We are often asked by first-time buyers about the process and when they should engage a lawyer. Buying your first home is an exciting, but also stressful process. The aim of this article is to outline the process and steps to follow once you are ready to make an offer on your first home. This can be broken down into 3 steps: Making An Offer, Due Diligence, and Settlement.
The Sale and Purchase Agreement is a legally binding contract between you and the vendor (seller) that sets out the terms and conditions of the purchase. This is the document you will use to make an offer on a property. Before you submit your purchase offer, it is crucial to have a lawyer review this agreement to ensure it meets your requirements and to identify any potential issues.
Having a lawyer review the agreement before signing & submitting it ensures you receive advice on any issues and can add necessary terms. You can include additional conditions in the agreement. Some common examples are:
These conditions are important, as they ensure that you can fulfil your potential obligations under the agreement and help ensure that you make a sound investment by considering aspects like title, LIM, and builder’s report.
Once the agreement has been reviewed and any amendments made, you will sign and submit the offer to the vendor, usually through their real estate agent.
Due diligence can be performed prior to submitting an offer, but more commonly it is done once you have had an offer accepted and are under a conditional Sale and Purchase Agreement. You will then have the time specified in the agreement to conduct your due diligence, such as obtaining a title search, LIM report and building inspection report. You will also have time to fulfil any other conditions, such as securing finance or property insurance.
The level of due diligence you undertake will vary depending on circumstances, such as your budget, the nature of the property, and the available information. We will work with you to ensure that the Due Diligence conditions meet your needs.
If you have a Due Diligence Condition and your due diligence investigation uncovers issues, you have the options to:
If you have a Finance Condition and you can’t secure financing, you can also back out of the agreement using that condition.
It is crucial that your due diligence and other conditions are drafted to work in your favour, allowing as much freedom as possible to avoid a potentially burdensome agreement. That is why we recommend our clients seek advice before making an offer.
Once all conditions of the agreement have been satisfied, the agreement becomes “unconditional,” and both parties are obligated to fulfil it. At this stage, all you need to do is sign the conveyancing and mortgage documentation, and we will handle the rest. While the vendor is obligated to settle on the day of settlement, technically, they can settle at any time before 4:00 pm, so we often suggest that you make plans to move in the day after settlement, rather than the day of.
We hope this guide is a start to answering some of the questions you may have about your first property purchase. For more information, also check out our Brief Guide On Purchasing a Property and our Comprehensive Guide on Buying & Selling Property on our website.
If you’re looking to purchase a property, maybe even your first property, contact the friendly team at Wakefields Lawyers today on (04) 970 3600 or email firstname.lastname@example.org.
– Tom Speight (Solicitor)