How do you buy a house? Lawyers, latte and the settlement process

We’re still looking at the single biggest financial question in the minds of our readers in the 18-35 age group. That question is, ‘So, like, how do you buy a house?….’ If you missed them, check out our last three posts So, like, how do you buy a house? Deposit and Finance; So, like, how do you buy a house? How much should I borrow? and So, like, how do you buy a house? Lawyers, latte and the offer process. We’re pressing on and are now assuming you’ve dealt with your lawyer in terms of the offer process, signed the contract on the home of your dreams and paid the deposit.

To pick up from where we left off last time, my mate Cara Hawkins and I are having coffee. She’s just poured another cup of chick chai latte (ewww!…) and is now explaining the legal conveyancing and settlement process on your new home (if you’re buying a block of land to build on she says that’s a bit different so check with your lawyer first). Cara explained the basic steps like this:

• Contract signed and deposit paid – We assume you’ve already done this but check out our last post if you missed it.
• If the contract is conditional it’s time to get cracking. You and your lawyer have some more work to do and it needs to get done within the timeframes stipulated in the contract:
  •  Finance clause – Take the contract to your bank and arrange for the bank to arrange formal confirmation that finance (your mortgage) has been approved. The bank will also usually help you assess eligibility and with your application for the First Home Owners Grant (FHOG – I just love that abbreviation!).
  • You need to engage an appropriately qualified building inspector to inspect and report back on the condition of the property within the required timeframe. If you don’t know one, your lawyer may be able to make a recommendation.
•  Assuming the conditions are all confirmed to the satisfaction of you and your lawyer within the required timeframes, the contract then becomes unconditional and binding (legally you cannot change you mind at this point – a house isn’t like an impulse Friday lunch time clothing purchase – it can’t be returned or exchanged!…)
•  At this point your lawyer takes over and works with your bank or financial institution to organise the process of settlement of the purchase (the process of drawing down on the loan from the bank, paying for and obtaining ownership of your home). The lawyer will correspond with the bank, vendor’s solicitor and others to organise this which you don’t need to worry about.
• Your lawyer also handles the conveyancing process (the process of legally transferring ownership of the property from the vendor to you). The process differs from state to state which is why you need a good lawyer based in the same state as the property you are purchasing.
• You will also need to do a pre-settlement inspection. This should be done as close to settlement as possible to ensure the property is in the same condition you agreed to when you made the offer and/or that other contractual conditions have been fulfilled (for example, fittings nominated as being transferable to you as part of the purchase haven’t been removed from the property or items such as rubbish and old car bodies etc which were supposed to be removed have gone).
• Once settlement has gone through, all that’s left to do is collect the keys from the real estate agent; plan the house warming party and make sure you make all the mortgage repayments on time. You’re now a proud home owner!

So that’s like, how you buy a house! Thanks Cara!

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By Dean Johnson (with thanks to Cara Hawkins of Simmons Wolfhagen Barristers & Solicitors)

1 www.simmonswolfhagen.com.au – their website has great answers to FAQ’s!