All These Searches

My solicitors have mentioned to me I should consider some of the following to purchase on top of the solicitor costs:

1. Department of Education
2. East Australian Pipeline Authority
3. Energy Australia
4. Jemena Gas
5. Outstanding Council Notices
6. Unpaid council rates
7. Hunter Water unpaid rates
8. Unpaid land tax
9. RTA
10. State Rail
11. Transgrid
12. Council zoning and planning certificate

I have ordered 6, 7 & 8 so far.

They said they would like to lodge a Caveat on my behalf to stop the owner selling the property to someone else without us knowing and this also protects you between when you pay the money to when the property is transferred into your name. That seems a bit strange as one of the things we discussed the other day is that now I have signed the contract then the seller can't backout of the deal only I can in the cooling off period!

Thoughts on this would be good from members.
 
Ok, if no one can help with this then can someone just offer some feedback about the "Caveat" part. Is this something you normally get done on an investment Unit?
 
Ok, if no one can help with this then can someone just offer some feedback about the "Caveat" part. Is this something you normally get done on an investment Unit?

Lodge a caveat as the solicitor has suggested or buy title insurance - although I was recently advised that title insurance should not be a band-aid for sloppy conveyancing :)

There is a reason - let me look up the case law. It revolved around a case where a purchaser had handed over all the settlement monies but then found they could not get the title registered as someone had lodged a caveat that was not noticed until too late. The purchaser could not get the money back or get title to the property.

Your solicitor's letter will probably mention the case by name.

edit: here it is
From: http://www.dlaphillipsfox.com/artic...--Legal-updates-for-the-NSW-built-environment

The danger lurking between exchange and completion
The recent decision in Black v Garnock [2007] HCA 31 demonstrates the important practical issues for purchasers in safeguarding their purchase between the period from exchange of contracts and settlement.
The Black v Garnock case changes standard conveyancing practice in settlements, by making it necessary for legal practitioners acting for purchasers to lodge a caveat on title immediately following exchange of contracts and also to carry out a final search of the subject property as close to settlement (if not, on settlement) as possible. The case may even go so far as to suggest that it be 'salutary practice' to conduct settlement at the Department of Lands so that a final search can be carried out there immediately prior to settlement.
Background
On 15 July 2005, contracts were exchanged for the sale of a rural property for $1 million. The purchasers paid a 10% deposit, with the balance of the purchase price to be provided by its mortgagee. Settlement was the standard six week period.
The vendor owed approximately $228,000 to a firm of accountants. The creditors had been chasing payment of this outstanding debt. It was decided that the monies owed would be paid out of the settlement proceeds from the sale of the property. However, the day before scheduled settlement, 23 August 2005, the firm of accountants obtained a writ for the levy of the property against the vendor in order to settle the outstanding debt.
On the morning of settlement, 24 August 2005, the purchasers' solicitor had conducted a final search of the property. The search disclosed no further encumbrances beyond those already known to the purchasers, in particular, no writ. The firm of accountants contacted the purchasers' solicitor stating their interest in the property and advising that settlement should not proceed. Accordingly, settlement was postponed until the afternoon. In the meantime, the accountant's solicitor registered the writ over the property at the Department of Lands but did not notify the purchasers of registration. No updated search was ordered by the purchasers' solicitor and settlement occurred, with the balance of the purchase price being paid to the vendor.
The transfer was rejected for registration at the Department of Lands as a result of the existence of the prior writ now on the title. An attempt on behalf of the purchasers to lodge a caveat also failed. Accordingly, the purchasers had paid the full purchase price to the vendor but could not register the legal transfer of the property to them. The vendor had not used any of the proceeds of sale to repay the accountants so the writ could be released.
The case
The purchasers commenced proceedings seeking an injunction preventing execution of the writ amongst other things on 28 September 2005. On 7 October 2006, the purchasers obtained an interlocutory injunction, however on final hearing the proceedings were dismissed as it was held that the purchasers did not have legal title, as they were not registered on title. The purchasers were then granted an interlocutory injunction by the Court of Appeal, which declared that as holders of equitable interests in land, the purchasers were entitled to priority over any rights to the land that might be held by the judgment creditors and restrained execution of the writ.
On appeal to the High Court, the majority of the High Court upheld the vendor's appeal. The Real Property Act 1900 (NSW), in particular the provisions relating to the recording of writs, was analysed and it was held in the majority that the Torrens land system, being a system of title by registration, meant that registration of a transfer under a writ vests in the transferee a particular kind of title by registration. The purchasers' attempt to rely on their equitable interests to claim priority over any rights to the property was not accepted, as the writ was registered first on the title.
Issues and practical implications
In light of the decision of the High Court, it appears purchasers and legal practitioners acting for purchasers would be advised to lodge a caveat immediately following exchange of contracts which would include exchange of contracts on exercising an option. This will assist in protecting the purchaser's interest between exchange and completion, even for contracts with a standard six week settlement period. Failure to do so potentially exposes the purchaser to risks such as that presented in the Black v Garnock case.
The Real Property Act 1900 (NSW) permits various dealings, including writs, to be registered even if a caveat is on title unless the caveat is specifically worded to exclude those particular dealings. So it is vital that the wording of the caveat is precise and specifically excludes those dealings from registration that the purchaser would not want registered on title prior to settlement. The caveat should also be drafted so that it does not need to be withdrawn prior to settlement, in order to save costs and time for the purchaser. This will involve educating banks as to the appropriate wording on caveats so that they will not require the caveat to be withdrawn as a settlement requirement for lending.
Final searches of the property being purchased need to be conducted by the legal practitioner as close to settlement as possible. Callinan J in the Black v Garnock case suggested that settlements should occur at the Department of Lands for extra caution. However, the practicalities of doing so (for example, no settlement rooms) do not appear to support such practice. Accordingly, the transfer and related documents should be lodged as soon as possible immediately following settlement.
 
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Your solicitor's letter will probably mention the case by name.

thanks Propertunity for offering your help as usual, I read all that. There is no Caveat that I'm aware of but my solicitor just said she thinks it is a good idea to protect against it like I wrote above.

My solicitor who is quite young seems pretty good and I like her a lot compared to my last solicitors but I have concerns of her experience now with property as there has been a couple of things that has made me wonder including:

When we discussed pricing she gave me a sum for her fee and said that only other costs would be for strata reports and inspections if I need them and maybe a couple of low cost searches. She never mentioned anything about this Caveat issue and now she has sent me this large list of searches I should consider and some that I paid for as important. I paid her for the strata reports in cash to cover the costs when I signed the contract as well.

But more importantly. she said I would not need pest & building inspections as units are covered by Strata but said I could still get them if I wanted. In her last email she now suggests I get a building inspection. But maybe she has read something in the strata report that has made her think I should get a building inspection now?

It seems she has gone away and researched about property purchases or consulted with her superiors and has now come back with these new things.

So do you or other members usually pay for the Caveat protection? I have read of anyone else getting it. It is nearly several hundred dollars so I really don't want to pay for it unless absolutely necessary.
 
There is no Caveat that I'm aware of but my solicitor just said she thinks it is a good idea to protect against it like I wrote above.
It's not to do with existing caveats; it's precisely because of caveats that you're not aware of, which may be lodged prior to title transfer, that you need to protect yourself.
monsoon said:
When we discussed pricing she gave me a sum for her fee and said that only other costs would be for strata reports and inspections if I need them and maybe a couple of low cost searches. She never mentioned anything about this Caveat issue and now she has sent me this large list of searches I should consider and some that I paid for as important.
I'm surprised the caveat issue wasn't mentioned, as that's conveyancing 101 these days.
monsoon said:
But more importantly. she said I would not need pest & building inspections as units are covered by Strata but said I could still get them if I wanted. In her last email she now suggests I get a building inspection. But maybe she has read something in the strata report that has made her think I should get a building inspection now?
1) You should read the strata report, too. 2) I'd say recommending a building inspection is to cover her behind, moreso than because she's found a problem. If a lawyer tells you in writing that you don't need a building inspection, and something goes catastrophically wrong with the building that's not covered by the strata for some reason, the lawyer is left open. She's creating something she can point to and say "look, I told you to get a building inspection", in case things go pear-shaped.
monsoon said:
So do you or other members usually pay for the Caveat protection?
It's a statistical game. Chances are that if you don't lodge a caveat, you're not going to get burnt, and will have saved a few hundred dollars. But if you needed the caveat and didn't get it, it could be catastrophic and wipe you out. (Unless this is a trivial purchase for you, which I'm assuming it's not.) Personally, I'd rather feel regret at having forked out a few hundred bucks unnecessarily, than the enormous regret I'd feel if I didn't lodge a caveat, and ended up in the position that the Blacks found themselves in.

Edit: PS - I feel the same way about searches as I do about caveats. If you don't pay for a search, don't be annoyed if in a few months, you find out that the property has to be vacated because some utility is going to dig a huge tunnel under your property, and the noise etc makes the property uninhabitable. Having said that, unless your contract was subject to satisfactory searches, even if you did find that out, you couldn't necessarily crash the contract anyway. (I've discovered this through bitter, expensive, experience. I did a search, it revealed a problem which cost me multi-$100K, solicitor neglected to tell me about the problem. Solicitor was found to be professionally negligent, but I got zero damages on the grounds that I had no valid reason to get out of the purchase anyway, because my contract wasn't subject to satisfactory searches. :eek:)
 
ok thanks ozperp for the info. I guess I will have to seriously consider getting the Caveart thing then. I'm just surprised I don't hear of other people getting them.
 
ok thanks ozperp for the info. I guess I will have to seriously consider getting the Caveart thing then. I'm just surprised I don't hear of other people getting them.
It has been discussed on the forum many times, and is common practise the past couple of years. People who haven't transacted property recently may not be quite as familiar, as prior to Black v Garnock it wasn't considered necessary to routinely lodge a caveat.
 
So it is vital that the wording of the caveat is precise and specifically excludes those dealings from registration that the purchaser would not want registered on title prior to settlement. The caveat should also be drafted so that it does not need to be withdrawn prior to settlement, in order to save costs and time for the purchaser. This will involve educating banks as to the appropriate wording on caveats so that they will not require the caveat to be withdrawn as a settlement requirement for lending.

Out of interest, does anyone have sample wording of how these caviets should be drafted? or point me in the direction of where I can find one?
 
Out of interest, does anyone have sample wording of how these caviets should be drafted? or point me in the direction of where I can find one?

No, I think it is "secret solicitor's business" :) Look a solicitor or conveyancer would tell you straight up if you asked them (I think??).

Interestingly enough on a very recent purchase we made on behalf of a client, there was a special condition in the contract, put there by the vendor's solicitor, specifically excluding the rights of the purchaser to lodge a caveat on title after exchange.....which naturally raised Q's on my side of things.

Despite many conversations with the selling agent and the vendor's solicitor we were unable to have the clause removed - they flatly refused. The reason given was that the vendor's solicitor had been burned by a purchaser doing this. It was a husband/wife purchasing and one of them had passed away in between exchange & settlement. The contract is able to be collapsed in such cases as death of one of the parties, but apparently it was extremely difficult to have the caveat removed if one of the parties dies - "near impossible" I was told. (Don't know how true this is - I don't know so I had to take the solicitor at his word)

This naturally made me and my purchasers nervous but Title Insurance was an option for us as it afforded us the same protection.
 
My solicitors have mentioned to me I should consider some of the following to purchase on top of the solicitor costs:

1. Department of Education
2. East Australian Pipeline Authority
3. Energy Australia
4. Jemena Gas
5. Outstanding Council Notices
6. Unpaid council rates
7. Hunter Water unpaid rates
8. Unpaid land tax
9. RTA
10. State Rail
11. Transgrid
12. Council zoning and planning certificate

I have ordered 6, 7 & 8 so far.

They said they would like to lodge a Caveat on my behalf to stop the owner selling the property to someone else without us knowing and this also protects you between when you pay the money to when the property is transferred into your name. That seems a bit strange as one of the things we discussed the other day is that now I have signed the contract then the seller can't backout of the deal only I can in the cooling off period!

Thoughts on this would be good from members.

Can anyone approach these agencies without having the solicitor do the searches?

Would it be cheaper?

What are the benefits in these reports?
 
Can anyone approach these agencies without having the solicitor do the searches?
Yes, but they'll charge you exactly the same. Property transactions are happening all day, every day, so these agencies have areas set up to deal with these requests, and the charge quoted by the solicitor/conveyancer is the charge that the organisation imposes to offset the cost of dealing with the request.
Alien said:
What are the benefits in these reports?
They give you information about the property you're planning to purchase - it's part of your due diligence. Primarily, any planned infrastructure which would impact on you, can be discovered by paying for these searches.

Thinking, for example, of the tunnels being constructed all over Brisbane. If you didn't pay for appropriate searches, you may not know that your property was planned for resumption in 2 years. Or that it would be untenantable for the next 4 years while tunnel construction was happening, due to excessive noise.

Most of the time, the searches are just an expense and don't tell you much. But once in a while, there's something in those searches that could save you making a very costly mistake.

Much like insurance and a caveat, searches are an expense incurred in protecting your interests.

One last bit of advice: if you get the searches, read them carefully. It's common practise for solicitors/conveyancers to just tell you "they didn't reveal anything". Well, I got told that, when in fact there was a multi-$100K disaster that had showed up in searches, which my solicitor's staff missed. And it's a long story, but it cost me multi-$100K, and them nothing, even though they were found to have been professionally negligent. :mad: I'm still recovering from this "oversight" 3 years ago. :(
 
The Law society now recommends that solicitors advise a client that they should lodge a caveat after signing (in NSW) because of the Black case. If the client doesn't want one it is up to them.

Incidently, in Black the solicitor for the purchaser did their final title search on the day of settlement at about 10am. Settlement was at 2pm, but a writ was lodged on the title somewhere between 10 and 2, and because the purchaser didn't lodge a caveat the writ took priority. Hows that for bad timing!

All the other inspections such as pest etc are not essential, but it is advisable to get them done just in case there is a problem.
 
It may not be the first to happen but the first to be heard in the High Court which now creates a precedent that you can lose priority if you do not protect your caveatable interest with a caveat.
 
Incidently, in Black the solicitor for the purchaser did their final title search on the day of settlement at about 10am. Settlement was at 2pm, but a writ was lodged on the title somewhere between 10 and 2, and because the purchaser didn't lodge a caveat the writ took priority.
Why doesn't the law society recommend that a search is done at 1:59pm for a 2pm settlement ? A search costs a few $$$, but a caveat much more. Or the settlement agent does the search on his iPhone as he hands over the cheque ?
 
Not very practical.

You could still lose priority anyway. Imagine all the work done up to that stage and then you find out you can't settle. Better to put the caveat on when exchanging and notifying the world of your interest straight away.
 
So the Black case is the only time this sort of thing has ever happened?
As far as I'm aware, yes. But it's set a precedent that overturned the previously accepted beliefs regarding security of title. Because debtors now know that the Courts will uphold their rights regarding writs served in the few hours prior to settlement, debtors can now *target* that timeframe, if they know that the vendors have no money, nor any intention to pay. In other words, it's not purely statistical; there's now a lot more attractiveness for debtors to lodge a writ in this window than there was prior to this case.

For example, ozperp owes monsoon $500K. ozperp has a PPOR worth $600K which she owns outright, and has sold to sucker. I don't want to pay monsoon any of the $600K, because I have other plans for the money. Monsoon knows that ozperp's not going to pay her $500K debt from the $600K she's getting from sucker for the property sale.

Monsoon's legal option is to go to the titles office and serve the writ, preventing ozperp from transferring the title to sucker until the $500K debt is paid. sucker has no idea that ozperp owes monsoon $500K. Monsoon knows that if they register the writ too early, ozperp will just decide not to sell, knowing that she has to use the proceeds to pay monsoon $500K. Yes, monsoon could force ozperp to sell, but that takes significant time and money; it's much easier to just take advantage of ozperp's decision to sell.

So monsoon is smart and sits on the sidelines while the property sale cruises towards settlement. At the very last possible moment, monsoon takes his writ to the titles office and lodges it.

sucker pays $600K to ozperp, then finds that they can't get the title transferred into their name. :eek: The only way for sucker to get the title is to pay another $500K to monsoon, so that monsoon lifts the writ, or for sucker to get ozperp to pay monsoon $500K from the $600K. But ozperp saw that coming and has transferred the money offshore, used it to purchase another property in her child's name, etc - basically already done something other than stick the $600K cash in the bank, making it hard to retrieve the funds quickly/inexpensively.

So ozperp is off with sucker's $600K, and sucker owes their lender most of $600K and has no title. Yes, sucker can pursue ozperp to get the $600K back (reverse the purchase), or can pay back the $500K to monsoon and then pursue ozperp for the $500K, but neither of these options leave sucker in a very attractive situation.

Lodging a caveat is insurance against ending up in sucker's shoes. It's a few hundred bucks, yes, but it could end up causing you worlds of hurt if you end up needing it.
 
Not very practical.

You could still lose priority anyway. Imagine all the work done up to that stage and then you find out you can't settle. Better to put the caveat on when exchanging and notifying the world of your interest straight away.
Sorry.... I meant do a 2nd search - one on exchange & another at settlement. Still cheaper than a caveat ?
 
Hi Keith

But you could still lose out. If someone else lodges a caveat or writ etc after you exchange then you could lose priority. Imagine you had all the inspections done, the removealist truck packed and the loans ready to go and then you find out you can't settle.
 
Probably a very basic question, but I assume the cost of either title insurance or a caveat is tax deductible?
(have just bought a place and had decided not to worry about such things, but a read of this has thread has me worried).
 
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