Buying Property In Western Australia from Interstate

Key factors for Interstate purchasers to consider when buying property in Western Australia.

If you are thinking about joining the many people buying real estate in Western Australia from interstate, firstly, congratulations!

Western Australia is a beautiful part of the world and has strong housing demand. It also has a median house price substantially lower than Sydney and Brisbane.

However, there are some things you need to be aware of, and traps for the unwary.

These include:

1. NO COOLING OFF PERIOD:

Most Australian states have a cooling-off period during which buyers can walk away from a contract to purchase – generally on payment of a small fee. Western Australia has no such protection. While you are free to insert a cooling off period into a contract, this is very unusual in Western Australia and the standard forms make no provision for it. Including a cooling off period is likely to make your offer very unattractive to a seller.

2. YOUR ACCEPTED CONTRACT IS BINDING:

A corollary of the no cooling off period is that if you make an offer in writing and it is accepted, then you cannot simply walk away from it. Sometimes buyers will make multiple offers on different properties, expecting either that most of them will be rejected, or that they will simply be able to refuse to complete the ones they no longer want. That is not the case. Once acceptance of your offer has been communicated, you are obliged to comply with it – which likely will mean completing the purchase of the property.

3. IS THE CONTRACT CONDITIONAL:

Contracts to purchase property in Western Australia should be in writing and will generally be based on the REIWA standard contract for sale of land or strata title by offer and acceptance – a standard form contract available to members of the Real Estate Institute of Western Australia. Most property sales in WA are by private treaty, with auctions being far less common than in NSW or Victoria.

Those contracts are routinely conditional on certain things – the most obvious and common being the buyer securing finance. Even if you are confident that you can obtain finance, it is generally a good idea to complete the finance clause because if, for whatever reason, finance is not obtained, you can bring the contract to an end without penalty.

There are also common conditions added to contracts which may not necessarily bring a contract to an automatic end if they are not satisfied, but which are useful to protect the buyer. Typical examples of such special conditions are Timber Pest and Structural Defect clauses. These permit the Buyer to arrange for termite and building inspections to determine if there is any relevant damage. If such issues are identified, the Sellers may have to agree to rectify the issues, or the Buyer can terminate the contract.

As the contract sets out the parties’ obligations, it is a good idea that you put things in writing. If promises have been made to you by the seller or the agent, like that the microwave comes with the house, or that the patio has been permitted by council, make sure they are in the contract.

While your agent can assist with preparing any non-standard special conditions you may wish to include, you need to ensure that they are drafted in a way that is clear and so that both parties know precisely what their obligations are, and what happens if they are not complied with.

4. THE PURCHASE PRICE IS NOT THE TOTAL COST:

Like most Australian jurisdictions, transfer duty applies on the sale of real property, and transfer duty is payable at settlement. So, whatever your agreed purchase price, you will also need to ensure you have enough for your finance costs, the transfer duty, settlement costs, land tax (on certain types of property and uses), council rates, and things like utilities and strata levies.

5. WHAT YOU NEED TO BE TOLD:

The law in Western Australia does not have a mandatory disclosure document for property sales (except for strata properties where there is a specific disclosure obligation) or a list of specific things that must be disclosed. Instead, there is a general requirement to disclose all ‘material facts’ relevant to the transaction. That means that it is wise to perform your own investigations and clarify any concerns or doubts you may have directly with the agent and any relevant local entities.

6. SALE AND TRANSFER PROCESS:

Again, this will be governed by the contract. There is no specific sum that must be offered as a deposit- but generally a larger deposit is more attractive to sellers as it gives them more protection. There is no specific time within which settlement must occur – but generally 4 weeks/1 month following finance approval would indicate serious intent. Finance approval can occur by whatever time is agreed – but 21 days from acceptance is fairly common. Common special conditions include Timber Pest and Major Structural Defects (as mentioned above), Good Working Order for electrical appliances, there is also a common special condition relating to pools where present.

Once you have an accepted contract, you will need to engage a settlement agent or conveyancer. CS Legal is one of the largest settlement agencies in Western Australia and has its own experienced legal department in case anything goes wrong.

Your settlement agent will organise everything necessary for settlement but will require certain things from you including proof of identity, details of finance, ATO clearances and the like.

7. BUYING PROPERTY THAT IS NOT EXISTING STANDALONE HOUSES:

As mentioned above, buying into a strata scheme has specific differing obligations – including the requirement to provide a strata disclosure which sets out details of the strata scheme you will be buying into, including financial aspects of the scheme. It is also quite common to purchase either land which has not yet been sub-divided and the titles issued yet, or built properties off-the-plan which have not yet been constructed or titles issued. These each have their own separate issues.

Off-the-plan purchases will generally come with substantial additional documentation that should be carefully reviewed, including the circumstances under which the contract can be varied or terminated.

Many land sales in planned communities now also come with additional covenants that can include things like time to build on the land, and the types and appearances of the structures that can be built. All of these things should be carefully considered.

8. WHAT NEXT:

If you are buying a property to live in, then welcome to WA. If you are an investor and intend to rent the property out, you will need to engage a local property manager. But whatever you are planning to do, having experienced professionals behind you can help. Feel free to give us a call or drop us an email to find out how CS Legal can help you – whether than be in helping to prepare a contract, to reviewing and advising on one, to dealing with any issues that may arise, or just providing settlement services on the transfer – we can assist!