Posted by Mark Foy | 30 June 2021 | Legal Developments
When purchasing a detached house as an investment property, it is important to consider the legal aspects and responsibilities which accompany your real estate purchase.
So you’ve decided to invest in a house. There’s no strata title scheme involved and your investment does not require you to engage with a body corporate.
You have complete control over the management of your asset, or do you?
Prepare for both the ups and potential downs
Your investment in a detached house includes the potential upside for further development, extensions renovations and such – but it also brings with it a corresponding increased risk that you must fully bear the costs of maintenance and repair to all elements of the building and any other improvements located on the property.
In some States, the standard form of contracts typically used for purchasing detached houses will make provision for the buyer to obtain a building and pest inspection. Auction contracts of course are generally unconditional and / or have these conditions removed. If purchasing a property subject to building and pest inspections, it is extremely advisable that you try and negotiate these conditions.
It would be unrealistic to assume that when purchasing new (or nearly new) house that all relevant building works have been conducted in complete compliance. It is also not unknown for certain termites species to substantially damage new buildings very short periods of time – and for these reasons, it is critical to obtain both a building and pest inspection of a property wherever commercially agreeable to the Seller.
Check the boundaries of your real estate purchase
Your investment in a detached house and ability to make future changes to it (such as substantial renovations, extensions or demolishing pre-existing structures) will be controlled by local council planning schemes and restrictions.
Inner city properties are generally heavily restricted by planning regulations, which can limit what modifications can be undertaken. Inner city lots are typically segmented by old surveys and, with increasing improvements in technology, it is not unknown for resurveys of these lots to be required, to adjust for now out of date surveys measurements.
It is highly advisable when investing in a house, building or other major land improvements close to local boundaries that surveyors are engaged to confirm that the house and all major improvements on the property are within the stated legal boundaries and to also check that adjoining owners have not constructed improvements over the boundary into your propose property.
Have you checked what planning restrictions may apply?
The legal aspects outlined highlight just some of the many reasons both first time and sophisticated real estate investors should always engage in a trusted and experienced property lawyer when purchasing detached house properties.
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This publication is © Nexus Law Group and is for general guidance only. Legal advice should be sought before taking action in relation to any specific issues.
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