Property Searches – to Search or not to Search

Once a contract has been entered into and the buyer has satisfied all the key conditions of the contract, then the buyer’s solicitor will order settlement searches on the property. There are some searches the buyer cannot escape ordering, but there are a wide range of purchases that, depending on the law firm, are at the option of the buyer to order. The buyer may also wish to have some searches undertaken as part of the due diligence process, prior to the contract going unconditional.

Required Searches

Conveyancing firms will order the following searches on any purchase matters:

Current Title Search

• Confirms who the government (Queensland Titles Registry) has recorded as the registered owner of the property. Only the persons who are listed on the title search have the legal capacity to sell the property. If the seller on the contract does not match with the title search, then the seller cannot legally sell the property.

• This search will be ordered twice. Once when the contract is signed and once on the day of settlement of the contract (to make sure no new interests have appeared on the title).

Council Rates Search

• This will confirm the amount the council charges for rates over the property. It will also confirm whether the seller has paid the rates for the period the search has been ordered for and will be taken into account when calculating the amount payable at settlement.

Water Meter Reading

• The local water authority will inspect the property’s water meter to confirm how much water has been used during a period of time. This will allow the parties’ conveyancers to predict how much water will be used by the settlement date and adjust accordingly (as the water authority will charge for water used).

• Depending on the council, the local water authority may also charge a water and sewerage access fee on the property, which can also be taken into account when calculating the amount payable at settlement.

Land Tax Clearance Certificate

• Will confirm whether there are any land tax payments owing. If there is any land tax owing to the Queensland Revenue Office (QRO) the search will outline this. A cheque or payment direction will be made in favour of QRO at settlement to ensure land tax has been paid for.

Body Corporate Information Certificate (for unit or townhouse)

• Will provide the levy amounts the body corporate issues over the property. It should line up with the Disclosure Statement provided to the buyer before signing the contract and if any information on the Disclosure Statement is inconsistent with the Body Corporate Information Certificate, the buyer may terminate the contract.

Additional Searches

Optional searches on the property include:

Registered Plan

• Most law firms do consider this a required search. It will confirm the boundary and area of the lot. It will also identify where any registered encumbrances or easements are located on the property.

Dealing Image of Encumbrances or Easements

If there are registered third party interests on the property, this search will identify what type of interest it is (i.e.. a manhole or drainage pipe) and provide clarity as to restrictions for using the property.

Council Building Approvals

• Provides details of building approvals and inspections issued by the local council and confirm council approved renovations. If renovations have been done and were not approved by the council, then the buyer may be liable to remedy the offence at a later date.

Contaminated Land Search

• Will confirm whether the address is listed on the register as contaminated land. If the seller does not advise the buyer the address is on the register, and the search proves otherwise, the buyer may terminate the contract.

Department of Transport & Main Roads search

• Will advise whether the property is subject to any proposed resumption to build new roads and railway lines. If the property is subject to a proposed resumption, the value of the property may decrease.

There are also searches that can be done on the seller which includes:

ASIC search

• Relevant when the seller is a company. Will confirm whether the company is registered (if unregistered the company will not have the capacity to sell the property) and will also confirm the position holders of the company who would be authorised to sign the contract and transfer documents.

Bankruptcy search

• Relevant when the seller is a natural person. If the search result advises the seller is bankrupt, they most likely do not have the capacity to sell the property as the property would have been repossessed by creditors.

Personal Property Securities Register (PPSR)

• If the contract provides for included chattels in the property, you may wish to check if it is part of the securities register as if it is, it can be repossessed.

What can you do about your Concerning Search Results

A standard contract does not provide for a searches clause, therefore most of the time, the buyer does not have a contractual remedy to rectify any issues with the search results. A buyer can attempt to negotiate with the seller to have any issues rectified before settlement but the seller does not have any standard contractual obligations to rectify a unsatisfactory search results.

If a buyer wants to have the ability to terminate the contract, a due diligence condition should be inserted in the special conditions provision of the contract.

To Search or not to Search

Some law firms may recommend doing more searches so the buyer is well informed of any potential issues with refurbishing the property (for example being made aware of an interest held by your local electricity provider with an underground electrical cables or overhead power pole). The major downside of doing so is the costs associated with these property searches which may reveal nothing.

Some law firms may choose not to order these searches to save the client costs, however the downside of this is that a buyer may be unaware of potential issues local authorities have. Once settlement has been effected it is the responsibility of the new registered owner to take care of matters with the property. Ultimately it is up to the buyer to decide if they would like to proceed with certain additional property searches and should communicate with their conveyancer any specific searches they would like ordered.

If you have any questions or require assistance with a property searches or a conveyancing matter in Queensland, please contact the property team at My Property Protect for more information.

---

Written by

---