Purchasing property in South Australia; What you need to know!

KEY TAKE-OUTS

• What to expect when purchasing in South Australia
• What are finance conditions?
• Why is Insurance relevant to my purchase?
• Is there a cooling off period?
• What is a form 1?
• What about stamp duty?

The property market across Australia is booming as we are all aware. Many investors and first home buyers are in the market and looking to get their hands on property.  You may be located in NSW and looking at purchasing in South Australia to invest or even relocate from another state, or perhaps you are a first home buyer in South Australia and just need a little guidance on the process.  This blog will give you an outline of useful information in relation to the purchase process in South Australia.

When purchasing property in South Australia, a Residential Contract standard form issued by the Real Estate Institute of Australia is typically the commonly used Contract format.

What are finance conditions?

Contracts are commonly conditional upon finance. This works differently to a cooling off period, in the sense that you are allowed a specified amount of time to obtain finance and the contract is conditional upon satisfaction of this. In the event you cannot obtain finance to fund the purchase, you are able to end the Contract provided it is within the specified finance period. These finance period time frames are usually around 14 days from the date of the Contract.

It is important to note that as the purchaser, it is an essential condition that you must use your best endeavours to apply for finance and obtain a loan to fund the purchase. It isn’t as simple as just claiming you can’t obtain finance and ending the Contract. The Vendor can ask for evidence that you are unable to satisfy the finance condition and receive formal loan approval. This means that you may be required to accept any offer of finance regardless of if the finance offer is beneficial for you or not.  It is important to remember that each Contract differs, and the wording of the clauses and special conditions must be carefully considered before proceeding with a purchase as this may alter the finance condition and how it applies to the specific contract.

What about Insurance?

You may be wondering why Insurance is mentioned in this blog and how it is relevant during the purchasing process. Under the standard contract conditions in South Australia, the property is at risk of the purchaser from the date of the Contract. This means that any liability for damage or injury falls on the purchaser before settlement. It is recommended that an insurance policy is obtained to protect your interests, commencing from the date the Contract is signed.

Before you are alarmed, it is important to know that although the risk passes to the purchaser, the Vendor is bound by the Contract to take all reasonable care to maintain the current state of repair of the property and must not damage it.  Building and contents as well as public insurance are typically the recommended policies when purchasing property.

Is there a cooling off period?

Under legislation, in South Australia you are entitled to a 2-business day cooling off period. This is only waived under auction conditions or if agreed by the parties. The cooling off period is given to allow the purchaser time to conduct pest and strata reports, and any due diligence investigations into the property before being locked into the Contract. The vendor at this stage is still bound by the Contract, to sell to the purchaser. This is where the form 1 has significance in this process. The cooling off period commences when the form 1 is received by the purchaser, if received after the Contract is signed, or immediately the date the contract is signed if the purchaser has been provided the form 1 prior to signing the contract.

What is a Form 1?

The form 1 is a document required to be provided by the Vendor to the purchaser and particularises details about the property which may impact the purchaser’s decision to purchase the property. It is essentially a form that reflects the most accurate information and disclosures that the Vendor has in relation to the property they are selling. The form 1 is required to be served on the purchaser 10 clear days before settlement. If a form 1 is not provided at the time of signing or before, the purchaser reserves the right to rescind the Contract at any stage up until settlement.

What about stamp duty?

Stamp duty is payable to Revenue South Australia on all property purchases. When you acquire property, you are required to pay stamp duty. This amount must be paid before you can be registered as the owner on the certificate of title. Stamp duty is payable either at settlement, or within two months after the execution of the Contract, which ever occurs first.

For example, if you have a 6 week settlement period from the date of the Contract, stamp duty is payable on settlement as this is within 2 months. If the settlement period of the Contract is 3 months from the date, then stamp duty is due within the 2 month period from the date of the Contract.

There are also concessions and exemptions to stamp duty in South Australia depending on the circumstances and eligibility. Stay tuned for a further blog detailed on stamp duty in South Australia. You can also calculate estimated stamp duty costs through the revenue SA website, accessible here where you will answer a few questions and an estimate will be provided. ;

If you have any questions in relation to the process in South Australia, need to find a conveyancer, or would like to know conveyancing costs for purchasing in South Australia get in contact with our Interstate Conveyancing team today!

Please note the information contained in this publication is general information and should not be taken as legal advice applicable to your situation or Contract. Coutts holds no responsibility for any information relied on this blog.