Property Buying Tip #7 – Understand the Process
Finding a property
In the first part of this series, we have covered the areas of Know What You Can Afford and Know What You Want. The next step will be finding the property you wish to acquire and set the wheels in motion.
Finding this property will happen via any one of various channels, including agents, online marketing and property portals, direct contact, etc. In this time you will most likely view a couple of properties. It can be an information overload, but the most important thing is to keep a cool mind and remember the items you decided on before starting (price, type, size, etc.).
Signing an Offer to Purchase or Sales Agreement
Once you have found the property you want, the next step will be to sign an Offer to Purchase or a Sales Agreement. This differs depending on who you purchase from. If you are buying a house from an individual, you will most likely sign an Offer to Purchase, which they will have to accept and sign as well. In most cases, this will happen via a 3rd party such as an agent or real estate broker. If you are buying from a Developer, chances are you will sign a Sales Agreement, because the conditions of the sale are seldom negotiable and will have a low chance of changing.
In both these agreements, you will find the likes of (but not limited to):
- The purchase price of the property
- Deposit amount or requirements
- Suspensive conditions (i.e. timeframe to get bond finance)
- Occupation Date (Will be discussed in more details in a future article)
Read these agreements carefully, because they will contain all the details of the transaction.
Applying for Finance
Once the offer is accepted by the Seller or the Agreement signed, you will have to apply for mortgage finance to purchase the property or deliver guarantees if you are buying it as a cash deal. The purchase will only be binding if your finance conditions are met, and the timeline in which you have to comply with this will be set out in the agreement or offer.
You will require a signed agreement or offer to apply for a bond. The application will cover personal information, Fica, proof of income and expenses to determine if you can afford the property and if you have an acceptable credit score. After completing the application, most institutions will give you an answer (or offer) within 5 business days.
Additional Tip: Apply to more than just one institution or your own bank, you never know what other banks may offer you.
The outcome of the application will determine if the deal will move forward. For the sake of this article, we are assuming a successful outcome!
In most property transactions, there are 2 sets of attorneys involved:
Transferring Attorney/Conveyancer – They are appointed by the Seller to oversee the transfer of the property from the Seller to the Purchaser.
Bond Attorney - If there is any bond finance involved, this attorney is appointed by the Bank to register a bond over the property in favor of the Bank, which acts as security for the loan.
During the course of the transaction, you will communicate the most with the Transferring Attorney. They will keep both parties up to date on the progress, and you will sign all the documents to effect the transfer of the property with them.
What does Property Transfer and Registration mean?
These terms often get thrown around without people really understanding what it means. Every property has a title deed that depicts the information around the property (owner, location, size, etc.) and records of this are kept with local authorities known as the Deeds Office. The Deeds Office is a government registry of all fixed property and the rights pertaining to fixed property.
In order to change the ownership of the property, the change needs to be affected and noted by the Deeds Office and this is done via the property registration process. The change is lodged with the Deeds Office, and after the process is complete, the property will be registered with the Deeds Office showing you as the rightful owner, with all the accompanying rights.
If there is a bond registered over the property, change of ownership cannot happen without the approval of the institution holding the bond, done in the form of a bond cancellation. Meaning you can’t sell a property without the bank’s knowledge if you still owe them money.
Final Steps of Registering the Property
Once the finance is granted to the Purchaser of the property and instructions are given to the Bond Attorney from the Bank, the Transferring Attorney will prepare all paperwork to be signed by both Seller and Purchaser. These documents will include the cancellation of any existing bonds on the property, the registration of the new bond over the property and the documents to transfer the property over to the Purchaser. All these documents need to be handed in at the same time to the Deeds Office, and the Transferring Attorney oversees this process and coordinates all parties.
Once all the documents are signed, the Transferring Attorney will request the Purchaser to pay the transferring costs & duties, as well as any bond registration costs (will be covered in detail in our next article). If all costs are paid by the Purchaser, the Transferring Attorney can submit (lodge) the documents with the Deeds Office to start the final process.
The Deeds Office will scrutinize all the paperwork to ensure everything is in order and comply with all relevant legislation and regulation. When they are satisfied, they will inform the Transferring Attorney that the property is ready to be registered, and the Registrar of Deeds will register the property in the name of the Purchaser.
Once the property has registered, the purchase price is released to the Seller and all financial arrangements will be finalized. The Purchaser will then become liable to start repaying the bond to the Bank.
The timeframe behind this entire process can change very easily. If everything is in place and there are no delays, this process can normally be settled in 3 months. Keep in mind there are various items that can delay the registration process such as Deeds Office back-log, delay in paperwork, delay in securing correct finance, delay in supporting documents (rates clearance, electrical CoC, etc.)
The best way to manage this whole process is to keep in regular contact with the Transferring Attorney and to track the progress on a regular basis.
*Although every effort was made to ensure the accuracy of our calculations, Foce Property Investments and its subsidiaries accept no liability in respect to any errors contained herein. Under no circumstances will Foce Property Investments be liable for any loss or damage arising from these examples