When you decide to buy a house and land package, you have a lot to consider.
In the midst of all the excitement, it’s easy to get carried away with the visions of your new house that are floating around in your head.
For the smoothest possible transaction, you must still be on the lookout for potential legal snags as you shop.
Here are some legal tips to help you with the purchase of a house and land package.
THE FIRST STEP IS TO CONDUCT A LAND ASSESSMENT.
Do your homework before signing on the dotted line for a house and land package.
Prior to making a purchase, buyers should conduct their own research to determine the land’s size, drainage, and location. Customers should conduct their due diligence, including visiting the land site, contacting the local council to learn about the development application process and any restrictions imposed on the land.”
Consider any restrictions on the percentage of the land that can be occupied by a building as this could alter any plans you may have for the home of your dreams.
This will have an effect on the design and style of your home or whether you go ahead and buy land. A solicitor or conveyancer should review the contract of sale, including any additional clauses, title search, plans, dealing – sewer diagrams and council planning certificate – to ensure that you understand the vendor’s contract.
In the process of purchasing a home and land, a formal valuation is essential. Banks will conduct a land valuation as part of the loan application process or during the five-day cooling-off period for homebuyers.
In this way, if the purchase price is greater than the land’s value, you will only lose 0.25 percent of the purchase price if you decide to cancel the contract. To avoid any possible loss if the value does not equal the purchase price, your broker or banker should provide the valuation prior to exchange of contracts.
THE SIGNING OF CONTRACTS
One contract is required for the purchase of both the house and the land. One for the sale of the land, and one for the construction.
A delay in land settlement could affect the building contract, which is separate and not dependent on the construction contract. Because every state’s sales process is unique, you should do your homework before signing any contracts.
In the case of off-the-plan sales of land,
Purchasing land that is being subdivided off-the-plan is contingent on the registration of the plan, so keep that in mind. Penalties may be imposed on the contractor if construction is delayed because of the subdivision process. The cost of materials may rise as a result of construction delays.
It is possible to receive a time estimate for the completion of land subdivision when purchasing land off-the-plan. The process of subdivision is subject to many council requirements being met before the land can be registered on a separate title.
For the registration process to be successful, the developer must meet all requirements of various authorities for the provision of water, electricity, drainage, and sewage to the land.
The council may also require the developer to set up a Neighborhood Plan or Community Title for owners in the community to pay levies towards expenses such as security, gardening, or water where it is not individually metered to each property.”.
Insist that your council representative determine whether the council is in charge of maintaining community roads or whether property owners are expected to foot the bill.
It is possible to order an inspection of owners corporation records for Neighbourhood Plan or Community Plan properties before or during a cooling-off period, or during a building/pest condition inspection.
The land must be registered in order for a settlement to take place. Upon receiving notification of registration, buyers have 21 days to complete settlement.
A standard land contract
Standard land contracts are easier to understand.
To avoid entering into a building contract prematurely when purchasing land off the plan, the contracts for sale of registered land can be completed in standard time periods according to contract terms.
Contracts in construction
The first and most important step is to work with a reputable contractor. It is possible to conduct an online search for a contractor’s license in most states.
An insurance certificate under the Home Building Compensation (HBC) Scheme must be included in every home building contract in NSW if the value of the project is more than $20,000. Contact the insurance company to verify that the certificate is current.
Building contracts contain clauses that apply to buyers who want to buy land and build a building on it. Your lawyer or conveyancer can review the contract and help you understand your rights and responsibilities.
BUYER BEWARE
Certain clauses in the contract should also be familiar to the buyer. As an example, in many building contracts, the buyer is responsible for any excess building materials that remain on the site after “cutting the block” of land.
It would cost an additional $16,000.00 if builders quoted $1,000.00 per load to remove 200 tones of excess material from the land after cutting the block.
Because of this, you may be able to negotiate a reduced fee with your builders before signing the building contract so that there are no unexpected costs or delays in the project.
The contract for the construction may stipulate that the owner is liable for the cost of any retaining walls that are necessary as part of the project.
When it comes to construction delays, it’s critical that owners know what their responsibilities are under the contract and plan accordingly.
“The contract must include a description of the proposed construction works, plans, and specifications. The deposit cannot be more than 10% of the total contract price.
A builder’s profit margin rises as a result of post-contract modifications.”
In order to avoid contract variations after the fact, it is critical to plan ahead and ensure that basic necessities like adequate power outlets and any other desired features are included in the building contract. “
Solicitors and conveyancers will look at the contract price, the “builder’s margin,” and whether the price can change, as well as the payment schedule. 20 percent is the standard builder’s mark-up.”
EXPERT ADVICE AND CONVEYANCING
Different states and territories have different approaches to conveyancing, which can be as varied as the sales process itself.
A cooling-off period is not required in some states, such as Western Australia, which does not have one. Before you sign on the dotted line to buy a house and land package, be sure to check the rules in the state where you intend to make the purchase.
The building contract should be reviewed by a reputable solicitor or conveyancer to ensure that it contains all necessary details, such as:
- The correct information for a contractor’s license. Fair Trading NSW in New South Wales provides an online license check.
- Plans for the project are outlined here.
- a detailed set of building instructions and specifications
- Relevant warranties, which the Home Building Act 1989 mandates in New South Wales
- The price agreed upon and whether or not it is subject to revision
- A schedule for making payments
- The contract should include a clause that allows you and the contractor to make changes to the original plan.
- a provision for the termination of the relationship; and
- Compensation for delays in the building process
Help is at hand: With the help of one of our knowledgeable and competent professionals, you can receive assistance throughout the whole home-buying process tailor-made for your needs.
