Searches – which ones do you need to undertake when buying a house?
Buying a property can be a daunting experience, particularly when you are a first home buyer who is new to the conveyancing process and working with solicitors. Once you have signed a Contract to purchase a property and have contacted your solicitor, the next in the buying process step will be for your solicitor to order searches relating to the property.
>We have written this blog at the request of our facebook followers to provide home buyers with more information on the types of searches which are available for your solicitor to order for you. The searches that we outline can be undertaken for all properties, houses and units, however we will be writing a separate blog on searches for the purchase of units.
Searches are undertaken in your conveyancing process either for your general information, for the purposes of making adjustments to the purchase price at settlement (for example, water, rates, body corporate etc), but most importantly are undertaken to ensure that there are no major issues with the property which, had you otherwise known about, you may not have purchased the property.
Every solicitor will have a different idea of which searches are ‘essential’ and which are not. Some may prefer to be thorough and order many different searches, whilst others may be more cut price and only do the bare basics. Whilst the bare basic searches can save you money, you are also at more risk of not finding out important information about the property which may hinder your ability to deal with your property in the future. For example if your property is in a flood zone, you may not be able to put a pool in at a later date and it is better to know this before you buy than find out later and have no recourse.
Our recommendation would be to have a conversation with your solicitor once you have signed a Contract and give them as much information about the property as possible so that they can order the searches which are going to be most relevant to the property you are purchasing.
Below we outline each of the main searches that solicitors will undertake on your behalf, the purpose of each search and the rough cost. It is important to note that solicitors use different search providers, so our costs are an indication only and will vary amongst solicitors.
The title search is crucial and a non-negotiable search. It will show you who the registered owner is and any dealings which have been registered on the title, such as the seller’s mortgage, easements and any caveats which need to be removed before settlement. Your solicitor need to order this search twice – once when you sign the Contract (to ensure the details on the Contract are correct) and again on the morning of settlement (to ensure that nothing has been registered on the title which may prevent you from settling, eg a caveat). The cost will be around $20.00-$30.00 per search.
A search of the registered plan is also a non-negotiable search. It will show you the exact boundary of the lot, the area and where the lot is situated on the street. Your solicitor will likely ask you to confirm that that is the correct lot you are buying to ensure that the correct lot is being transferred to you. The cost will be around $20.00-$30.00.
Easements and Encumbrances
If the title search reveals any easements or encumbrances, it is important that you have your solicitor order a copy of this search as easements and encumbrances may prohibit you from doing something to your land, or allow another party access to your land. This search will enable you to find out what the easement is for – drainage, access, stormwater etc. For example, manholes are common easements which allow the council to access your land for the purposes of maintaining the manhole – this means that you are unlikely to ever be able to build over this manhole. Searches of this nature will be around $50.00 per easement.
Land Tax Search
A land tax search will reveal whether there are any outstanding amounts payable for land tax, which may be passed on to you as the buyer if the seller does not make payment of the overdue amount at settlement. If you are purchasing a property off-the-plan or where the seller is a company or an individual with a number of properties, is it likely that they will be liable to pay land tax, which means this search will be necessary. The only situation where you would not order a land tax search is if you know that the seller only owns one property and where the land value of the property owned by the seller is more than $650,000.00 (the threshold at which the seller will be liable to start paying land tax). The cost will be around $50.00.
Transport and Main Roads Property Search
This search will show any current proposals and resumption information for all roads, ports and railway lines. This means that it will indicate whether Council are planning to build roads near the property you are purchasing (which may decrease the value of your property once this occurs). The cost is around $32.00.
This search will reveal if the property is connected under normal tariff conditions, if the property is connected under guarantee conditions and the amount of the guarantee, if the property is not connected upon what conditions is may be connected and whether there are any underground cables running through the property. Whilst it is normally undertaken for your information, you may be entitled to termination or compensation under the Contract if the seller fails to disclose any undisclosed easement over cables. The cost is around $50.00.
Contaminated Land Register
This search will reveal whether the property you are purchasing is listed on the Environmental Management Register or Contaminated Land Register. If the seller has not disclosed to you in the Contract that the property is listed on either of these registers, you will have a right to terminate the Contract. The cost of this search is around $50.00.
Transport Noise Corridor Search
If the property is in a noise corridor, the Queensland Development Code requires buildings to achieve certain levels of noise mitigation through the use of appropriate materials for the floor, walls, roof, windows and doors where they are located in the corridor. This search will show whether or not the property is situated within a noise corridor. It is a free search, so you may as well take advantage of it and have your solicitor undertake the search.
Pool Safety Register
If the property you are purchasing has a pool, you should have your solicitor undertake an inspection of the pool safety register to ensure that there is a current pool safety certificate that has issued for the property. If there is a pool on the land and no pool safety certificate provided with the Contract, the Contract will be subject to the buyer being satisfied that a pool safety certificate can be issued. As the buyer, you may terminate the Contract (acting reasonably) if no pool safety certificate issues prior to the Pool Safety Inspection Date under the Contract. The search is around $5.00.
QCAT Tree Register and Minor Civil Dispute (fences) search
This search provides details of orders which have issued by QCAT in relation to trees and dividing fences on the property and will show if the sellers are currently in QCAT disputing over either of these issues. It is a free search, so you may as well take advantage of it and have your solicitor undertake the search.
Council rates searches reveal the amount that is payable for rates on the property per quarter or half year. They will also show whether the seller has paid their rates up to date or whether there is an amount that is outstanding, which will then need to be paid by the seller before settlement. This allows for a rates adjustment to be made at settlement so that the seller is responsible for the rates up until the date of settlement and the buyer is responsible for the rates from the day of settlement. The cost of rates notices will differ significantly between councils and urgent searches will be more costly than those ordered well before settlement.
Special Water Meter Reading
Having a special water meter reading done means that a council representative will attend the property as close to settlement as possible and take a water meter reading so that water usage can be accurately adjusted for at settlement between the buyer and the seller. This is particularly beneficial for buyers where there may be a water leakage at the property, as it will be identified and all water usage as a result will be paid for by the seller. The cost will vary between councils.
This search will reveal whether the property has flooded and the level of the last flood. They are free with most councils.
Building Approval Search and Building Property Notices Search
The Building Approval search provides details of building approvals and inspections at the property. This search is particularly important where a property has been renovated or an addition made to the property and includes structures, such as carports, being erected at the property. If the seller has done building work which has not been approved by the council, you may find yourself being issued with a Show Cause Notice from the council down the track. The Building Property Notices search will give information about show cause and enforcement notices which have been issued by the council already. Again, the cost of these searches will vary between councils.
SEARCHES AGAINST THE SELLER
If the seller is a corporation, it is wise to do a search of the company. This will confirm that the company is not bankrupt (and has the capacity to sell the property to you) and will note the Directors of the company, so that your solicitor can ensure that the Contract and transfer documents have been executed by the authorised representatives for the company. You may also have a right to terminate the Contract if there is a breach of warranty by the seller. The cost will be around $18.00.
Personal Property Securities Register (PPSR) Search
When a seller sells you the property (comprising the land, improvements and chattels), it is to be sold free of encumbrances. This search will reveal details of any personal property affected by a registered security interest – this is important as any assets you are buying could be re-possessed later. Whilst PPSR interests are more common over plant and equipment rather than real property, if your property purchase includes chattels of value or major improvements, it is prudent to do a PPSR search to ensure that none are registered on the PPSR and if they are registered, that a release of the security interest is obtained from the seller at settlement. The cost is around $15.00.
This search is self-explanatory – it reveals whether or not the seller is a registered bankrupt. This is important because if the seller is bankrupt, then they may be unlikely to have the capacity to sell the property to you and you may have a right to terminate the Contract. The cost is $27.00 per seller.
Court Registers – Supreme, District and Federal Court Searches
Searches of the Court registers are FREE! They will reveal if any action has been commenced by or against the seller, the nature of any action and a copy of all originating court applications, orders, appeals etc relating to the matter. For example, the search will reveal if the seller’s mortgagee has begun recovery action or action for re-possession if the seller has defaulted on their mortgage repayments.
YOUR RIGHTS IF YOU ARE NOT SATISFIED WITH YOUR SEARCH RESULTS
Once your solicitor has undertaken the searches, they will send you a copy of the searches and a report highlighting anything that appears to be an issue. In the event that you are not satisfied with your search results, you may have a right to terminate the Contract or to seek compensation from the seller, depending on what the issue is. Alternatively, you may not have any rights at all and will be stuck buying the property. It is all dependent on the particular search which has revealed unsatisfactory results.
Generally speaking, if the search results do not relate to a specific breach of the Contract, then you will not have a right to terminate the Contract. However, you can protect your interests by having your solicitor insert a special condition (such as a Due Diligence/Satisfactory Searches condition) into the Contract so that the Contract is subject to you receiving satisfactory search results – this must be inserted prior to signing the Contract.
As we have advised above, every property is different and will require different searches to be done. It is therefore important to have an in-depth discussion about the property with your solicitor so that they can determine which searches will need to be undertaken for your specific property. If you are buying property for the first time, you could also discuss the property with your solicitor prior to signing the Contract so that they can advise you of anything in particular to look out for and to look over the Contract before you sign it.
If you have any questions in relation to a sale, purchase or searches in your conveyancing matters please contact our experienced conveyancers – (07) 3870 8244 (Toowong) and (07) 3264 7692 (Albany Creek).