26 Feb Why ‘Searches’ are critical in the property process
Before the contract on your new Queensland Property goes unconditional, it can be worthwhile for Searches to be performed on various aspects of the property. There are obligations on both sides, however it can become quite tricky if, as a Buyer, you don’t act swiftly.
The bulk of what is required when it comes to Real Estate Searches is up to the Buyer, so before we get to that – Sellers – you have your commitments to your potential Buyer. While they may not be onerous – they are seriously important.
You as a Seller and our position as the legal representative of either yourself or your potential Buyer(s), we need to know some information about your property and if there might be any ‘skeletons in the closet’ which may affect the purchase.
Some of these issues could include:
* A listing on the EPA’s (Environmental Protection Authority) Contaminated Land Register or Environmental Management Register
* If there has been any irregularities through improvements to the building (for example, an extension or add on that hasn’t got the appropriate approvals from local authorities)
* If the property has any registered or unregistered easements
* If the property is subject to or potentially subject to flooding (and if it is on any similar lists)
* Are there any issues with encroachment onto the property from adjoining land – or vice versa – your property encroaches onto another property?
* Is there any known errors in boundaries on the property?
* Would there be any potential infrastructure works that may impact how the property is currently being presented (i.e. future road developments)?
Top Gun Conveyancing points out here that the onus is on the Buyer to engage in the proper Searches to satisfy themselves when purchasing their Queensland property and, in a large amount of situations, anything not taken into consideration before going unconditional on the contract will land in the Buyer’s lap, however Sellers should obtain Searches to cover off on the above potential issues.
WHAT DOES A BUYER NEED TO DO?
By not going through the Search process effectively or fast enough, the Buyer can be left vulnerable.
It is absolutely essential that when a Buyer decides a property is the one for them, that Searches are conducted ASAP.
It is common practice that a contract is signed between Seller and Buyer prior to the Searches taking place. Unfortunately, there are very few instances in the Queensland Property market for the Buyer to get out of the contract if they were not satisfied with their Searches.
The best protection, is for a Buyer to make the contract subject to a special condition for them to be satisfied with the results of Searches This special condition would have to be agreed to by the Seller prior to signing the contract.
We reiterate, though, that the onus is on the Buyer to engage with us to Search on their behalf – and be satisfied with the outcome of the Searches.
The purpose of the Searches is to ensure there is nothing untoward the owner (Seller) has done to the property and there are no surprises – for example, a four lane freeway scheduled to be built just off the back fence in the future! While that is an extreme case, it is always better to be safer than sorry.
Additionally, your Searches can uncover other matters, such as encumbrances, which may affect your interest in the property. These encumbrances could be a proposed or existing tunnel that goes under the property – or if it is based above an abandoned mine. If subsidence hasn’t already taken hold, the property may be impacted by such in the future.
Buyers normally have no rights should they proceed to Settlement without adequately Searching a property that is subject to flooding or if they buy a property where improvements or additions to the property haven’t been given the appropriate approvals.
It is recommended that you consult the Buyer Booklet supplied by Top Gun Conveyancing once you engage us to read more about Searches.
CONSIDERATIONS WHEN BUYING IN BODY CORPORATE/STRATA PROPERTIES
An important part of the Search process – especially when buying into a building or estate that has Strata or Body Corporate associated with it – is insurances – even more so if it is being purchased as an investment with a view to renting it to tenants or holiday makers.
The insurances a Queensland Property investor is recommended to have are:
* Building – the property itself
* Contents – i.e. carpets, curtains, interior blinds etc, along with any other inclusions
* Public Liability
Upon request, the Body Corporate is required to provide you with an understanding of what insurance it has on the building or property, which will give you one of two outcomes:
- If the Body Corporate HASN’T got building insurance, you’ll need to have a policy on the property.
- If the Body Corporate HAS got building insurance – and you are satisfied at the level of cover – it is not essential that you have a building insurance policy.
IMPORTANT: In the case of #2, while your building insurance policy is being managed as part of your body corporate/strata obligation, you will still need contents insurance and if tenanting, a public liability policy and any landlord’s insurance you may chose.
Body Corporate managers can also provide an ‘Inspection of Records’ Search. This provides a very detailed report on the going-ons within the body corporate.
Particularly the search will provide financial information for the Lot and the Body Corporate, including the sinking fund balance, contribution entitlements, copies of past minutes of meeting for AGMs and any committee meetings, details of any recent expenditure, details of any disputes and it will disclose any special levies raised or to be raised which come into effect once you own the property. This is a highly recommended search if you are buying in a body corporate.
The Search part of buying a property is yet another process that as a Buyer, you need to factor into your purchase. Our team here at Top Gun Conveyancing will provide you with the booklet you need to read right through on Conveyancing requirements and we can assist with advice about the Searches.
Again, remember the Search is up to you as the Buyer. We’ve outlined some of the factors and protection mechanisms in this blog.
We remind you that if searches reveal unsatisfactory results we suggest you instruct us to give you specific advice regarding your contractual rights and any remedies you may have. The advice will depend on the nature of the unsatisfactory search result and your particular Contract.
Our team here at Top Gun Conveyancing is here to assist in guiding you through your Queensland Property purchase, reach out to our Top Guns for the best information and don’t get caught out.