The local council
Check whether:
- There is a vacant block of land next to or near the property. If there is, are there any plans for a block of flats or apartments to be built next door? This might allow the neighbours to look over your back yard.
- There are plans for a shopping centre development down the street.
- There are any zoning or building restrictions on the property.
- The property is properly zoned for your use.
- There are any buildings or other structures that were built without a permit (you will be very unhappy if the council tells you to demolish the recently added rumpus room!).
- Any special rates have been levied, for example a special rate to pay for road maintenance.
- Wiring and plumbing have been legally connected.
The statutory authorities
At some stage you will want to see certificates from various statutory authorities (which are like government departments) that tell you:
- Whether they have any interest in the property you want to buy.
- Whether there is something that is going to happen in the area that might affect your use of the property.
You should always get these certificates, even if it seems to be a waste of your time. You will want to know:
- The "adjustments" on the purchase price resulting from unpaid or unused rates and taxes.
- If there is some reason you will not be able to use the property in the way you intend, for example, if you want to renovate.
- Whether there are any major works, like freeways, to be built in the area.
- Whether there are services, like gas and electricity available.
The costs
The potential costs include:
- Property and pest checks.
- Title searches and rate certificates.
- Legal/conveyancing services.
- Mortgage costs.
- Stamp duty (you may be eligible for an exemption, contact your state revenue office for details).
- Land titles office — registration fees.
To ease the burden, make sure you check out government grants for new home buyers.
