Buying property is a major financial commitment, and the risks are not limited to paying too much. Buyers can encounter contract issues, title restrictions, undisclosed defects, planning limitations and unexpected costs if proper checks are not completed before exchanging contracts.
The good news is that many of these risks can be identified early through appropriate due diligence and professional advice.
1. Unfavourable Contract Terms
A property contract can contain special conditions that create obligations or risks for the buyer. These may relate to settlement dates, deposits, inclusions, existing agreements or other conditions attached to the sale.
Having the contract reviewed before exchanging contracts gives you an opportunity to understand your obligations and identify issues that may need clarification or negotiation.
2. Title and Ownership Issues
The property’s title may contain easements, covenants, restrictions or other interests that affect how you can use the property. These issues may not always be obvious when inspecting the property itself.
Title searches and other conveyancing checks can help uncover these matters before you become legally committed to the purchase.
For additional protection against certain unforeseen title-related risks, buyers may also consider Stewart Title Insurance, depending on their circumstances and the property involved.
3. Building and Pest Problems
A property can look perfectly acceptable during an inspection while still having structural defects, termite activity, water damage or other problems.
A conveyancer’s role is different from that of a building or pest inspector. Where appropriate, arrange independent inspections so you can make an informed decision about the property’s physical condition and potential repair costs.
4. Zoning and Planning Restrictions
The property’s location and zoning may restrict what you can do with it. This is particularly important if you intend to renovate, develop the property, operate a business or purchase commercial premises.
Before committing to the purchase, confirm that the property’s zoning and planning controls are compatible with your intended use. For commercial buyers, this can be especially important because the property’s permitted use may directly affect its suitability for a business.
5. Unexpected Costs
The purchase price is only one part of the total cost of buying property. Buyers may also need to account for stamp duty, registration fees, inspections, loan costs, adjustments and future repairs.
Commercial transactions can involve additional considerations, including GST and other transaction-specific costs. Understanding these expenses before exchange can help prevent unpleasant financial surprises.
How Can You Reduce These Risks?
Before committing to a property, consider whether you have:
- Reviewed the contract and special conditions
- Checked the title and relevant property searches
- Arranged appropriate building or pest inspections
- Confirmed zoning and permitted use
- Calculated the total cost of the transaction
- Obtained professional advice about unusual or complex issues
Most importantly, don’t wait until settlement to raise concerns. Getting advice early can give you a better opportunity to understand and address potential problems.
When Should You Speak to a Conveyancer?
Ideally, you should speak to a conveyancer before exchanging contracts, rather than waiting until settlement. Early advice allows potential issues with the contract, title, searches or other transaction requirements to be identified while there may still be time to address them.
For Sydney buyers, professional property conveyancing Sydney can help ensure the legal and administrative aspects of the purchase are properly managed from contract review through to settlement.
Get Advice Before You Exchange
Property risks can be expensive to discover after a contract has been exchanged. Taking the time to investigate the property, understand the contract and obtain appropriate professional advice can help you make a more informed decision.
If you’re preparing to buy property in Sydney, Alexis Conveyancing can assist you through the conveyancing process and help you understand the key steps involved before settlement. Call us today 0403 726 223.
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