Buying your home
It is a common theme that the greatest single purchase that the vast majority of people will make in their entire lives is that of a home or property. Because of this, those preparing to make a financial commitment to a house or rural land should understand precisely what it is that they are receiving.
The quality of life that is offered in rural and regional Victoria is something that many people find hard to resist. But it is important to understand life in a rural zone before buying a property and living on it. Because, although it may look peaceful, rural Victoria can be dusty, busy, noisy and odorous at certain times.
New residents in rural and regional areas, existing rural residents and commercial producers all have an equal right to live, work and enjoy rural Victoria, but equally, everybody needs to understand the rules governing land use in rural areas, and be prepared for the reality of agricultural and commercial pursuits.
With these thoughts in mind you can now start looking for that ideal country retreat or residence in a regional town, but wait there are some more issues that you need to consider, such as;
- how are you going to finance the purchase?
- have you organised a solicitor to conduct all of the legal processes?
- have you made your “wills” and “power of attorneys”, because with such a substantial asset and joint responsibility you need to look after each other ‘legally’ by having these in place?
- have you drawn up a wish list for the type of property that you are looking for?
- does your wish list include all of the items you want to have on the property or in the house?
Once you get to the point of selecting either one property or a number of different properties you then need to start some investigations, such as;
- investigate the local planning provisions that govern land use in your chosen area and understand the sort of rural industries that can legitimately 'move in next door'
- understand that the nature of the rural industries that exist in your area are likely to intensify over time, and that production practices will change
- if you have children, research the quality of the schools in the area where you may be moving to. How do they compare to other schools in the area, and how does the school district compare to other school districts around the state?
- what is the condition of the neighbourhood or surrounding area in general? Are the other houses/properties well kept and maintained?
Having done all of this and you are narrowing you choice down to one property, it is time to engage the services of some professionals to ensure what you are looking to purchase is worth the money, structurally sound and meets all of your requirements. These professionals are:
- a solicitor to handle all legal requirements
- a registered building practitioner to conduct a pre-purchase inspection of the property
- a registered pest treatment company to conduct a termite/pest investigation of the property.
At this stage you should also be able to get a copy of the section 32.
A legal document
The section 32 is a document provided by the seller of real estate (vendor) to an intending purchaser.
In general terms, if the vendor fails to provide the information required by the Act before the contract is signed, the purchaser will be able to cancel the contract. Of course, there are exceptions to this rule, and purchasers should not assume that any 'technicality' will allow them to end the contract.
Before a contract is signed is the best time to get legal advice from a qualified lawyer, as the opportunities to end the contract can be severely limited if legal advice is sought after the sale has been finalised.
In recent years, the information required in a section 32 has been expanded and extended. Interpretation of the section 32 requirements, particularly those relating to building works undertaken by an 'owner-builder', can be quite confusing. In addition, failure to comply with some of the rules can attract huge monetary penalties.
The vendor's name/s will be included in the section 32. But it is often the case that the person selling the property is not actually the owner of the property.
It is important to check that the person selling the property is entitled to do so. The first document to check is the certificate of title. If the names appearing on the Certificate of Title are different to the vendors, then further checks are made to verify the vendor’s right to sell. There may a power of attorney, or a grant of probate included in the section 32. If not, then further investigations will be required.
Remember, many section 32's are prepared by unqualified conveyancers who are not aware of the investigations needed to ensure that the vendor is entitled to sell, or the legal documents required to give the vendor authority to sell.
The Section 32 will also identify WHAT is being offered for sale.
You may have been shown a block of land by the agent, but is it the same block of land described in the section 32? What if the agent has given you the wrong section 32?
The certificate of title contained in the section 32 will include a detailed description of the property for sale. In most cases the section 32 will reference a lot, and the plan of subdivision on which the lot appears.
It is important to confirm that the land 'on the ground' corresponds with the lot described in the section 32. This means checking that the dimensions of the lot, as described in the plan of subdivision, are the same 'on the ground' and that the fences are standing on their correct boundaries.
The following is a list of the basic information found in a section 32. Further information may be required - it depends on the property being sold. (Remember, legal advice from a qualified lawyer should always be sought regarding the information contained in the section 32, and what information should be included).
- statutory warnings to the purchaser
- vendor’s details
- title details
- information regarding building permits issued in the past 7 years
- particulars of owner-builder warranty insurance
- if the vendor is the owner-builder who completed building works there should be a written inspection report (which lists any defects) in the section 32
- particulars of any mortgages or 'charges' over the land (i.e. debts charged against the land)
- information regarding covenants, easements and any other restrictions on title (whether or not they appear on the title)
- planning information, particularly where zoning restricts land use
- information regarding outgoings payable by the owner of the property
- disclosure of any notices or orders issued by the authorities, regarding fencing, road-widening, sewerage etc.
- if there is access to the property by road and what category of road is provided eg access vs formed
- information on services connected to the property.
Once you and your solicitor/conveyance agent have read and understood the section 32 statement it is highly recommended that you organize for a pre-purchase inspection and termite/pest inspection to be carried out on the property.
Make sure the companies that you select have indemnity insurance.
Pre-purchase inspection reports
Pre-purchase inspection reports, also known as building inspection reports, are intended to help with the need of knowing what potential concerns that a house exactly entails.
People have these pre-purchase inspection reports or building inspection reports done before they complete a contract on a house for a variety of reasons. For one, these building inspections assist the buyer in understanding what subtle problems they might encounter with the home after they purchase it. Armed with this full disclosure, the individual is capable of engaging in the best decision regarding finalizing the home purchase, or avoiding it instead. Another reason that people might be interested in property inspections is because when the report demonstrates problem areas, then the prospective buyer is able to utilize this information as a negotiating tool. More advantageous terms can be secured this way in the final rounds. If significant problems are uncovered, the buyer may even be able to obtain a less expensive final buying price.
There are a variety of benefits to getting a pre-purchase inspection report done. The person ordering the report gains the advantages of a complete inspection service for the entire house. Everything from the house's roof exterior and interior to its very foundation is inspected. This includes all walls, floors, under-floor areas, and ceilings. Not only this, but fences, any pool, and all outbuildings will also be thoroughly looked over. Items that would not typically be covered in this property inspection report include driveways, air conditioning, carpets, tiles, alarm systems, paint coatings, appliances, plumbing, windows, and gas fittings. These can be done as part of the report, but they must be specified.
A benefit to having the pre-purchase inspection report done lies in gaining peace of mind. Buyers are generally worried about what problems may exist in a house that they are buying of which they are not aware. Thanks to this report, they can rest assured that all current problems with the house are made known to them.
A second benefit to the process of getting the inspection and report focuses on the ability of the buyer to interact with experts. Any questions that the potential buyer has can be answered upfront. All recommendations for other specialists that are necessary as a result of the information in the report can usually be obtained right there from the person or company conducting the inspection. In fact, the consultant performing the inspection will typically make a recommendation for additional assessments to be conducted regarding any presence of pests, structural issues, or water drainage. To this effect, they will refer the buyer to a water supply authority, pest inspector, property surveyor, geotechnical engineer, structural engineer, or electricity supply authority.
A last advantage to having such a report comes in the fact that the report will give recommendations for any and all repairs or additional assessments that need to be conducted. The buyer may then be able to require that this work be done in advance of closing on the house in question. This way, there will not be any unpleasant surprises in store for the purchaser immediately or shortly after moving in to the house.
A termite/pest inspection is a step required to assess whether there is evidence of termites or other timber pests, and if so, what needs to be done to effectively manage the problem.
Termite/pest inspections are also a vital part of any termite management programs.
Inspections are an ongoing requirement, with the Australian Standard AS3660 recommending that a termite inspection is done at least every 12 months. In most cases - things do change around your property from year to year and over time the property owner may be unaware that something around the property that they have done might encourage termite attack.
This termite/pest inspection option is always required when structures are involved, however when trees, retaining walls or other such items have timber pest activity it is highly recommended to have the primary structures on the property inspected.
It must be understood that this inspection will not eradicate existing termite activity or provide any future protection from further attack.
Termite treatment will be only be conducted when authorized by the property owner.
While these inspections/investigations are being carried out your solicitor or conveyancing agent should be requesting a Building Regulations 326 certificate from the Local Council.
Building Regulations 2006 - Regulation 326 Certificate
Building Regulations 2006 - Regulation 326. Requests for information:
1. Any person may request the relevant council to provide in respect of any building or land
- details of any permit or certificate of final inspection issued in the preceding 10 years; and
- details of any current statement issued under regulation 502 or 503 of these Regulations; and
- details of any current notice or order issued by the relevant building surveyor under the Act.
2. Any person may request the relevant council to provide in respect of any building or land details as to whether the building or land is in an area
- that is liable to flooding within the meaning of regulation 802; or
- that is designated under regulation 803 as an area in which buildings are likely to be subject to attack by termites; or
- for which a bushfire attack level has been specified in a planning scheme (within the meaning of regulation 811(4)); or
- that is an area determined under regulation 805 to be likely to be subject to significant snowfalls; or
- of designated land or works within the meaning of regulation 806.
3. An owner or mortgagee of a building or land, or a prescribed building practitioner under section 137B of the Act, may request the relevant council to provide inspection approval dates of the mandatory notification stages for building work carried out on that building or land.
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