Pittwater Life December 2020 Issue

Business Life: Law
with Jennifer Harris
Business Life
Processes concerning the
purchase & sale of property
To have reached
December seems
quite an achievement
with many feeling a sense
of relief to have survived
what has been a difficult
and unpleasant year and
to be living in the beautiful
surroundings of the peninsula.
Early in 2020 it was noticeable
that the numbers of
residents swelled at Easter and
have remained so since then.
Holiday homes have become
permanent, while former
primary dwellings in Mosman,
the Eastern Suburbs the North
shore have been left empty.
This month and for the next
2 or 3 months the peninsula
traditionally experiences what
locals call ‘the invasion’ as
the populace is expanded by
holiday makers during the summer
months. As international
travel is not available this year
it is likely that the residential
population, particularly north
of the bends, will be very large
indeed.
One business area where
demand has been heavy in
2021 has been real estate. Once
more or less settled on the
peninsula and working from
home, the attractions of the
lifestyle and no daily struggle
and expense through the
traffic has led those occupying
rented accommodation to look
to permanently relocate to the
peninsula. Agents advise that
there is not enough stock for
current demand. Some properties
are not being marketed
with advertising but through a
data base. Therefore, for those
looking to purchase it is wise
to talk to local, well-established
agents.
The agent should have a
copy of the Contract for Sale of
any property they advertise and
should supply you with a copy
on request if you are interested.
A property cannot be advertised
for sale until a contract of
sale has been prepared.
The contract for residential
property must contain a copy
of the title documents, drainage
diagram and a current zoning
certificate issued by the local
council.
If the property has a swimming
or spa pool, one of the
following must be attached to
the contract.
n A copy of a valid certificate of
compliance; or
n A valid occupation certificate
(issued in the past 3 years)
and evidence that the pool
has been registered; or
n A valid certificate of noncompliance.
There are other documents
which may be included in the
contract, such as a survey, but a
sales contract must satisfy the
above, otherwise a purchaser
may be entitled to rescind the
contract within 14 days of exchange
(unless settlement has
already occurred).
Finally, property exclusions
must also be included and
a statement of the buyer’s
cooling-off rights must be attached.
Next do your research on
location and facilities such as
schools, churches, sporting
grounds and clubs, shopping
centres and hospitals and
having found a property in the
location you desire what steps
must you undertake to secure
it? Consider the up-front costs
of for example obtaining a
building report, strata report,
pest inspection report and,
perhaps depending on the terrain,
a Geotech report. Above
all be clear and understand the
difference between owning a
house and owning a property in
a strata or community scheme,
as each has ongoing costs and
obligations.
If the property is offered by
private treaty you may have
more time to organise your
finance and obtain reports and
you will have the right to have a
five-day cooling-off period after
conditional exchange, during
which you can withdraw from
the purchase.
For some, one of the benefits
of a private treaty sale can be
that they can set the price they
want, and the property is listed
at that price. And they will have
time to consider offers from potential
buyers and can extend
the time for which the home is
for sale indefinitely.
The alternative to private
treaty is of course an auction.
If, having done your research
and had your solicitor or conveyancer
examine the contract
and have obtained the relevant
reports, what should you do to
prepare for an auction?
To participate you must
register with the agent that
you propose to bid and receive
a bidder’s number. The agent
must give all potential bidders
a copy of the Bidder’s Guide
before the auction. The guide
contains information on how to
register to bid and what kind of
76 DECEMBER 2020
The Local Voice Since 1991
identification must be provided
to register.
The agent is required by
law to have a list of the auction
conditions clearly visible
for all potential bidders. The
conditions are as follows:
n The highest bidder is the
buyer, subject to any reserve
price.
n The auctioneer is entitled to
make one bid only on behalf
of the seller.
n Before the auction, the auctioneer
must announce that
the auctioneer is permitted
to make one bid on behalf of
the seller.
n The Auctioneer must announce
immediately before,
or in the process of making
the bid, that he or she is making
a vendor bid.
n The auctioneer can refuse a
bid that is not in the interest
of the seller.
n The auctioneer has no authority
to accept a late bid after
the fall of the hammer.
n If there is a disputed bid,
the auctioneer is the sole
arbitrator and makes the final
decision.
n The successful buyers’ name
must be given to the auctioneer
as soon as possible after
the fall of the hammer.
The auctioneer will oversee
the bidding process and
take bids from the registered
bidders and keep track of the
current bid price.
Prior to the auction, the
vendor will have nominated a
reserve price which is generally
not disclosed. A reserve price is
the minimum price the vendor
is prepared to accept. If the
reserve price is not reached the
auctioneer will privately consult
the vendor as to whether they
will sell at a lower price.
If the vendor is not prepared
to reduce the price and bids
do not reach the reserve price
the auctioneer may seek more
bids. If however bids still do not
reach the reserve the property
may be passed in or withdrawn.
The highest bidder then gets
first right to negotiate with the
seller.
It is recommended that you
understand that if you are the
highest bidder you must sign
the contract at the fall of the
hammer; ie once there are no
more bids the auctioneer will
The Local Voice Since 1991
count down to ‘the fall of the
hammer’ which will signal the
end of the auction. No bids can
be made after the fall of the
hammer and the highest bidder
is legally obliged to sign and
exchange contracts.
Before you commit to
participate it is recommended
you:
n Have your finance unconditionally
approved (not just
pre-approved) and confirm
with your lender the maximum
amount you can borrow.
n Have enough money on hand
to give a cheque for the deposit
(usually 10%).
n Know your maximum purchase
price – if you exceed
it you may need to borrow
more and have to pay for the
lender’s mortgage insurance.
This could affect your repayments
and could go beyond
your budget.
You may find that a vendor is
willing to consider pre-auction
offer. This can be done through
the agent before the auction.
The negotiation process is the
same as purchasing by private
sale.
For those who dream of purchasing
a peninsula property,
perhaps the foregoing might
be helpful. If in the event you
wish further advice concerning
property and conveyancing
matters you may care to contact
the writer. While many have
their own legal advisers it is
often helpful to have the advice
and wisdom of local knowledge
which is not contained in the
various presale reports such as
where are the known areas of
tick infestation, where does it
flood and where are the termite
areas, to mention but a few.
*Wishing all readers a very
happy Christmas and year
ahead. We close December 23
and reopen at 9am on January
11. Should you require assistance
during this period
our phones and emails will be
monitored.
Comment supplied by
Jennifer Harris, of Jennifer
Harris & Associates,
Solicitors, 4/57 Avalon
Parade, Avalon Beach.
T: 9973 2011. F: 9918 3290.
E: jennifer@jenniferharris.com.au
W: www.jenniferharris.com.au
DECEMBER 2020 77
Business Life