As a property investor, it is natural to look for ways to minimise your expenses. After all, the less you spend acquiring and maintaining a property, the greater the return on your investment. However, you need to choose where to make savings carefully as some could cost you more in the long run.
Take conveyancing, for example. This is one of the biggest additional expenses when purchasing a property, often costing upwards of $2,000. While you can reduce this by choosing a cheaper service, or even doing your own conveyancing, this creates extra risk.
A key part of the conveyancing process is conducting a series of searches to check certain things about the property. This clarifies exactly what you are buying and confirms it matches what you have inspected. It also allows you to identify any potential issues before the sale is fully finalised.
While there is a wide range of property searches available to buyers, most of them have a fee attached. There is also only a handful that are legally required as part of the purchasing process. As such, to keep costs down, some conveyancing services choose to skip most non-essential searches.
Technically, there is nothing wrong with this approach and, depending on your situation, it may work for you. However, it does leave you open to easily preventable issues, like unexpected development restrictions or an inherited tax debt. To help you work out if this is a risk you are willing to take, let’s take a deeper look at conveyancing searches.
Put simply, conveyancing is the process of transferring legal ownership of certain items. This term is most commonly used in relation to property, where it mainly refers to the changing of title details. Both buyers and sellers have responsibilities within the conveyancing process and must play an active role in its administration.
While usually done by a qualified professional, it is possible to do your own conveyancing. However, it is quite a complex task, and any errors can leave the relevant party open to significant legal issues. As such, it is strongly recommended that all investors engage an experienced conveyancer for every property transaction (buying or selling).
One of the key parts of the conveyancing process is the completion of a number of searches. These check some of the key property details, including the ownership arrangements, the property’s development history, and any existing restrictions. As such, they help the buyer confirm that what they are purchasing matches their understanding of, and plans for, the investment property.
As part of the conveyancing process, there are a few key searches that must be completed. Specifically, your conveyancer will need to undertake a:
In addition to the above mandatory searches, there are several other checks you should also consider. While these are not legally required, they can provide important information that could impact your future plans. There are also some specific searches that apply to particular investment property types and certain locations.
Additional searches your conveyancer may conduct include:
There are also a range of other searches you can have completed if you have specific concerns about the property. For example, if you believe it may be built on contaminated land, you can search the relevant register. Similarly, if you suspect the vendor has registered for bankruptcy, you can check this and confirm they can sell the investment property.
Most of these issues are considered significant enough to impact your decision to buy and must be disclosed as part of the sale. If you find that something significant was not disclosed, you may be able to terminate the contract without penalty.
To keep costs down, most of the more affordable conveyancing services will limit the number of searches they do. This approach is perfectly legal, but it does increase the risk of you being misled or inheriting significant unexpected issues. This is particularly true if you do not check whether all building and planning requirements have been met.
Not doing certain searches could also leave you open to unexpected costs after settlement. With that in mind, checks like the Rates and Land Tax Searches can actually pay for themselves. As noted above, anything they uncover can be built into the final adjustments, reducing your out-of-pocket expenses.
If you would like advice about your property investement search, contact us..