I see this statement often along the lines, "always seek legal advice". On what? It seems to be a bit of a throwaway line.
Is it the share market equivalent where they tell you to consult a financial adviser? I usually think, what can they advise me on that I can't see for myself? In other words, I never consult a financial adviser, but admit I am a DIY investor and live or die by my own decisions.
More often than not these statements are designed to cover themselves, so they can't be held liable for giving someone the wrong advice.
What are your thoughts on getting legal advice with regard to property transactions?
Personally it has saved us a number of times. I know it can be costly but in the end we saved thousands and it only cost us hundreds.
At the time it was money well spent.
Ros
If I was spending $500 then I wouldn't be seeking advice, but property investment is worth a lot more than that. The advice provided not only relates to your purchase but also to your exit strategy – you may have to sell, sometimes unexpectedly. If there are some issues which may affect your purchase (and you are unaware of them by not having recieved advice) these will be obvious to a purchaser who has recieved the advice and has developed a strategy to resolve the issues.
Issues may be as simple as having a beneficial easement on adjoining land (no harm done) to having half of your block subject to a proposed road widening scheme (major detriment to property value). If purchasing commercial property with existing leases, then the content of these should be explained (they are income generating property and you should be informed as to your rights).
A few dollars spent in the beginning will save you a lot of heartache later on.
Hi wezwaz
From my reading, it seems most of the richest people in the world, got that way by building the best teams around themselves. They realised, early on, that they couldn't possibly be an expert in all the fiields they have to cover as entrepreneurs. To be a successfull property investor, IMHO, you need to build a team around you that consists of a great mortgage broker, an excellent solicitor and a brilliant accountant (as a minimum).
The solicitor we use has saved us much more than we've ever paid him. Good luck.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi there
as a Legal Costs Consultant, I see the litigation files of many parties where there has been a dispute over property transactions – it may be the purchaser has decided they don't want to purchase the property and want an out – or there may be problems about inclusions in the contract which have not been delivered on settlement.
A solicitor – if consulted early may be able to anticipate some potential problems – because they are objective – and may have had experiences that a buyer – who may only have ever bought one property – hasn't had the opportunity to develop.There have been times when advice has been given which may lead to a different track being taken (particularly with finance options, guarantees etc) – it is a security measure and often won't be needed – but even I like to touch base with colleagues in the profession if I am concerned about issues.
thanksThe Problem with advice, is that you have to be carefull where it comes from and what barrow that person is pushing. We all have pre conceived ideas and most of us seem to be single minded. From a legal perspective, obviously there are good ones and bad ones. I have seen Lawyers kill deals by being pedantic and I have seen other Lawyers explain things in laymens terms. Advice is still a good thing to get. I would like to share a true story with everyone here.
Some months ago I listed a two bedroom townhouse and when I went around to take some photos of the property the Tenant advised that he was interested in putting an offer on the property but wanted some time to do some research. I advised that that was fine and as it was only mid week we could have a chat after the week end open house. After the Open house the Tenant came up to me and said that he had done his research and was ready to place an offer on the property. His first comment was. How did I come at the asking price of $350,000? To which I replied that as I specialized in this type of property and had in fact sold several similar recently, I felt that I had advised the Vendor with a very realistic value. What was the reason for his question? To which he replied that he had paid $80.00 for a report from a company that specializes in Buyer Property Valuation reports, and according to his report the town house was only worth $300,000. I asked if I could have a look at the report to which he agreed and sure enough the report suggested a range of $280,000 to $320,000 depending on property condition. The Tenant had taken the middle road which in itself was fair enough. I advised that his report was useless as the information supplied was at least three months behind time and I was confident that I would achieve the sale price for my Vendor and that he should rethink his offer. Long and short of story, the property sold to the first open house visitor and for very close to full price. I think that the Tenant is still paying $80 for someone to give him advice and last I heard he was still looking.Jon
Thanks for the feedback.
I am somewhat inexperienced in this area. It's also a bit like when doing your tax, someone asks who is your accountant. I have never had an accountant in my life. So if I am thinking of buying a property, do I immediately get in touch with a solicitor for guidance? Or is it when I have chosen a property? How does it work? What are the mechanics of the process? What are they specifically going to be helping me with? How do I pay them – by the hour? When it comes to legal matters I guess we are talking some ludicrous rate of pay to consult.
I would appreciate your further input.
wezwaz,
I believe it will depend on which State you live in as Contracts are prepared and executed differently by State so I can't speak for all, however in Queensland you can use a Lawyer or a Conveyancer and I would suggest that you phone and obtain a few quotes for the service that they provide. Understand that the Queensland Contracts have been written by the REIQ with advice obtained from the Law Society and as such they are fair to both parties, if anything they are weighted towards the Buyer with statutory 5 day cooling off period (in case you change your mind or feel that the agent forced or coerced you to sign the contract)Provided that you don't sign a cash unconditional contract you are relatively safe. This means that you need to understand such things as Subject to Finance (I advise that you speak to your lender prior to looking at property) Subject to Building and Pest Inspections and their ramifications, Settelemny dates and time required to complete. and in the case of Community Title purchases find out exactly what a Body Corporate Disclosure Statement should cover. It is no longer Buyer beware the onus is on the Seller to disclose all defects or matters that would have a bearing on the Buyers decision process. (As a matter of interest, I believe that houses should have to produce a disclosure statement as well )
Best I can do to help without legal jargon.
Jon
Hi WW
for perhaps a more extensive explanation of what your solicitor should do for you – look at the conveyancing protocol in the state where you are buying.
You as the buyer are looking at your property – from perhaps an emotional perspective – imaging your furniture in the property etc
You do need the items mentioned by Jon above – if you are lending money – you need to sort out your finances and you do want to be sure the property you are buying is structurally sound – hence the building and pest reports
What the solicitors do is help you investigate the title to the property – and make sure it can be transferred to you without any problems – this does require making inquiries of Government departments who may have an interest in your property – also local Councils whose planning laws may affect your property. Your solicitor will also explain the mortgage documents to you and your commitments to your lender.
Where a solicitor could help is where – for example – there are unapproved structures on the property. You may elect to buy the property as is – or get those structures approved or perhaps reduce the purchase price because of the difficulties in getting approvals down the track. These sort of issues would need to be addressed in the contract if you have concerns.
If there is something not quite right – for example the fence is in the wrong place – once again your solicitor can advise you and assist you with options.
Anyway – look at the conveyancing protocols for more info.
thanksMy personal experience has been to buy a property at auction which was badly vandalised 4 days later. I am now involved in ongoing legal proceedings, argueing about the cost of the repairs, trying to rescind the contract. I never sought legal advice before signing athiscontract but from now on will, as when I got the phone call from the cops to tell me I had no idea what my legal rights were until I asked a solicitor, and even then I had to look around to find a knowledgeable one with good conveyancing contract knowledge. From now on I will always ask a solicitor the ins and outs of a contract before I sign. I guess you can and stand by your own decisions, however when the unplanned does happen your own knowledge/decisions power is not enough.
wezwaz, I wholeheartedly concur with Paul and Karen – my solicitors have saved me far more than I've ever paid them. If your transaction is completely straightforward, then you may consider the $500 to $1000 spent on conveyancing and oversight of your purchase/sale as "wasted". But the problem is that a not-insignificant portion of transactions are NOT straightforward, and just one non-straightforward transaction can easily bankrupt you. I could give you a handful of cases where people who did nothing "unreasonable" ended up losing everything (or a LOT, anyway) through legal technicalities which could have been avoided if they'd had good legal advice.
Here's one: let's imagine you have a contract to purchase a house here in Queensland. The contract goes unconditional and you're all ready to settle, but as you don't yet own it, you haven't obtained insurance on the property. The day before settlement, an arsonist sets fire to the house and burns it to the ground. Did you know that you still have to settle at full price? In Queensland, the property is at the purchaser's risk from the day after contract, not settlement. If you'd been aware of that, you'd either have purchased insurance well before settlement, or done as I do and insert a clause amending the standard contract such that the property remains at the vendor's risk until settlement. This is just one of many, many potential legal traps.
It's good to be confident in your own judgement, but with respect, there's no way a layperson can be up-to-date on all the legalities of property transactions. Many lawyers aren't, either. But if they screw up, they are liable and have professional negligence insurance. If you screw up, you have no protection and could lose everything.
I sure hope you've at least had legal advice on protecting your assets in structures; if not, you are a BIG gambler! I recommend that you go directly to a solicitor for advice on asset protection, at an absolute minimum.
Regards,
Tracey in Brisbane
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