Buying or selling a home is one of the biggest financial decisions you’ll ever make. While it’s an exciting time, the legal side of the process—known as conveyancing—can be complex, and making conveyancing mistakes can lead to costly delays or even a collapsed deal.
Knowing what to look out for is the best way to ensure your property transaction goes smoothly. Here are some common conveyancing mistakes and practical tips on how to avoid them.
1. Not Getting Your Finance Sorted Early
This is a mistake that can derail a purchase before it even begins. Many buyers get caught up in the excitement of finding their dream home and make an offer without having a confirmed pre-approval in place.
- The Problem: Your offer might be accepted, but if your finance falls through later, you could lose your initial deposit and face penalties for breaching the contract. In some cases, a contract becomes unconditional as soon as it’s signed, especially in an auction setting where there is no cooling-off period. If you can’t secure the funds, you’re in a very difficult position.
- How to Avoid It: Before you start seriously looking for a property, speak with a mortgage broker or your bank to get a formal loan pre-approval. This gives you a clear budget and allows you to make offers with confidence. If in doubt, make sure you add the “subject to finance” condition in the contract.
2. Skipping the Due Diligence
The phrase “let the buyer beware” is a core principle when it comes to buying property. This means it’s your responsibility to be satisfied with the property before you buy it. Skipping crucial checks to save a little money can be a very expensive mistake in the long run.
- The Problem: You might buy a home only to discover serious hidden issues, like a major termite infestation, a cracked foundation, or illegal building works that need to be torn down. These issues can be incredibly costly to fix and can significantly reduce the property’s value.
- How to Avoid It: Check building compliance and verify property boundaries. You should ensure the contract has special conditions for building and pest inspections, but only major structural issues get you out of the contract, so if there is minor damage, buyer beware. If you know the cost to repair prior to entering the contract, you can try to negotiate the sale price.
- For apartments, townhouses, or units, a strata report is essential to uncover any issues with the body corporate, such as large debts or upcoming special levies for major repairs. Your conveyancer or property lawyer will also conduct essential searches, such as checking the title for easements, covenants, unpaid rates, or undisclosed interests from government authorities.
3. Misunderstanding the Contract of Sale
A standard contract of sale is a comprehensive legal document, often filled with complex terms and special conditions. Many people sign it without fully understanding what they’re agreeing to.
- The Problem: You could be locked into a contract that has conditions you don’t agree with or that puts you at a disadvantage.
- How to Avoid It: Never sign a contract of sale without a professional review. The role of your conveyancer or lawyer is to read every clause and explain your obligations in plain language. They will identify potential risks and can sometimes negotiate with the seller’s representative to have unfair clauses removed or amended before you sign.
4. Leaving Things to the Last Minute
Conveyancing has strict deadlines and a specific sequence of events, and making conveyancing mistakes in managing these deadlines can cause a domino effect, delaying settlement and potentially costing you money.
- The Problem: Failing to sign a document or pay the deposit on time can jeopardise your purchase. Similarly, if you don’t coordinate with your bank, you could miss the settlement date, resulting in costly penalty fees or, in more severe cases, contract termination and consequential legal action.
- How to Avoid It: Stay organised from the get-go. As soon as you have a signed contract, provide all necessary documents to your conveyancer and lender promptly. Keep an open line of communication with all parties involved and respond to requests for information as quickly as possible.
5. DIY Conveyancing
DIY conveyancing has become even more complex with the advent of electronic conveyancing, which is effectively a closed system where only accredited entities can participate. Doing your own conveyancing is not a decision to be taken lightly. The process is full of legal complexities and risks that can be difficult for someone without legal training to navigate.
- The Problem: You could miss a critical search, fail to identify a problematic clause in the contract, or make a technical mistake on a legal document.
- How to Avoid It: Engage a reputable licensed conveyancer or a property solicitor. Their fees are a small price to pay for the peace of mind that comes from having an expert on your side who is insured and has a deep understanding of the legal requirements for property transactions.
Key Takeaways
- Sort out your finances first. Get pre-approval before you start shopping.
- Do your research. A building and pest report is a non-negotiable step.
- Get expert advice. Don’t sign a contract until a professional has reviewed it.
- Stay on top of deadlines. Timely communication and organisation are key.
- Don’t DIY. A qualified conveyancer or property solicitor is a vital part of your team.
By being proactive and seeking professional guidance, you can navigate the conveyancing process with confidence and avoid these common and often costly mistakes.
This is general information only and you should obtain professional advice relevant to your circumstances. If you or someone you know wants more information or legal advice, please call 03 5747 8251 or email [email protected].