Law Talks Episode: Buying property? Why due diligence matters

Robyn: Good morning and welcome to law talks here on 4CRB. Well buying a property is one of the biggest financial decisions most people will make, whether it’s downsizing, investing or buying that dream retirement home. But too often, buyers rush in without doing the proper checks and that can lead to costly surprises.

To help us unpack the importance of due diligence when buying a property, we’re joined by Attwood Marshall Lawyers’ Property and Commercial Law Senior Associate Mieke Elzer. Thanks for joining us.

Mieke: Thanks Robyn.

Robyn: Let’s start with the basics. What do we actually mean by due diligence when it comes to buying property? And why is it so important?

Mieke: Due diligence is really just a fancy way of saying doing your homework before you buy. It’s about checking all the legal, financial and practical details of a property so you don’t get any nasty surprises later.

Now, when we talk about downsizing or buying a retirement home, it’s particularly important because you want certainty and peace of mind. Once you’ve signed on the dotted line, you inherit all the problems of that property. So, spending the time and money upfront to check everything is far cheaper than fixing an unexpected issue later.

Robyn: Yeah. And when people hear about title searches, it can sound very technical. Can you explain in simple terms what a title search involves and what kind of red flags it might reveal?

Mieke: Well, I like to say a title search is like a property’s birth certificate. It shows who legally owns it and what’s registered against it.

It can reveal things like mortgages, easements or covenants that limit how the property can be used. For example, you might discover there’s a right of way through the backyard or restriction on building.

Without a title search, you could end up buying a home that isn’t quite what you thought it was.

Robyn: Yeah, well particularly here on the Gold Coast, zoning and council restrictions can really affect what you can and can’t do with the property. How can buyers check this before signing a contract?

Mieke: The Gold Coast is a prime spot for this. You might think you’re buying a quiet residential property, only to find the neighbouring land is actually zoned for medium density apartments. Or you might want to add a granny flat but council rules don’t allow it.

Buyers can check council planning maps, or better yet, have their lawyer or town planner review the zoning. Now spending an hour checking that information can save years of regret.

Robyn: And one of the most common checks is the building and pest inspections. Why is this so important, particularly for older homes in coastal areas?

Mieke: On the coast, moisture, flood damage and termites are the big culprits. An older house might look fine on the surface, but you can have structural damage hidden in the roof, stumps or walls.

A good building and pest inspection gives you leverage too, so if there are issues you can negotiate repairs or a price reduction.

For retirees especially, the last thing you want is to move into what which should be your forever home and then face tens of thousands in repair bills.

Robyn: Well, many of our listeners might be moving into apartments or townhouses as they downsize. What sort of due diligence should those buyers do around body corporate fees and strata reports before they commit?

Mieke: This is a big one, Robyn. With strata or body corporate, you’re not just buying the unit, you’re buying into the whole complex. So, you need to look at the body corporate records, see what levies you’ll be paying and whether there are major works planned like lifts or roofs needing to be replaced.

Sometimes levies can double if big projects are coming up. It’s also worth checking if there are any disputes in the complex, as this will tell you a lot about the culture of the building.

Robyn: Yeah, absolutely. And beyond the purchase price, what other unexpected costs can surprise buyers?

Mieke: A lot of people forget about stamp duty, registration fees, body corporate levies, and even council rates. On the Gold Coast insurance costs can also be higher because of flood or cyclone risk. If you’re buying into a retirement lifestyle village, you’ll need to consider exit fees down the track.

A good lawyer or conveyancer will map out all the likely costs so you can budget properly before you enter into an unconditional contract.

Robyn: And what are some of the common legal traps you’ve seen when people don’t do proper checks? And can these lead to costly disputes down the track?

Mieke: Well, I’ve seen people buy properties with unapproved structures, like sheds, decks or even whole extensions, only to find out later, council can issue orders to demolish them.

We’ve also seen disputes around boundary fences where buyers didn’t realise the true property line. And I’ve seen people caught out caught out by body corporate special levies which can run into tens of thousands. These disputes can drag on for years and be extremely costly.

Robyn: So, if we’re trying to avoid all these legal traps, how early in the process should a buyer get a lawyer involved to review the contract and what difference can it make to the outcome?

Mieke: Well ideally as soon as you’re serious about making an offer. Too often people sign first and then bring the contract to us later.

By then their options are limited. Having a lawyer review the contract upfront means you can insert conditions like subject to finance, subject to building and pest, or subject to body corporate review.

That gives the buyer an exit strategy if things don’t stack up. Obtaining pre signing advice from a lawyer is the best insurance policy you can have when buying a property.

At the end of the day, buying a property is about more than just the purchase price. It’s easy for people to get caught up in the romanticism of buying their first home or a holiday home, but when making such a major financial commitment, it’s essential that you ensure you know exactly what you’re getting into.

Doing your due diligence upfront, checking the title, zoning, building reports, body corporate records, and having the contract properly reviewed can save you from making very costly mistakes down the track.

I’d say my advice is simple. Don’t rush. Get the right advice early and treat due diligence as an investment in your peace of mind.

Robyn: Great advice. And that brings us to the end of today’s discussion. Buying property can be exciting, but as we’ve heard today, doing your due diligence and seeking the right legal advice is absolutely crucial to avoid those unexpected and often expensive pitfalls down the track.

A big thank you to Mieke, a Senior Associate at Attwood Marshall Lawyers, for sharing such valuable insights with us today.

Mieke: Thanks very much, Robyn.

Robyn: You’ve been listening to more talks here on 4CRB, which you can hear every Friday morning from 9 o’clock, and it is available for replay on our website 4crb.com.