Purchase Information Booklet

INFORMATION FOR PURCHASERS OF RESIDENTIAL PROPERTY IN VICTORIA AUSTRALIA

Who we are

Nevile & Co Commercial Lawyers have more than 35 years experience in property and commercial transactions. Our office is conveniently located in Collins Street, Melbourne, opposite the Grand Hyatt Hotel.

We have positioned ourselves at the boutique end of the legal services sector and aim to provide cost-effective, timely and pragmatic advice focusing on a personal service catered at meeting the needs of our clients.

We have a wealth of experience in acting for Purchasers of property in Victoria and have a diverse client base both domestic and international.

What we can do for you as your Lawyer

It is highly advisable to instruct an independent lawyer to act on your behalf in regards to all property and commercial transactions, including the purchase of property in Victoria.

Our most important functions are to protect your interests and ensure you obtain a good title to the property free from any encumbrances and to communicate with you on a regular basis.

Our services include but are not limited to:-

1. Giving advice on the documentation prepared by the Vendor's Lawyer and attending to pre-contractual negotiation with the Vendor's Lawyer (if necessary).

2. Addressing any queries or concerns you may have in the pre-Contract and post-Contract stages.

3. Dealing with any Foreign Investment Review Board Issues.

4. Undertaking the necessary searches of Title.

5. Undertaking the necessary searches with Government, Statutory Authorities and Owners Corporations.

6. Preparation and execution of all necessary documentation to effect the transfer of the property into your name.

7. Assistance in arranging competitive finance.

8. Co-ordination with your Lender in regards to the preparation of mortgage / loan documentation and advancing of funds at settlement.

9. Arranging and attending settlement on your behalf.

10. Assistance in connection of all services into your name upon settlement.

11. Reporting to you on a regular basis.

12. Attending to any further or unforseen negotiations or correspondence required by you.

13. Providing timely advice on any matters of concern.

Please note the above is not an exhaustive list of our functions, please do not hesitate to contact our office if there are any other matters in which you may require assistance.

The Purchase Process

A typical transaction of a purchase of a property in Victoria will proceed as follows:-

Stage 1: Purchasing at Auction or Private Sale

A property may be purchased at an auction, private sale or by tender. The Vendor decides which method will be used.

Auction

An auction is a public sale which takes place at an advertised date, time and place. Prospective Purchasers bid against each other and the property is sold to the highest bidder (provided the bid is acceptable to the Vendor). There are relatively new laws providing stricter control over the auction process.

Private Sale

The Purchaser and Vendor agree on a price through negotiation, usually with the assistance of the Vendor's real estate or selling agent.

Stage 2: Signing of Contract & Section 32 Vendor's Statement

Who can own property in Victoria?

In order to purchase property in Victoria you must be a legal entity (that is, an individual person over the age of 18 years or a Company incorporated in Australia).

Do I need to obtain consent from the Australian Government for my purchase?

If you are not an Australian Permanent Resident or Citizen but you do meet any of the special conditions or visa categories, you will need to obtain Foreign Investment Review Board Approval for your purchase. Please refer to the Section later on this booklet titled 'Non-Resident Purchasers'.

Signing of Documentation

Once you have decided on the property you would like to purchase, the selling agent will provide you with 2 documents which are prepared by the Vendor's Lawyer.

1. Contract of Sale.
2. Section 32 Vendor's Statement.

The following provides a brief summary of the documentation in general terms. Please note that the terms and conditions of your purchase may be varied by negotiation and not all of the following discussion may be applicable to your transaction.

Section 32 Vendor's Statement

A Vendor of property in Victoria must provide a Section 32 Vendor's Statement to a Purchaser.

Included in the Vendor's Statement are:-

1. Information about the property's title (if it is affected by any mortgages, covenants or easements).

2. Zoning of the property (ie. residential, commercial or industrial).

3. Outgoings on the property - for example, Council rates and Owners Corporation fees. This may be given as a not exceeding per annum charge and does not include daily usage and consumption fees for services on the property.

4. Details of building approvals received.

5. Title Search detailing the property to be purchased and a diagram showing the location of the property.

6. If you are buying a Unit, Townhouse or other property with an Owner’s Corporation, the rules of the Owner’s Corporation as to how the property is to be used may be included.

Please note, if you purchasing a Unit with an Accessory Unit (for example, a car space or storeroom), you may not be able to sell or transfer the Accessory Unit separately from your main Unit. Also, if you intend to lease the Accessory Unit to a third party, there may be restrictions as to who you may lease the Accessory Unit to (most Owner’s Corporation restrict leasing to a person who is a current owner or occupier of a Unit in the development for security reasons).

The Vendor's Statement is a legal document and must be factually accurate and complete. You will be required to acknowledge that you have received a copy of the Vendor's Statement by signing and dating the Vendor's Statement.

Cooling-Off Period

A cooling-off period of 3 business days applies to all purchases of residential property purchased by private sale (except in the circumstances listed below). The cooling-off period commences from when the Purchaser signs the Contract.

The cooling-off period does not apply:-

• If the property was purchased at an auction or within 3 business days before or after a scheduled auction;
• If the Purchaser is an estate agent or owner's corporation.
• If the Purchaser has obtained independent legal advice before signing the Contract.
• If the Purchaser has previously signed a Contract for the same property.
• If the property is used mainly for industrial or commercial purposes or is more than 20 hectares in size and is used mainly for farming.

To cancel the Contract, it is necessary to provide written notice to the Vendor or Vendor's agent within the 3 day cooling-off period. The Purchaser is entitled to a full refund of any money paid, except for $100.00 or 0.2%, whichever is greater.

Stage 3: Preparation of Transfer Documentation

At this stage we will ask you to confirm what name(s) the property is to be purchased under. If you have signed the Contract of Sale 'and/or nominee', you may nominate an additional or substitute Purchaser.

Please note that there may be stamp duty consequences depending on who you nominate into the name of a Company or into the name of an individual who is not a direct relative. We will advise you of these consequences should they arise.

Stage 4: Organising your Finance

If you have a Lender involved (that is you are not advancing cash for your purchase), we will liase with them to ensure the loan documents are prepared and executed timely.

If you are applying for the First Home Owner's Grant, your Lender will normally attend to this application for you. If you are advancing cash, you will need to submit your own application. Our office can assist with the preparation of the application.

We can also assist in arranging competitive finance.

Stage 5: Statement of Adjustments

Prior to settlement, a Statement of Adjustments will be prepared. This Statement will apportion the outgoings of the property between the Vendor and yourself as of the settlement date so that each party only pays the outgoings for the period in which they own the property. This Statement will also detail the final amount owing to the Vendor at settlement.

Stage 6: Pre-settlement Inspection

We recommend that prior to settlement you undertake a final inspection to inspect the condition of the property and the chattels (if any). Please contact the selling agent to arrange a convenient time. If necessary, we can arrange for a representative from our office to undertake the final inspection of your behalf if you are located overseas (additional charges may apply).

Stage 7: Settlement

We will attend settlement on your behalf and will arrange for your Lender (if applicable) to also attend. At settlement, the amount as calculated in the Statement of Adjustments is handed to the Vendor's Lawyer in return for the Certificate of Title and transfer documents.

Stage 8: Post-settlement

Once settlement has been effected, the keys to the property may be collected from the Vendor or Vendor's estate agent.

If you have a Lender, they will attend to the paying of stamp duty and registration of the Certificate of Title into your name. Your Lender will hold onto the Certificate of Title until you have repaid your loan.

If you do not have a Lender, our office will attend to the payment of stamp duty and registration of the Certificate of Title on your behalf. Unless you instruct our office otherwise, the Certificate of Title will be kept in our secure Deeds Register at our office.

Depending on whether the property is purchased as joint proprietors or tenants in common, the Certificate of Title can be passed to other members of your family or to any other person you nominate by the operation of your Will. After settlement, we highly recommend that you prepare an Australian Will and our office is able to assist in this regard.

Non-Resident Purchasers

Who requires Foreign Investment Review Board (FIRB) Approval?

If you are not a permanent resident or citizen of Australia, you will need to obtain approval from the Australia Government (through the Foreign Investment Review Board or FIRB) for your purchase.

A Purchaser does not require approval if they are:-

• An Australian citizen with a foreign spouse who will buy a residential property as joint proprietors.
• An Australian citizen living abroad.
• A foreign national who holds a permanent resident visa or a 'special category visa' (usually only applies to New Zealand citizens).

When should approval be obtained?

Approval needs to be obtained for a specific property (a general approval cannot be granted).

Prior Approval Obtained

Preferably, approval should be obtained prior to entering into a Contract for Sale.

For auctions, prior FIRB approval must be obtained. The FIRB will endeavour to ensure that a decision is made before an auction if an application is received at least 5 working days before the auction. A Purchaser cannot lawfully make a bid at the auction without FIRB approval.

No Prior Approval Obtained

If no prior approval has been obtained, the Contract for Sale must be made conditional upon the Purchaser receiving FIRB approval.

Purchasing within a Large Development

Please note, with some large developments, the developer may have applied for and been granted approval to sell a certain number of units in the development to foreign owners, so there is no need for you to make a separate application.

What properties will attract approval?

The following properties will usually receive FIRB approval:

• Vacant Land: as long as the Purchaser starts continuous construction within 12 months of receiving approval.
• Existing residences for redevelopment: as long as this will increase the supply of housing.
• New Developments: providing the dwelling has never been occupied or sold limited to 50% of sales.

New residents holding Temporary Visas for a period of more than 12 months may also be granted approval to purchase new or existing properties on a conditional basis.

International Students

Special provisions apply to international students who wish to purchase property in Australia. Approval will usually be granted to a student provided:-

• The purchase price of the property does not exceed $300,000.00. (There is generally some flexibility here).
• The student is over the age of 18 years, be attending a recognised tertiary institution and hold a student visa valid for at least the next 12 months.
• The property is close to the tertiary institution.
• The student agrees to live in the property (cannot rent or lease or derive income from it) and sell the property if they return home to live or cease to live in the property.

We advise that Foreign Investment is a highly specialised area and the above is a guide only. For more information on foreign investment, please do not hesitate to contact our office.

Disclaimer:

Please note that the information contained in this Booklet is of a general nature only and should not be used as a substitute for professional legal advice.

We strongly recommend that you consult a Lawyer, before signing any documentation.