Let the Buyer Beware - do your homework when buying a property

Caveat emptor - let the buyer beware! Due diligence. Doing your homework. Call it whatever you want, if you are purchasing a property you must ensure that you fully investigate all aspects of the property. You are about to spend a substantial sum, so you don't want to be stuck with a property that has serious problems.

What property searches you will need to do will depend on the type of property in question. Your property lawyer will be able to advise you on what searches you should obtain. Below are some of the common searches:

House (Non-Strata)

1. Building inspection: This involves getting a builder to inspect the property and note any issues with the structural integrity of the building, any existing damage and potential issues with Council approval. Unless you are a builder yourself, it is well-worth ensuring that you know exactly what condition the building is in before you purchase. 
2. Pest inspection: Similar to the building inspection, a pest inspection involves a pest exterminator inspecting the property for evidence of termite activity and other pests. Termite issues is one of the most significant problems as it will affect the structure of the building.
3. Survey: A survey will assist in identifying the boundaries of the property and will indicate whether there are any encroachments onto the property and by the property onto adjoining blocks. The surveyor will also note whether any buildings appear to be built in accordance with the local government regulations.
4. Building Certificate: If you want to be sure that Council will have no issues with what is built on the property (such as an unapproved back deck or recently built car-port or garage), then you will need to obtain a building certificate. You must have obtained a survey before applying for a building certificate and a building certificate can take a couple of weeks to be received.

Apartment (Strata)

1. Strata report: This is an absolute must have if you are looking at buying a strata property. Strata reports will indicate the financial status of the owners corporation and will often foreshadow future works and repairs that will need to be undertaken. A strata report will have the insurance details for both the common property and the relevant lot.
2. Pest inspection: A pest inspection may not be required if details of pest issues have been highlighted in the strata report.
3. Building inspection: As above, strata reports often outline any structural issues in the minutes of the meeting.  

Due Diligence on the Contract

You will need to get your property lawyer to review the Contract and in particular, ensure that the property is properly identified in the Contract and that the Vendor has good title to be able to sell the property. Any unusual or particularly onerous provisions should be identified by your lawyer with a view to having them removed or amended. A good property lawyer can provide advice on a Contract within hours of receiving the Contract in draft form.

Buying a property is a significant step. Given the value of the transaction, it pays to do your homework. Once you sign the Contract, you generally won't be able to back out if you find something wrong with the building. Make sure you get the right searches so that your dream home doesn't turn out to be a bricked nightmare.

Jonathan Marquet
Emil Ford & Co