1. Pre-Purchase Due Diligence Reports – Helping To Make Informed Choices When Purchasing Property

If you ever attended an open house and noticed a crack in the ceiling, you may have wondered whether this is something to be concerned about. This article looks at the benefits of obtaining pre-purchase due diligence reports from licenced professionals when purchasing property.

When you are purchasing a property, whether it be as your home or for an investment it is important to think about obtaining further information on the property through due diligence reports. This will ensure that you are aware of any potential or actual problems that the reports highlight. You can then consider the risks prior to your purchase and use this information to make an informed decision as to whether you are paying the right price or even whether you want to purchase the property at all.

Depending on the nature of the property that you are interested in, the reports that you should consider include:

Building & Pest Reports; and/or
Strata Report (if a Strata Property).

Building & Pest Reports

Building & Pest Reports are highly recommended as you are buying the property in its present condition and state of repair subject to any pest and termite infestation that may be present or any structural damage or fault. If any faults are detected after you exchange contracts then you will not be entitled to claim compensation from the Vendor or rescind the Contract (in other words be released from your obligations under the Contract).

Even if you are looking to purchase a unit or a commercial property it may be necessary to arrange for a Building Report, particularly as you are buying the property in its current state of repair. Prepared by a professional Builder, a Building Report may uncover issues with the state of repair that are not visible even through a thorough inspection by a non-qualified person.

These Reports will provide comfort that any potential or actual issues have been identified before you commit to the purchase.

Strata Report

A strata inspection report is vital for any strata purchase. The report provides details of such things as the history of expenditure of the building, the financial status of the owner’s corporation, whether there is any history of water penetration, plumbing, structural problems and/or other faults. Furthermore it details any history of disputes the owner’s corporation may have with developers or other third parties.

When you buy your unit, you become a part of the Owner’s Corporation and take on the responsibility of any existing or pending issues within the strata complex. This report allows you to enter into the transaction with your eyes wide open as to any current issues within the complex.

Most importantly a strata report will also indicate whether or not any Special Levies are payable by owners, or whether any special levies are to be struck in the future. A special levy is a levy that is payable above and beyond the standard quarterly levies you will have to contribute, and this may cost between the hundreds or the thousands of dollars. As an owner you will become liable to pay these special levies and depending on the amount of the levy you may not wish to take this risk.

Whilst due-diligence reports do incur a cost at the outset, the information that they provide ensure that you can make your decision to purchase with the comfort that you have considered all information available to you.

Author: Belinda Drivas - Property Group [Email]

2. National Consumer Credit Regulation – Are You Ready to Face the Change?

Significant changes to the regulation of consumer credit are currently taking place on a national basis. These changes will impact all participants involved in the provision of credit related services throughout Australia and involve what many would call a welcome move toward a single national regulatory regime. Ranging from the introduction of licenses for providers of consumer credit and credit-related brokering services to the appointment of the Australian Securities and Investment Commission as the sole regulating body, the changes form part of the national government plan to increase consumer protection and promote responsible lending.

As a finance broker, credit provider under a consumer credit contract, mortgage manager, aggregator, mortgagee, lessor in a consumer Lease or beneficiary of a regulated guarantee, you need to consider the ways in which your lending practices may be affected by these changes.

One of the key changes is the introduction of a new National Consumer Credit Code (the Code), If you are involved in certain types of credit activity you will be taken to engage in credit activities if that credit is to be provided for personal, domestic or household use or for the purchase, renovation or improvement of the value of a residential investment property.

The National Credit Reform package is scheduled to be passed in the last week of October. Based on the current timetable, anyone engaging in credit activities will need to register their details with ASIC between 1 April and 30 June 2010. The Code introduces additional requirements for those engaging in credit activities that are not currently scheduled to commence until 1 July 2010 with further additional requirements to commence 1 January 2011. We will continue to update you with more detailed information on the additional requirements in future editions of E-Law.

Author: Denise Caffrey - Banking & Finance Group [Email]

3. First Home Buyers – Time is Running out to Maximise your Benefits

If you are eligible for the First Home Owner’s Grant (FHOG) discussed in our August issue of E-Law, it is important to note that the First Home Owner’s Boost has now decreased to $3,500.00 for existing homes and $7,000.00 for new homes.

Any qualifying contract entered into on or after 1 October 2009 will therefore attract a grant in the total of $10,500.00 for existing homes or $14,000.00 for new homes.

From 1 January 2010, the FHOG will revert to $7,000.00 for all qualifying first home owners.

Author: Property Group [Email]