The formal transfer of the title of the investment property from the vendor to the purchaser occurs on settlement. The settlement date is established in the contract between the vendor and purchaser. The activities needed to execute the transfer and meet the settlement date are arranged between the parties and largely coordinated by the solicitors or conveyancers. In WA, settlement agents are most commonly used for this purpose. Thus the key people involved in this aspect of the process are the investor or purchaser, vendor, real estate agent, solicitor or conveyancer, financial institution and state and local governments.
An important consideration in the transfer process is the total purchase costs. These can be significant and must be taken as part of the total purchase price as they will form part of the calculation to establish the return on investment. Awareness by the investor of the total purchase costs will help ensure that negotiations are focused on establishing a purchase price to take account of this.
It is advisable that you make property investors aware of the purchase costs before they negotiate any investment funds. Purchase costs include:
- The purchase price agreed between the purchaser and vendor;
- The purchaser’s solicitor or conveyancer costs and disbursements;
- Bank fees, including: loan fee, mortgage registration fee, cheque fees;
- Adjustment of rates (water, council, land tax);
- Stamp duty;
- Land titles office transfer fee; and
- Miscellaneous transaction charges.